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Bert22306
And I have given Steve Jobs credit for just that. It was his genius to create ...
RandomJitter
*Everyone* is vulnerable in a fast moving market. Winners have to put together ...
Analyst: Apple took 80% of handset profits in Q4
Dylan McGrath
2/9/2012 2:24 PM EST
SAN FRANCISCO—Apple Inc.'s iPhone captured 19.1 percent of the global smartphone market share in 2011, up from 16 percent in 2010, according to Canacorrd Genuity analyst Michael Walkley. Based on the timing of the iPhone 4S refresh in October, Walkley expects Apple to gain more market share in the first quarter of this year, when be projects iPhone's market share to be about 23.8 percent.
Google's Android operating system maintained its lead among smartphone OSes in the fourth quarter, with about 50 percent market share, down from 56 percent in the third quarter, according to Walkley.
Based on Apple's fourth quarter market share gains and Samsung Electronics Co. Ltd.'s strong gains within the Android smartphone market, Walkley estimates that the two companies combined to take roughly 95 percent of all smartphone profits in the fourth quarter.
Apple generated roughly 80 percent of all handset profits in the fourth quarter, despite having only 8.1 percent market share overall, according to Walkley. Apple's share of handset profits in the fourth quarter increased from 56 percent in the third quarter and 48 percent in the fourth quarter of 2010, Walkley said.
Click on image to enlarge.
Samsung's share of overall handset profits declined to 15 percent in the fourth quarter, down from 26 percent in the third quarter of 2011, Walkley said. The firm's share of the Android smartphone market increased to 39 percent in the fourth quarter from 35 percent in the third quarter, he said.
"With RIM, Nokia, HTC, and Sony Ericsson all in the midst of product transitions and Motorola Mobility merging with Google, we believe Apple and Samsung will maintain dominant share positions during [the first half of 2012]," Walkley wrote. "Our January checks indicate Apple and Samsung trends remain strong versus competitors."
Walkley said that, based on fourth quarter earnings results from leading handset OEMs, Canaccord Genuity believes that global handset unit sales increased to 455 million units in the fourth quarter, up 13 percent from 402 million units in the third quarter. Smartphone sales increased 34 percent sequentially to 159 million units, according to the firm's estimates, largely because many consumers held off new purchases in the third quarter in anticipation of the new iPhone launch.
Canaccord Genuity projects that handset sales will decline 17 percent sequentially in the first quarter to 377 million units. Smartphone sales are expected to decline 14 percent sequentially to 137 million units in the first quarter, according to the firm. The company expects overall handset sales to grow 3 to 4 percent in both 2012 and 2013.
Both Android and Applie's iOS increased market share in the fourth quarter, according to Canaccord Genuity. Android's share in smartphones increased to 48.4 percent in 2011, up from 22.6 percent in the fourth quarter of 2011, the firm said. Apple's iOS grew to 19.1 percent of the market in 2011, up from 16 percent in 2010, the first said.
Combined, Android and iOS accounted for 73.4 percent of all smartphones OSes in the fourth quarter of 2011, up from 70.5 percent in the third quarter, Walkely wrote.
"Our checks indicate the smartphone market is increasingly dominated by two different ecosystems with iOS on the one end of the spectrum with its closed ecosystem and Google’s Android OS with its open ecosystem on the other end," Walkley wrote.
Click on image to enlarge.
Google's Android operating system maintained its lead among smartphone OSes in the fourth quarter, with about 50 percent market share, down from 56 percent in the third quarter, according to Walkley.
Based on Apple's fourth quarter market share gains and Samsung Electronics Co. Ltd.'s strong gains within the Android smartphone market, Walkley estimates that the two companies combined to take roughly 95 percent of all smartphone profits in the fourth quarter.
Apple generated roughly 80 percent of all handset profits in the fourth quarter, despite having only 8.1 percent market share overall, according to Walkley. Apple's share of handset profits in the fourth quarter increased from 56 percent in the third quarter and 48 percent in the fourth quarter of 2010, Walkley said.
Click on image to enlarge.
Samsung's share of overall handset profits declined to 15 percent in the fourth quarter, down from 26 percent in the third quarter of 2011, Walkley said. The firm's share of the Android smartphone market increased to 39 percent in the fourth quarter from 35 percent in the third quarter, he said.
"With RIM, Nokia, HTC, and Sony Ericsson all in the midst of product transitions and Motorola Mobility merging with Google, we believe Apple and Samsung will maintain dominant share positions during [the first half of 2012]," Walkley wrote. "Our January checks indicate Apple and Samsung trends remain strong versus competitors."
