Apple Takes in Lion's Share of Global Smartphone Market Profits

 
 
By Todd R. Weiss  |  Posted 2015-07-13 Print this article Print
 
 
 
 
 
 
 
Apple, iPhones, Samsung, Lumia, smartphone market share, Microsoft

While Apple only sells about 20 percent of the world's smartphones by volume, it towers over its competitors by the revenue it earns from its iPhones.

Apple's iPhones helped the company bring in 92 percent of the first-quarter profits of the eight largest vendors in the global smartphone marketplace, leaving the remaining 8 percent to all its competitors combined.

Making that even more incredible is that Apple sells only about 20 percent of the smartphones on the market while its roughly 1,000 competitors sell the other 80 percent, according to research conducted by financial services firm Canaccord Genuity and published July 12 in The Wall Street Journal.

The latest estimates from Canaccord Genuity Managing Director Mike Walkley showed Samsung bringing in about 15 percent of the global smartphone profit for the quarter, The Journal reported, with the two companies "accounting for more than 100 percent of industry profits because other makers broke even or lost money."

One year ago, Apple brought in 65 percent of the smartphone segment's profits, according to Canaccord Genuity.

None of this is great news for Samsung and other competitors. Samsung recently reported estimated second-quarter 2015 figures that show expected drops in revenue and profit as the huge technology company continues to be plagued by disappointing financial results. In estimates released July 6, Samsung said it expects to report operating profits of $6.1 billion for the quarter ended June 30, which is a 4 percent drop from the same period a year ago, as well as revenue of $42.3 billion, 8.4 percent lower than the total one year ago.

The numbers are particularly disappointing at this time because in April Samsung released its new flagship smartphones, the Galaxy S6 and Galaxy S6 Edge, to battle back against Apple's hugely popular iPhone 6 and iPhone 6 Plus models (pictured), which came out in September 2014.

Samsung will release its final figures for the second quarter in late July. The estimates show the company heading for its seventh straight quarterly profit decline.

Samsung has been hit hard in recent years by lower sales of its mobile phones, which have been losing ground to cheaper phones from Chinese handset makers, and from stiffer competition from Apple's latest iPhone 6 smartphones and from other competitors. Much of the sales slump likely was due to consumers who were waiting to see the then-new iPhones and Samsung's own replacement for its earlier flagship Galaxy S5 phone.

The company had been hoping for a big financial turnaround after the release of the new Galaxy S6 and S6 Edge, which went on sale April 10 after almost two months of intense build-up in the marketplace, but the company misjudged the popularity of the S6 Edge devices and didn't produce enough of them, which stalled sales.

In late April, Samsung reported a $4.63 billion net profit for the first quarter of 2015, which was down 39 percent from the same quarter one year prior, when the company had a $7.04 billion net profit. For the South Korean smartphone and electronics maker, it continues to be a disappointing trend downward.

Samsung's first-quarter revenue of $43.8 billion was down from $49.9 billion for the same quarter one year prior. Operating profit for the first quarter dropped about 30 percent to $5.64 billion from $7.8 billion in the same quarter one year prior.

Samsung, looking for an edge to light a fire under its lagging smartphone sales figures, is now planning to unveil its next Galaxy Note phablet in mid-August, at least several weeks earlier than its typical autumn release announcements, in an effort to beat Apple in the constant race for new buyers, according to a recent eWEEK report.

Microsoft's Lumia line has been having its own problems, as well. Microsoft bought the smartphone line from Nokia for $7.1 billion in April 2014, and then rebranded it in October 2014. The Lumia line of Windows-based phones, despite being generally well-received, has barely made a dent in unseating Android- and iOS-based smartphones from the top of the smartphone market.

Microsoft announced on July 8 that it is laying off 7,800 employees, mostly from its mobile phone business, after laying off some 18,000 workers last year. It will take a $7.6 billion impairment charge for the layoffs and a restructuring charge of up to $850 million related to the acquisition of Nokia's Devices and Services businesses.

In January, Apple reported its best-ever financial quarter, posting $74.6 billion in revenue and $18 billion in net profits for the first fiscal quarter of 2015 due to a consumer frenzy of sales of its latest iPhone 6 and iPhone 6 Plus smartphones, Mac computers and sales of apps and more in the company's App Store.

 

 
 
 
 
 
 
 
 
 
 
 
 
 

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