Apple and Samsung aren’t just making all the money in the smartphone hardware business. They’re making more than all of it.
According to a report from Canaccord Genuity, the two handset makers combined to capture 108 percent of all profits made in the smartphone sector in the second quarter of 2012.
Though the math might seem fuzzy, there’s a simple explanation: not all profits are positive. While the common term is “losses,” in terms of financial reporting they’re just “negative profits.” And there were a lot of them last quarter.
Research In Motion, Nokia, Motorola, and Sony all posted losses, the report said, despite shipping plenty of phones. Because those losses subtracted from the overall sum of profits that Apple and Samsung accumulated, the top two appear to defy the laws of mathematics.
Apple and Samsung Both #1
Digging deeper into the numbers reveals another interesting story. Although Samsung sold more smartphones in the second quarter – as reported by IDC last week – Apple claimed twice the profits.
Apple’s share of the smartphone profit pie was 71 percent with $7 billion, while Samsung’s was 37 percent or $3.7 billion, according to Investor’s Business Daily. (HTC was also profitable, to the tune of $275 million.) That means Apple is making significantly more on each iPhone it sells than Samsung earns from its handsets. With margins that high, Apple doesn’t have to lead in market share; it just has to stay in the game to rake in the cash.
The report did point out that iPhone sales are traditionally weak during the summer, since a new model typically comes out in the fall. Android smartphones, meanwhile, are constantly being released from Samsung as well as other manufacturers, so there’s always a new model to try.
Who’s On Third?
With Android and Apple’s iOS running on 82.7 percent of all smartphones, there’s precious little market share for other competitors to fight over. RIM’s BlackBerry smartphones were down to 4.8 percent share in the second quarter, while Windows Phone handsets made up only 6 percent.
Still, the trend lines look better for Microsoft than RIM. Windows Phone share is slowly increasing, and a new version this fall could take Windows Phone over 10 percent share next year, the report predicted.
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