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Endangered species: why the market falls premium Android smartphones

Many analysts note that “award”, “top” and generally expensive Android smartphones sold is not the same as before. Samsung, LG, HTC, Sony, almost all manufacturers of expensive phones on Android today are losing money at a greater rate basically due to the inability to sell expensive gadgets. In the segment of cheap models of things they have things a little better due to the inability to compete with the aggressive Chinese like Xiaomi.

Dry facts show that Apple is the only manufacturer that makes a profit in the premium segment of mobile phones. It is also the only player, the profits of which grows, and grows quite spectacular.

Edition Telekomza leads stark figures on the state of the market is the Android technique. Using the statistics of IDC, they calculated that from HTC, Sony and Lenovo/Motorola average profit per smartphone is negative: minus $36, $26 and $18, respectively. This means that every smartphone sold reduce their budget by 36, 26 and 18 dollars. LG profit there is but tiny – $0,016 (1.6 per cent). The losses Microsoft with every smartphone even more depressing – $72.

Samsung is the only Android vendor that gets relatively good profit from smartphones, namely $33. However, with no simple phones or tablets with Samsung, too, has no profit. Galaxy S6 and S6 edge are much worse than the previous flagship series. Partly as a result, the stock price of Samsung Electronics has been declining for five consecutive months.

Basically this negative statistics due to poor sales in the upper price segment is the only one where last years Android players managed to get at least some profit. That’s what was said in a recent report HTC:

“Weaker than expected demand in the upper segment of the Android market coupled with poor sales in China led to a drop in the second quarter compared to last year”.

“We all know that the smartphone business is not going smoothly. I can’t even predict when the price will stop falling. Fundamental indicators appear to be problematic,” says the analyst Does take care of him Woo of IBK Securities.

Here is a graph of earnings growth of the largest manufacturers of smartphones in the period between the fourth quarter of 2014 and second quarter 2015:

As you can see, only Apple continues to increase profits and remain in the green zone, while the others slid into the red zone, and HTC has practically dropped out of the race (we recently wrote about the fact that HTC isn’t worth anything).

“The smartphone business is not when only two companies making money on phones, but it has become increasingly evident that only one earns the premium segment… All the others, apart from Apple and Samsung, it seems, is now praying for a miracle,” says analyst Charles Arthur.

Another prominent journalist Adrian Kingsley-Hughes in an attempt to find the reasons for the collapse of the premium segment Android allocates a number of possible reasons:

  • The producers spent too much time (and lost it on this one), trying to be like Apple and release Apple clones.
  • Manufacturers seem to have decided to remove from their function models, which were appreciated by many users: removable battery, a slot for memory cards, etc.
  • Devices average price range were more than sufficient for many users.
    Many smartphones have become too similar to each other, even for the price.
  • Premium Android smartphones have become too expensive.
  • The market is full of offers. All manufacturers are dumped on the market one model after another in the hope that something would work, but the consumer as a result appeared to be disoriented.
  • Buyers themselves have cooled to Android smartphones.

Kingsley-Hughes concludes:

“Many of these problems are familiar to those who watched the state of the personal computer industry over the last twenty years. Too high competition, lack of innovation and differentiation and high prices destroyed the PC industry and has forced OEMs technology to pursue increasingly slim profit margin”.

By the way, even Apple is not protected from these problems. Some analysts predict that the new iPhone 6s, which is expected out on September 9, will not be sold as good as the iPhone 6 and iPhone 6 Plus.

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