Global Phone Profits: Apple 66%, Samsung 17%, Everyone Else: Unlucky 13% - Forbes

Apple captured 32% of overall global revenue in the mobile phone industry and 66% of all profit in the third quarter of 2019, according to a new report from Counterpoint Research.

In distant second?

Samsung, with just 17% of profit, in spite of growing 8.4% year-over-year in Q3, and selling between 20 to 30% of all mobile handsets on the planet.

Global handset profit share in the third quarter of 2019
Counterpoint Research

Coming in third, fourth, and fifth are Chinese smartphone brands: Oppo, Vivo, and Xiaomi. While they sell a lot of hardware, most of it is in very price-competitive markets like China and India.

Apple makes huge revenue on devices, of course.

But Apple’s revenue in the mobile space seems secure even beyond what it makes from hardware, according to Counterpoint, thanks to services like iCloud, Apple Arcade, Apple Music, News+, and more. All told, it’s not hard to spend $100/month as an Apple user on additional subscription-based software, storage, and services.

The loyal premium user base in the major markets like the USA, EU and Japan is one of the reasons that Apple can still operate at a profit level that its competitors can only wish for. Now with a strong service strategy, Apple’s overall ecosystem is strong enough to guarantee it a steady inflow of revenue in the coming years. In the immediate future, we believe that Apple’s profit for the holiday season will increase with the new line up of iPhones gaining good traction.

Karn Chauhan, Counterpoint Research

The Chinese brands are expanding outside China, however, so Apple can’t rest on its laurels. And Samsung is shipping higher-margin handsets like the Galaxy Fold. At around $2,000, Samsung seemed to tease that it had sold almost a million units, before that number was debunked.

A million Galaxy Folds would be around $2 billion in handset revenue.

That might currently be wishful thinking for now, but as prices go down and quality increases, the Korean manufacturer will see increased sales of that and its other higher-end units.

Overall profits down 11%

The bad news for all manufacturers is that while individual boats might rise and fall, the tide is going down. Profits for hardware manufacturers dropped 11% year-over-year in Q3, even as smartphone shipments remained flat at around 380 million units.

Even Apple failed to increase profits:

Overall global handset profits declined 11% YoY to USD 12 billion in Q3 2019 due to an increased mix of entry to mid-tier products and a fall in revenues for key smartphone OEMs. Within the top ten brands, only Samsung and Huawei managed to increase their revenue on an annual basis.

Karn Chauhan, Counterpoint Research

What will drive growth in the future?

Analysts continue to pin their hopes for a renaissance in the smartphone market on the emergences of 5G technology, which will drive handset upgrades. The China-based manufacturers, Counterpoint says, are aggressively driving 5G adoption. That includes Huawei, Oppo, Vivo, and Xiaomi.

2019-12-22 16:14:31Z
https://www.forbes.com/sites/johnkoetsier/2019/12/22/global-phone-profits-apple-66-samsung-17-everyone-else-unlucky-13/