Apple Dominates 92% of Operating Margins in the Smartphone Industry
John Williamson / 3 years ago
Despite only having a market share of less than 20%, Apple’s operating profits accounted for 92% of the top eight smartphone manufacturers according to Canaccord Genuity managing director, Mike Walkley. This particular analyst told The Wall Street Journal that, Apple’s revenue share dramatically increased from 65% in the first quarter of 2014 to 92% in Q1 of 2015. Strangely enough, the research outlined Samsung controlled 15% of operating profits which equates to 107% market share from these two companies. At first, this figure seems very dubious but 107% signifies the amount of hardware companies folding or experiencing financial difficulties.
So how does Apple maintain such a high gross profit margin? Mostly from brand awareness and marketing prowess. Apple is a hugely recognizable name and manages to evoke a sense of luxury to customers opting to pay the high handset prices. In comparison, Android phones are relatively affordable barring the flagship models from Samsung, HTC and LG. Apple’s strategy involves limiting the amount of devices available and this simplifies the buying process for those who aren’t technologically minded. Additionally, Apple products tend to hold their value exceptionally well and this might provide some reassurance on the initial investment.
The data isn’t surprising and once again illustrates how difficult it is for any mobile manufacturers to dethrone Apple’s monetary monopoly. Thankfully, there are viable alternatives and the Android market has a wealth of handsets to suit various price points. Unfortunately, the Windows Mobile scene isn’t doing too well and Blackberry are in deep trouble. Nevertheless, it seems Apple’s ability to charge a hefty premium for their products isn’t going to change anytime soon and other companies can only marvel at their advertising power.
Thank you The Wall Street Journal for providing us with this information.