Apple Bagged 57% Of $12.5B In Smartphone Profits In Q1, Android 43%; Samsung 95% Share Of That, “More Than Google”

Posted: May 15, 2013 in Android, Apple, Google, GT
Tags: , , , ,

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Apple continues to lead both as the single-most
profitable smartphone maker, and by default the most
profitable platform, taking 57% of $12.5 billion in
smartphone operating profits in Q1, according to
figures out from Strategy Analytics today. Android
took 43%, equating to $5.3 billion, Neil Mawston, chief analyst with the firm, tells TechCrunch. The figures come as analyst houses are releasing
various estimates for how smartphones have been
selling in Q1. Strategy Analytics have published
some numbers that tell the story in a different way. Yes, Android is dominating smartphone sales
(Gartner’s figures yesterday noted that Google’s
platform took nearly 75% of all sales in the three
month period). Yes, Samsung continues to widen its
lead against Apple — now at 31% of all smartphone
sales. But it still has a ways to go before it tops Apple, which has built its brand as the premium
offering. (One possible reason why it has resisted up
to now launching a low-cost, more cheaply made
handset.) Within the Android portion of smartphone profits,
Samsung is taking the lion’s share and more. Its $5.1
billion in operating profit works out to 95% of all
Android revenues, and 40.8% of all smartphone
operating profits overall. Bad news for other vendors/
platforms like Nokia and BlackBerry: their collective profits totalled just $300,000 for the quarter, working
out to a 2.2% share of profits. This also shows that Samsung has come quite some
way in working out its profitability engine in the last
year as it has continued to grow. This time a year
ago, it was generating only about half the revenues of
Apple in mobile devices (and that was counting
Samsung’s smartphones as well as its feature phone handsets), and accordingly a thinner proportion of
profits. These numbers largely tally with some released
earlier this month by Canaccord Genuity (via
AllThingsD). The difference lies at the lower end,
where Canaccord Genuity says that vendors beyond
the top two effectively took nothing. With these numbers coming out just as Google I/O
kicks off, Strategy Analytics again throws light on just
how disproportionate Samsung’s weight is in the
Android ecosystem, and how its sales dominance
works out to larger economies of scale and profit: its
$5.1 billion in operating profits works out to 95% of all profits made on Android, with LG the only other
vendor to break out from “others,” with a meagre 2.5%
of profit share on $100,000 in operating profits. “An efficient supply chain, sleek products and crisp
marketing have been among the main drivers of
Samsung’s impressive profitability,” Woody Oh,
Strategy Analytics’ senior analyst writes. In contrast,
“LG delivered a small profit during the quarter, but it
currently lacks the volume scale needed to match Samsung’s outsized profits.” Just think of what that means for the even smaller
Android OEMs. Mawston believes that Samsung is actually
generating even more revenue than Google itself from
Android, counting things like mobile advertising and
apps revenue. “We believe Samsung generates more revenue and
profit from the Android platform than Google does,” he
writes. As Google’s Android head Sundar Pichai
today reported during that I/O keynote that there have
been some 900 million Android activations worldwide,
this begs the question of who is in the driver’s seat on the platform — and by association smartphones
worldwide. “Samsung has strong market power and it may use
this position to influence the future direction of the
Android ecosystem,” Mawston writes. “For example,
Samsung could request first or exclusive updates of
new software from Android before rival hardware
vendors.” If those kinds of requests are likely to get made, it will get harder and harder for Google to resist
and continue maintaining the level playing field it’s
tried to create for its mobile platform. Tablets are not included in any of the above
calculations, Strategy Analytics says.

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