Posted on 02/15/2016 12:51:13 PM PST by Swordmaker
2015 was a tough year for the also rans.
Hereâs an interactive (non-interactive on FR -- Swordmaker) bar chart that will give you a sense of how thoroughly Apple dominates the premium end of the mobile phone market, where most of the money is made:
To get a feel for what's going on, click (look) back and forth between the two views--market share and profit share. With 17.2% of the smartphone market in 2015, Apple captured 91% of the profit. Samsung, with 23.9% of the market, took 14% of the profit.
Canaccord Genuity analyst Michael Walkley, who posted this data last week, has been monitoring the situation for several years. His numbers arenât perfect. He's comparing smartphone market shares with mobile device operating profits, and only where they are available. (Chinese manufacturers are not required to disclose profits, so they donât.)
Sharp-eyed readers will note that Apple and Samsung shared 105% of the profit last year. (Estimates are that Xiaomi may have broken into profitability this year as well, however, Xiaomi doesn't pay any royalties on any intellectual property it uses to make its devices, so that profit is likely illusory. -- Swordmaker) That's because so many of their competitors lost money.
Apple, however, just keeps clearing the table. It took 91% of what Walkley calls the mobile market's "value share" in four of the past five quarters. In the fifth, it took 93%.
When Judge Lucy Koh required Samsung to provide a product break down of their shipped phones to determine actual infringement damages in the Apple v. samsung patent lawsuit, Samsung was forced under protest to reveal that instead of shipping, as they claimed 100% Android smartphones, the product mix was actually ~30% Android basic phones with no smart capabilities, ~40% Feature phones with only built-in functions, and no ability to download and install new apps, and ~30% actual fully functional smartphones, those with the ability to download and install apps, and do everything one would expect a "Smartphone" to be capable of doing. Therefore, of the reported 320 million "smartphones" Samsung had reportedly shipped in 2013, ~96 million were basic Android phones, ~128 million were limited function Android Feature phones, and another ~96 million were fully functional Android Smartphones.
In 2013, Apple sold 150 million iPhones, 100% of which were Smartphones.
Yet, according to the companies that compared shipments of smartphones, because Samsung claimed to have shipped 320 million Android phones which were ALL counted as smartphones, Samsung was counted as shipping 320 million "Smartphones," while Apple was counted as selling only 150 million, just 48% as many actual Smartphones. But in actual fact, Samsung only sold 96 million true smartphones. The rest of their products were NOT smartphones but lesser capable phones that just happened to use Android as an underlying OS.
These comparison companies are comparing the wrong things by including all Android phones as "Smartphones" when these clearly are not capable of being called Smartphones because they lack the functionality.
I got three words into the headline and figured I had enough.
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I’ve seen this breakout or breakdown probably a dozen or so times the past 2-3 years and some of it makes sense and some of it doesn’t.
We all know that not every Android phone is a smart phone. I’m guessing that only Galaxy 5 and 6’s count as Samsung’s smart phones.
I also know that every mobile product Apple sells is considered one.
Now, what about full featured Tab tablets and iPads? I mean the kind with full data capabilities? Do they or do they not fit into this breakdown? If they have phone numbers are they “phones”? Or are they computing devices.
If a Galaxy and iPhone are the same price what is the reason for such a profit disparity? Regionalization? I have no idea if Samsung gets away with charging Apple’s premium around the world and I know Apple doesn’t discount.
There’s more questions I have about the “why” in these reports and breakdowns than are ever answered.
It really doesn't matter, and shouldn't influence people one way or the other. Everyone should weigh the pros and cons when determining what product they need and want to purchase. However, we know they don't. By the way, my iPad has a phone number for the 3G access but it is not a "phone" so I would not put it in a mobile phone category.
I'll see if I can answer some of your questions.
Very few tablets have any phone capabilities at all. Very few of the Android devices even have Cellular capabilities at all like the upper end of the Apple iPad line for data. A tablet size phone is a bit ridiculous to carry around. Can you picture holding a new 12.9" iPad Pro up to your ear to have a phone conversation? Even the 9.8" original iPad would look ridiculous. . . otherwise you'd have to have an earpiece/microphone to have any kind of private phone conversation. They are just not too practical for the purpose.