Walkley said that, based on fourth quarter earnings results from leading handset OEMs, Canaccord Genuity believes that global handset unit sales increased to 455 million units in the fourth quarter, up 13 percent from 402 million units in the third quarter. Smartphone sales increased 34 percent sequentially to 159 million units, according to the firm's estimates, largely because many consumers held off new purchases in the third quarter in anticipation of the new iPhone launch.
Canaccord Genuity projects that handset sales will decline 17 percent sequentially in the first quarter to 377 million units. Smartphone sales are expected to decline 14 percent sequentially to 137 million units in the first quarter, according to the firm. The company expects overall handset sales to grow 3 to 4 percent in both 2012 and 2013.
Both Android and Applie's iOS increased market share in the fourth quarter, according to Canaccord Genuity. Android's share in smartphones increased to 48.4 percent in 2011, up from 22.6 percent in the fourth quarter of 2011, the firm said. Apple's iOS grew to 19.1 percent of the market in 2011, up from 16 percent in 2010, the first said.
Combined, Android and iOS accounted for 73.4 percent of all smartphones OSes in the fourth quarter of 2011, up from 70.5 percent in the third quarter, Walkely wrote.
"Our checks indicate the smartphone market is increasingly dominated by two different ecosystems with iOS on the one end of the spectrum with its closed ecosystem and Google’s Android OS with its open ecosystem on the other end," Walkley wrote.
Click on image to enlarge.
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green_ee
2/9/2012 4:50 PM EST
Apple got the profits from the over-inflated price of the iPhone, and the wireless carriers are taking the hit because they subsidize the low price end-users pay for the device thru monthly service fees.
I dont own an iPhone, and I never will, because there are a plethora of other smartphones that have equal-or-better performance for less cost.
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eewiz
2/10/2012 12:45 AM EST
FYI, Android phone with similar hw/performance sells at almost the same price.
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Bert22306
2/9/2012 5:59 PM EST
Heh. This is similar to being "damned by faint praise." Imagine 16 percent of market share raking in 80 percent of the profits.
I'm having a hard time figuring out whether it shows that Apple is particularly greedy, or whether it shows that the Apple Faithful really are a cult. Whatever, it's not pretty.
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phoenixdave
2/13/2012 11:52 AM EST
Greedy...yes
Cult.....most likely
But you have to give them credit for being able to do it! I wonder of there are any other companies in other areas that could achieve this?
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Bert22306
2/13/2012 3:38 PM EST
And I have given Steve Jobs credit for just that. It was his genius to create this following of faithful.
I started noticing the odd phenomenon way back in the days of the funny-looking Mac with the tiny little integral screen. And the phenomenon came back strong after Jobs returned to Apple, and they got into the handheld craze.
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lurchl
2/9/2012 6:19 PM EST
Anybody remember Windows versus Mac / OS(n)? Now we have Android versus iOS, and the two sides stack up the same way.
On one side, there's loosely- (or non-) integrated open hardware and open software which, as any nook color user can tell you, almost sorta works. (Yeah, I know the nook color isn't a phone, but it's an Android device I'm familiar with.)
On the other side sits a tightly-integrated hardware-software package which works very well, in which apps (mostly) talk to each other, and some opportunities exist for 3rd-party developers.
After enduring a dumb phone for almost five years and struggling with a nook color, I knew which device I wanted. The tipping point came with voice commands via Siri.
So Apple's device has an easier-to-use user interface, a great app selection, and doesn't cost users any more than top-level Android phones. iPhones may even cost less, though they lack the brute speed of a 4G connection.
We live with an economic system which allows anyone to charge what they can get from the market. Looks like Apple knows how to play that market well.
Before anyone begins to talk about monopoly, if Android didn’t exist, Apple would probably have to invent it. Look at Intel versus AMD – same situation. Intel *needs* AMD.
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Geoff Thomas
2/9/2012 6:22 PM EST
Couldn't it mean that Apple is running it's business properly and that folk don't mind paying more for a better, easier to use product?
Exxon mobil makes huge profits, do the people buying it's petrol classify as a cult? - do Walmart customers?
Envy is a terrible thing to have eating away at one.
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dylan.mcgrath
2/9/2012 6:25 PM EST
Any company would gladly take the profit margins Apple is able to command if it could. I believe that is Business 101.
