While Samsung shipped roughly double the amount of smartphones Apple did last quarter, market share still isn't translating into profit share, as Apple retains an absolutely massive 73% share of smartphone and tablet profits. And that was during a slow quarter where people started anticipating the next iPhone. John Paczkowski reports for All Things D:
So while Samsung outselling the iPhone 2-to-1 is a nice milestone and no doubt a point of pride for the Korean company, it’s not the financial victory that it might first appear. Samsung might be the mobile industry’s king, but Apple still rules overall in the most important metric of all: Profit.
What's more astounding is that's 73% of profits (and 43% of revenue) based on 6% of smartphone and tablet shipments. Every year to date, Apple has sold more iPhones than all previous years combined. iPhone 3GS sold more than iPhone and iPhone 3G combined. iPhone 4S is selling more than iPhone, iPhone 3G, iPhone 3GS, and iPhone 4 combined. Next quarter is the big one, with a new iPhone, perhaps an iPad mini and more to drive holiday sales. If Apple can continue growing at that scale, and they can do it without significantly increasing costs and decreasing margins, how much profit share can they capture? How high can Apple go?
At the same time, while Samsung is doing fine, how long can the HTC, LG, Nokia, and BlackBerry's of the world continue to fund innovation and competition when they're profit neutral or negative? Does it leave the doors open for alternative business models, like Amazon's content-subsidized Kindle, or for new players, like Facebook?
Source: All Things D