Apple gobbles 89% of Q4 Smartphone Profits pushing Android OEMs to the bottom

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Google’s Android has annexed the market share worldwide, now accounting for over 80% of all smartphones shipped worldwide. But when it comes to profit making, Apple steals the show as it continues its focus on premium devices. As per Strategy Analytics, Apple’s Q4 last year accounted for 89% of all smartphone profits, equalling to a staggering $18.8 billion, compared to Android’s 11% equating to $2.4 billion.

The woes for Android is only lessened by the fact that other platform players like Microsoft, Blackberry and Firefox went back empty pocket.


The figures above relate to the profits generated by handset makers, and not other components of the service ecosystem and potential profits made by app publishers and others, though its interesting to note that the overall smartphone handset profits were up by 31.4% compared to the previous year’s Q4.

When we focus on Android OEMs to figure the best performer, the results speak of the growing competitions for Samsung. According to Neil Mawson, research director for Strategy Analytics, the three big profit drivers for Android are Samsung, Huawei and Xiaomi. Though Samsung did not share the exact shares, it did mention that it “accounted for well over half of all Android smartphone profits globally in Q4 2014”.

It is interesting to note that, in 2013, Samsung accounted for 95% of Android profits, with Apple accounting for 57% of profit at the same time. That was a time when there was a significant congruence between Apple and the South Korean handset maker both in terms of unit sales and revenues. Though Apple’s Q4 (2014) success which made it the most profitable company of any quarter, ever was no shock, but what’s striking is just how wide the gap has become.

The bigger picture seems to be that Android handset makers are in something of a race to the bottom at this point: the markets that are driving the most traction in smartphone adoption are the emerging economies, where majority of the consumers are price sensitive. Thats forcing the handset makers to produce a number of models that are pulling down the average price for devices, which long ago dropped south of $100.

Apple may have missed the opportunity of acquiring critical mass in market share in these markets, but it has compensated more than enough by focussing on its strengths. For example, In China, Apple has been posting record sales, reporting sales of $16 billion in the country in Q4.

Seems like Apple’s strategy of premium products and lean logistics is clicking, where as Android’s weak profitability for its hardware partners might worry Google. If major handset manufacturers, like Samsung and Huawei, are unable to make appreciable profits from the Android ecosystem, alternative platforms such as Microsoft, Tizen or Firefox may capitalise on the situation.

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