Apple Is Still The Most Profitable Smartphone Company Despite Declined Profit Share in Q1 2017

Must Read

Hands-Free Resources: How Businesses Are Using AR to Make Workplaces Safe and Productive

The role of efficiency and ease in the modern world has become forefronted when it comes to technology, particularly...

Top Countries by App Downloads Q2 2021: India Dominates With 7 Billion+ Downloads [REPORT]

As the adoption of smartphones and the Internet has increased over the last decade, so has the number of...

3 Most Common Mistakes Social Media Marketers Are Committing In 2016

In their quest for greater sales and increased ROI, the self-appointed “digital marketing guru” has lost touch with what...

The latest data about global smartphone sales from Strategy Analytics is out, and once again its is Apple Inc. (NASDAQ:AAPL) who has earned the lion’s share of the profits, albeit lesser than previous two quarters. According to the report, Apple becomes the most profitable smartphone company, garnered an operating profit of $10.18 billion in Q1 2017. This is almost 83.4% of the $12.21 billion total smartphone operating profits globally!

What is more interesting is that with just 14.9% of Smartphone shipment share in Q1 2017, Apple accounted 83% of total smartphone industry profit share. Clearly, it’s not about selling more number of smartphones to dominate the market. It’s like inviting crowd with empty pockets vs. selective people with deep pockets to your shop!

This comes as absolutely no surprise to anyone, as Apple have been dominating industry profit for some time now. In Q4 2016, Apple pocketed a massive 92% of the global industry profit, whereas the figure was 91% in Q3 2016. This is good news for Apple, who have been suffering from stagnating and depreciating iPhone sales. This also represents an improvement over Q1 2016, when Apple accounted for 79.8% of the industry profit. This likely due to the higher profit margins on the iPhone 7 and iPhone 7 Plus, which enabled them to increase profitability despite sagging sales.

Advertisements

Meanwhile, chief rival Samsung continues to recover from the Note 7 fiasco, which has significantly affected their profitability over the past two quarters. Samsung managed a net $1.57 billion profit in Q1 2017, accounting for 12.9% of total industry profits. Good news for Samsung is that this represents a significant improvement over Q3 2016 when it narrowly avoided an operating deficit due to the Note 7 fiasco. The situation in Q4 2017 was similar, as Samsung had to recall the Note 7 leaving them without their latest flagship to drive sales. The bad news is that this is still a step backwards compared to last year when Samsung captured 21.9% of the total profits in Q1 2016. Further compounding their problems is the fact that their operating profit ratio in terms of sales was less than one-third than that of Apple (9.7% vs. 30.7%).

However, the launch of the Galaxy S8 and S8 Plus in late Q1 2017 was very well received. This, coupled with the fact that Apple’s sales and profits generally slow down in during the second quarter period (75% in Q2 2016), offers a glimmer of hope for Samsung for Q2 2017 to make up some ground.

Last year, we also reported on the rising star of the smartphone world – Huawei. However, they have not started the new year particularly well. Huawei had the maximum revenue at $6.47 billion, compared to other Chinese OEMs. OPPO followed behind at $5.41 billion. However, despite this, OPPO managed a greater operating profit of $254 million compared to Huawei’s $226 million. In fact, at 3.5% operating profit rate, Huawei even fell behind its other local rival Vivo (4.5%).

As it stands, companies like Samsung and Huawei have a window of opportunity in Q2 and Q3 to increase their profitability at Apple’s expense. Due to the seasonal nature of Apple’s iPhone launches, this leaves a gap in their portfolio that rivals can exploit. However, with the upcoming release of the iPhone 8 expected to break sales records, we can expect Apple to maintain their dominance of industry profit for the foreseeable future.

LEAVE A REPLY

Please enter your comment!
Please enter your name here
Advertisements

Latest News

Installing Windows 11 OS: Don’t Fall Prey To Hackers!

Microsoft had once said that its Windows OS line-up will end after Windows 10. But 6 years after launching...

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded and unparalleled...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter, with a...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one of the...

More Articles Like This