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While Apple’s iPhones only account for a small percentage of the smartphone market share, they certainly take up a majority of the profits.
A new report by industry research firm Canaccord Genuity states that Apple took home 92% of the total operating income earned by the world’s top eight smartphone manufacturers in the first quarter of 2015. The figure is an impressive jump up from only 64% in the first quarter of 2014. However, even more impressive is that Apple phones only account for 20% of smartphones sold around the globe. How does Apple achieve such numbers? Simple – Apple has the market cornered for high-end smartphones.
While iPhones may not sell at nearly the rate that Android phones do, Apple’s phones are much more expensive. According to CNET, the average selling price of an iPhone in 2014 was $624. The average price of an Android smartphone in 2014, by comparison, was $185. Although manufacturers such as Samsung, the distant second in profit earnings, have attempted to take on Apple with luxury Android phones such as the Galaxy S6 Edge, the majority of Android phones sold are more on the budget-friendly end. Apple only sells one phone – the iPhone, albiet with several different models – and the iPhone is a luxury item.
The release of the iPhone 6 and the iPhone 6 Plus last year, Apple’s first foray into the larger-screen smartphone market, also accounts for some of the jump in revenue. The release of the 6 and the 6 Plus saw the largest percentage of Android customers jumping ship to Apple, ever. The phones were also huge sellers in China’s burgeoning market, with sales in the world’s most populous country outnumbering sales in the US for the first time this year.
While the numbers are indeed impressive, the question whether or not Apple will be able to keep such a strong hold on smartphone profits remains. Will the release of the iPhone 6S this fall keep the momentum going, or will it drop back into the 60-70% range that it held in 2014?