Apple iPhone Profits Represent 90% of Industry Total

By Douglas A. McIntyre Updated Jan 12, 5:29PM EST · Published Nov 23, 6:28AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Apple iPhone Profits Represent 90% of Industry Total — © courtesy of Apple Inc.

Apple (NASDAQ: AAPL) investors have worried about tepid iPhone sales, the primary factor in the company’s profits. They can take some comfort in the fact that iPhone sales are so profitable that they are nearly all of the smartphone sector’s bottom line.

A major research firm posted new data about the industry:

According to the latest research from Strategy Analytics, global smartphone profits reached US$9 billion in total during the third quarter of 2016. Apple dominated and captured a record 91 percent share of all smartphone profits worldwide.

Linda Sui, Director at Strategy Analytics, added:

We estimate the global smartphone industry realized total operating profits of US$9.4 billion during Q3 2016. Apple dominated and captured a record 91 percent share of all smartphone profits worldwide. Apple’s ability to maximize pricing and minimize production cost is hugely impressive and the iPhone continues to generate monster profits. Huawei, Vivo and OPPO are the next three most profitable smartphone vendors globally this quarter, but they are still a long way behind Apple.

[nativounit] Samsung, the leader in industry sales by global units shipped, is notably absent. In early October it recalled all of its Galaxy Note 7 phones. The model was the company’s best hope to counter the iPhone 7 and pick up market share in China from local manufacturers Huawei, Vivo and OPPO.

Should iPhone 7 sales pick up over the holidays, the profit margin benefits should makes Apple’s net income swell. For a hardware company, Apple has extraordinary margins. In the most recent quarter, which ended September 24, net income was $9 billion on $46.9 billion in revenue. Apple has forecast revenue for the current quarter of between $76 billion and $78 billion. Apple’s management has been known to be extraordinarily conservative with its forecasts.

Apple has the chance to marry sharply rising revenue with massive margins in the next quarter. It is rare in any industry that one company owns over 90% of the bottom line. [wallst_email_signup]

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.