iPhone X might have fallen short of expectations but performed beyond expectations for Apple Inc. (NASDAQ:AAPL) in terms of profit. Apple iPhone X has accounted 35% of total handset industry profit in Q4 2017, making it the most profitable smartphone of the fourth quarter of 2018, reports Counterpoint Research. Overall, Apple’s handset industry profit share clocked 86% in the same quarter.
Apple’s performance becomes more commendable as its handset industry profit share kept increasing despite the global handset industry profit decreased. Apple’s share of handset industry profit in Q4 2017 increased 1% compared to the same quarter a year ago.
Likewise, despite lower than expected sales of iPhone X and availability of just two months, iPhone X accounted little over one-third of total handset industry market profit. The highly criticised iPhone X, especially for its price, also generated 21% of total handset industry revenue alone during the quarter.
Apple iPhone X Profit Share: Bound To Grow
Undoubtedly, iPhone X is still the most aspiring handset even today. In Q4 2017, Apple iPhone X was the most selling smartphone model with the sales figures of 29 million units. The sales of iPhone X is estimated to decline drastically from Q1 2018 onwards, but the profit share of iPhone X, according to Counterpoint, is expected to grow.
The report also highlights another very interesting fact that explains the reason behind the higher resale value of iPhone. 8 out of top 10 smartphone models that generate more profit for OEMs belong to Apple. The longer shelf life of all iPhones, including the models of iPhone that were launched three years ago, ensures that Apple enjoys the lions share of total handset industry profit.
90% of total handset industry profit was accounted by top 10 models only.
The globals smartphone market has started showing signs of stagnation. It was the first time when global smartphone shipments declined by 0.5% in 2017, especially due to below than expected sales of iPhone X and other premium smartphones in Q4 2017. The worldwide smartphone shipments in Q4 2017 declined 8.7% compared to the year-ago quarter.
The stagnation and slowing growth in smartphone shipments have out smartphone OEMs under pressure to book revenue. Companies are leaving no stone unturned to hook customers. The mounting revenue pressure is resulting in increasing ASP (Average Selling Price) of smartphones. In Q4 2017, the cumulative profit of Chinese OEMs crossed $1.3 billion which was largely driven by the sales of mid-to-high end smartphones.
Almost every Chinese OEM is largely dependent on the sales of devices mostly running on Android. Unlike Apple, Android OEMs don’t have a big cushion of profit due to the rising competition in the market which is flooded with Android devices. And that’s why the profit Apple minted from the sales of iPhone X is five folds more than the combined profit of over 600 Android manufacturers in Q4 2017.
Overall, the flagship models of Apple and Samsung account for the majority of their handset industry profit. Among all the Chinse brand, it is Huawei that has led the chart as it handset industry profit increased by 59% YoY in Q4 2017.