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Apple iPhone Profits Represent 90% of Industry Total
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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.
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.
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