In the world there are about 1,000 companies producing smartphones, and only one of them gets virtually all revenue generated in the industry. According to market research company Strategy Analytics, in the third quarter of the current year the share of Apple fell 91% of all operating profits earned by smartphone manufacturers in the world. Last year Apple’s share was 65%.
Analysts note that the share of another manufacturer, Huawei, now accounts for 2.4% of the total profit. Two of the company OPPO Vivo and generated not more than 2.2% of global profits. Recent developments have made the situation even brighter. While Apple is asking suppliers to increase production of the new iPhone, Samsung has published an unfavourable forecasts of their profits.
Particularly striking is the share of Apple in total profit looks like, considering that this company produces less than 20% of all smartphones sold in the world. This discrepancy suggests that the “Apple” giant can install on their products a higher price. Manufacturers of other smartphones mostly use the Android operating system controlled by Google, they are significantly harder to stand out from the competition, so they have to attract customers by lowering prices. In addition, Samsung and HTC have made in recent years, a serious strategic miscalculations.
Neil Moston, analyst from Strategy Analytics noted that many vendors that use Android, are in a disadvantageous intermediate position between Apple, with its expensive models and cheap mass brands like Xiaomi. “It’s kind of a trap, says Moston. Such brands are many, including a few hundred in China.” Even Samsung at some point managed to offer a successful smartphones in all price segments now experiencing problems with the influx of competitors.
The situation in the smartphone market is changing rapidly. In 2007 the iPhone revolutionized the industry. At that time, about two thirds of the market controlled by the Finnish Nokia. By the end of the decade in the list of the leading suppliers of smartphones along with Nokia settled Apple and BlackBerry. By 2012 the market was split evenly between Apple and Android. Now Apple is dominant. “The upper price range went from Samsung to Apple,” Mike says Oocly, managing Director of Canaccord.
Unlike Apple, receiving the bulk of its revenues from the sale of devices, many market participants are guided by a different strategy. For Microsoft and Xiaomi is selling smartphones is just the initial stage, and the profit is formed and then, by selling all kinds of accessories and add-ons. Samsung makes money by producing components for their own smartphones, and others.