In the Android Tablet count, they are counting every single tablet shipped regardless of capability or Android version shipped. This includes tablets made as toys that sell for $20 with Android 2.0 and no WIFI capability and only the built-in apps they include, and also the high-end $500 tablets. The toys may have only pre-school apps, no browser (remember no WIFI?), and no ability to upgrade the OS, yet they are counted as a "Smart tablet" and in competition to the iPads. In reality only a few, upper end tablets made by the high end Android makers are true competitors for Apple iPads, but they again lump all Android tablet forms, toys, etc., in the count as a Tablet competing against the iPad's market. They simply are NOT even in the same ball park.
Phablet phones are counted as phones. . . but some are counted BOTH ways depending on the company doing the comparisons. It seems it often depends on which makes Apple look worst.
On the other hand, Canalys counts all high-end Tablets as computers and by their calculations, Apple is the largest computer maker in the world by a large margin.
Samsung wound up with a severe problem in selling their smartphone line at the end of 2014 and were forced cut the production and sales costs in that area. They announced then they were going to concentrate more on their lower-end products where the profits were. The company said they had reduced their higher-end to only 19% of the mix to try and get the losses under control. In the later part of the second quarter 2015, Samsung cut prices on their flagship Galaxy S6 and Edge phones, which had been introduced at unlocked prices of $749 and $1079 respectively (priced on Amazon for unlocked MSRP phones in the month Samsung released these phones for sale.) for their introductory low end models, because of poor sales. The iPhone line has always sold from $649 to $949 from lowest to highest model (priced on Apple.com MSRP). So the Samsung was even higher priced for an introductory model than the highest capacity Apple iPhone!
Samsung is still in trouble with their bottom line.
Why is there a discrepancy in profits? Apple sells a better quality phone and doesn't discount. Samsung constantly undercuts itself by offering too many lower priced choices. They frequently offer 50% discounts with Buy One, Get One Free offers. . . or Buy One, Get Two, Three, or even FOUR Free offers. Samsung is seeking Market Share over Profit Share.
Samsung can't offer many apps the competition doesn't have since they all dip from the same Google Play store well. Since they cannot offer much that differentiates their products from all the other Android competitors in the OS, they can only compete in marginal things such as appearance, meaningless greater screen resolution, or price. They are competing against all those other Android makers who are also offering differing appearances, meaningless greater screen resolutions, and cutting prices in a race toward the lowest prices to capture that elusive market share. What else have they got?
Samsung's sales channels are all third-party. That means they have to share their profits with wholesalers, retailers, and carriers. That divides their margin down quite a bit. Those retailers include all the way down to mom-and-pop stores and corner convenience stores who may have several mid-level wholesale levels between Samsung and the eventual using purchaser, all of whom are taking a piece of what could have been Samsung's profits.
On the other hand, Apple's sales channel is extremely controlled and much shorter. While Apple does need to share their profits with some retailers, they don't have any wholesalers, and most of their retailers are either their own on-line store, their brick-and-mortar stores, their selected carriers, and also selected retailers who buy direct from Apple, not from uncontrollable middle wholesalers. This keeps the lion share of profits in Apple's tills. It also allows Apple unprecedented control over the consumer experience in buying Apple products. . . and how that customer will be treated. That kind of special treatment will result in more Apple customers wanting to buy from Apple again.
Losers!
That’s why apple products are so expensive.
Yup! Soon as they hit 15% of the market, they should have 100% of the profits and go out of business! Sound about right?
It's the Apple ability to do more and more with less and less. "Magical," to quote Steve Jobs.
No, not really. The Samsung Galaxy S6 and Samsung Galaxy Edge when they were first released as Samsung's flagship phones were MORE expensive than any of Apple's flagship iPhones.
If you compare Apple's Macs to similar placed computers from other top end computers from other brand name makers, you'll find that the Macs are competitive in price and are often less expensive. . . and always offer more included software, and far better ratings on their customer service. Apple computers have a far better repair rate than the competition as well, and generally last longer as well. Add in their resale value at end-of-use, and you will find that the total Cost of Ownership, in every study, the Macs come out far less expensive over the life of the computer than the competition. IBM has discovered that only 5% of their Corporation's users with Macs every call for technical support, compared with 40% of the users with Windows computers. That alone is a huge money savings. As a result, IBM says they are saving $270 per employee who switches to a Mac. They are now installing over 2000 Macs per week at IBM for their workers, going from zero to over 30,000 Macs installed in just six months as of October, 2015.
Apple is more expensive because they don't compete with the bottom of the barrel market share commodity products. They compete with the top tier products.
I, for one, can't wait!
And that Up Yours fella still owes us his business plan. Don't let me forget...
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