Here is a number that will blow your mind: Apple earned 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier according to analyst.
If it's not an iPhone, it's not an iPhone is Apple's latest commercial slogan. The slogan is total nonsense, but the money Apple makes with the iPhone actually should drive the competition out of the smartphone market.
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The Wall Street Journal reports that Cannaccord Genuity managing Director Mike Walkley estimates that Apple is reaping 92% of profits in the smartphone market. Apple is doing this with just 20% market share. The profit share has increased from 65% a year ago by almost 30%. Samsung earned 15% of profits. If you can read and do math at the same time you will be wondering why Apple and Samsung make more than 100% of the smartphone market operating income.
The reason for this is that other smartphone makers broke even or have lost money in Canaccord’s calculation model.
The mind blowing aspect of these numbers is that Apple has still such a huge potential for growth. The iPhone has still just 20% marketshare. Apple figured out how to make incredible profits from the iPhone. Each small market share gain is resulting in huge amounts of profits.
All signs are pointing towards Apple increasing market share with the iPhone 6S. The company has reportedly ordered a record breaking number iPhone 6S units from suppliers. The competition on the other hand struggle. Samsun has forecasted lower profits, Microsoft wrote off almost all value of the smartphone business the company bought from Nokia and HTC reported a loss.
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Apple's smartphones sell for about three times Android phones are selling. While the price point of Android powered phones is going down, Apple managed to increase the prices with the iPhone 6 and iPhone 6S - If it's not an iPhone, it doesn't make any money.