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Bert22306
2/9/2012 6:28 PM EST
Oh indeed. Which is why I added the "or" to the "either/or" choice!
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daleste
2/9/2012 9:56 PM EST
Yes, Apple is reaping the profits of their hard work. I just wonder if the absence of Steve Jobs will slow down their ability to dazzle the market.
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eewiz
2/10/2012 12:44 AM EST
In the short term(2-5 years), Apple will thrive for sure. In the long term they can thrive only with some visionary at the top, and I doubt whether Tim Cook is that guy.
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outsourced_but_not_out
2/10/2012 8:59 AM EST
Well, in addition to their own hard work, they also reap other people hard work. Look how many lawsuits are against Apple for patent violations. How many engineers here would love to see their invention in next iPhone/iPad and not getting paid nor even recognized for that.
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yalanand
2/10/2012 12:59 AM EST
Its pretty amazing to know that Apple got 80 percent of all handset profits in the fourth quarter, despite having only 8.1 percent market share overall. Moreover the slowdown also didnt affect the Apple sales. This shows that people just love Apple products. Still Apple is not serious about Asian markets, I think Apple should rethink about pricing if it has to make mark in Asian markets because people prefer low-cost smartphones.
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outsourced_but_not_out
2/10/2012 8:54 AM EST
Add to the picture:
Apple refused to pay licensing to Kodak for imaging patents.
Apple refused to pay licensing to Motorola for communication patents.
Apple based their commercial OS on open sourced FreeBSD.
And this is only from technology point of view, I am not bringing up stories about sweatshops in Asia.
If you read recently opened FBI files on Steve Jobs the comments like "shows integrity if it's beneficial" start make more sense.
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goafrit
2/10/2012 10:34 AM EST
Maybe anti-trust trial lawyers will be opening files on Apple soon.
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Frank Eory
2/10/2012 12:47 PM EST
As stunning as Apple's profits are, imagine how much larger they would be if they could get the fence-sitters to jump to the 4s rather than waiting for the iPhone 5.
I continue to run into people who are eligible for a subsidized upgrade, but foolishly believe the rumors out there about an iPhone 5 "coming soon". Apple's secrecy about its roadmap might actually be hurting sales in this case.
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Duane Benson
2/10/2012 12:57 PM EST
In basic product management, you learn that there are two ways to set pricing: cost-based and demand-based. In cost-based, you're essentially trying to get by with the minimum margin that will lead to a sustainable business in your competitive environment. Demand-based means that you charge what ever people are willing to pay. If they're willing to pay a lot more than you cost-based, then you make a lot of money.
Good, bad or indifferent, Apple seems to have nailed the demand-based formula. Enough people like them and their products enough pay what Apple charges and to raise volumes enough to drop Apple's costs.
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kdboyce
2/10/2012 3:44 PM EST
Looks a lot like the situation of Intel around the PC Hardware business. Their model essentially squeezed much of the profit out of other components in the system.
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chipmonk
2/10/2012 4:12 PM EST
How long can Apple keep charging a profit margin 5X of Samsung when they have to depend on Samsung Foundry to get their A5, A6 processors made ? Other Foundries ( you know who ) have not been able to match Samsung.
In Smartphones Samsung has almost caught up with Apple and Apple has tried to block them with lawsuits.
Samsung has also shown actual working prototypes of hardware that will double the speed of playing games / streaming videos on Smartphones while using only half the battery power.
Is Apple vulnerable ?
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RandomJitter
2/13/2012 12:18 PM EST
*Everyone* is vulnerable in a fast moving market. Winners have to put together teams and execute across all disciplines:
Hardware,
Software,
Developer relations,
Industrial design,
Manufacturing,
Supply and distribution management,
and Marketing
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chanj
2/11/2012 1:38 AM EST
Mobile market is relatively new. Smartphone, despite being around for more than 3 years, is still considered to be a new product, early in the product life cycle. The market will become mature overtime. The shrinking of profit margin is inevitable whether Steve Jobs was still alive or not. Apple no doubt runs a successful business. They please both investors and consumers. The market is going to change. The winner is not necessarily be the best even though I do hope so.
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junko.yoshida
2/13/2012 7:19 AM EST
That's a good point, Chanj.
But then, when exactly is the "shrinking of profit margin" going to start?
What triggers it?
If Apple continues to be the only company offering iPhones, that may not happen...
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hm
2/11/2012 10:58 PM EST
Apple has very high profit, but it is good that it reinvests them in new innovative product development. We should not envy their profit but should ask for more wonderful future products.
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