Apple Continues to Hog the Majority of Smartphone Market’s Profit

Apple and Xiaomi retain trading venues as the best-selling smartphone OEM in terms of shipping volume. However, a report indicates that the iPhone maker continued to maintain a stronghold over 75 percent of the global smartphone market operating profit in the second quarter of 2021.

In Q2 2021, iPhones accounted for only 13 percent of total smartphones shipped globally. In terms of revenue, however, the phone earned 40 percent of global sales revenue for smartphones and 75 percent of profits. Samsung accounted for a majority of the remaining 25 percent of profits. Here is what market analyst Counterpoint Research said in the report:

“Apple has been the biggest profit and revenue generator in the handset business. In Q2 2021, it achieved 75 percent of the total operating profit in the handset market and 40 percent of revenue despite contributing a relatively moderate 13 percent to global handset shipments. ”

The research firm attributed the constant revenue stream and a large increase in shipping share to the success of the iPhone 13 models.

“While this performance shows the strength of the Apple brand, it is still lower than the peak in Q4 2020, as its revenue share reached a staggering 50 percent, up from 28 percent in Q3 2020, and its profit share reached an unprecedented 86 percent “up from 51 percent in the previous quarter. Although there was a significant jump in its shipping share, from 9 percent to 17 percent in the same period, the volume of revenue share reflects the success of its first 5G-enabled iPhone series.”

The research firm also attributes Apple’s consistency and success to consumers’ interest in Apple’s ecosystem, which is at an all – time high.

“Apple also benefits from interoperability between its devices. The convenience of switching between a Mac, iPad and an iPhone encourages users of an Apple device to stay within Apple’s ecosystem by acquiring other of the brand’s devices. This is made possible by Apple’s significant control over both hardware and software, enabling a seamless shift of work on an app between multiple devices. ”

“While this has been the case for some time, it has become particularly marked with the stickiness of music, media, news, storage, etc. Apple is likely to retain this edge so that it can continue to charge premium prices for its handsets and thereby maintaining high operating profit margins. ”

Last month, the Cupertino giant was observed controlling a 57 percent share of the $ 400 + smartphone market.

Our Take

Apple’s success seems to be proof that a business can succeed even if a business operates in a closed ecosystem of expensive products. Its performance is amazing compared to several Android manufacturers selling devices with razor-sharp margins.

[Via Counterpoint Research]

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