Can Android Erode iPhone's Profit Share?

[steveknowshow]

We all know that the iPhone is crushing Android in profit share.

But can Apple keep this up if Android keeps gaining market share?

I'm talking 5-10 years down the road.

 

[SomeDudeAsking]

Samsung's profits will surpass that of Apple's by summer.

 

[Infinitewisdom]

5-10 years is a hell of a long time in the tech industry. We literally just got the first iPhone five years ago. Tough to predict what'll happen in another five years.

I like the shakeups on the management team and I hope that means we see significant innovations that get people super excited about upgrading again. The general consensus seems to be that last couple of upgrades haven't really excited people in the same way that perhaps the original iPhone or the iPhone 4 did. If they can do that, then I see Apple maintaining the lion's share of profit.

Whether of not Samsung remains as strong as it is currently, I don't know. I'd expect a third entrant of some sort to shake things up. Windows Phone 8? Another Android manufacturer.

 

[scaredpoet]

We all know that the iPhone is crushing Android in profit share.

What exactly is "profit share?"

And, are you talking about Samsung? Because Samsung isn't Android. Note that "Android" is open source, free software at its core. Android isn't a company... in and of itself, it makes no profit, and so probably won't have "profit share" to speak of.

This is why it's silly to remark on how much vendors like Samsung are making in profit above Google on Android. Of course that's going to happen: Samsung sells the hardware. Google gives them the software, and makes a cut on any paid apps. But their bread and butter has always been targeted advertising, and will continue to be.

People need to stop focusing on who's making more profit, and instead on what works best for them. So many people are coming up with completely meaningless metrics like measuring the "profit share" of something that's basically free, when they don't even know what they're talking about.

And it's this same mentality, sadly enough, that's exacerbating RIM's situation. It's true they aren't very relevant to most iOS/Android saturated markets, but the situation is only as "desperate" as it is because these "analysts" keeping obsessing and jabbering how little "profit share" they have. When the numbers actually point to RIM still gaining subscribers over all... just not in places where analysts pay attention.

 

[nuckinfutz]

The short answer is no.

Marketshare means nothing as witnessed by Apple's margins on notebook and desktop Macs despite there being low end PC offerings abound.

Apple's dominant area is the premium sector. While HP, Dell, Asus and others pound out low margin PC they cannot gain traction in the higher margin stuff because Apple owns that customer.

Android phones aren't going to change this. They too will pound out low cost low margin phones and people will laud the marketshare but the high end will be owned by Apple just like it is for PC

 

[dalbir4444]

The short answer is no.

Marketshare means nothing as witnessed by Apple's margins on notebook and desktop Macs despite there being low end PC offerings abound.

Apple's dominant area is the premium sector. While HP, Dell, Asus and others pound out low margin PC they cannot gain traction in the higher margin stuff because Apple owns that customer.

Android phones aren't going to change this. They too will pound out low cost low margin phones and people will laud the marketshare but the high end will be owned by Apple just like it is for PC

I wouldn't be too sure about that. If we are comparing phone manufacturers, Samsung's profits have quickly closed the gap to Apples' in the past two years.

 

[Rogifan]

The bigger question is can anyone outside of Apple pose a threat to Samsung? Right now it seems the only Android (or Windows) OEM making money is Samsung. We could have a future where the only smartphone players are Apple and Samsung.

 

[siiip5]

The short answer is no.

Marketshare means nothing as witnessed by Apple's margins on notebook and desktop Macs despite there being low end PC offerings abound.

Apple's dominant area is the premium sector. While HP, Dell, Asus and others pound out low margin PC they cannot gain traction in the higher margin stuff because Apple owns that customer.

Android phones aren't going to change this. They too will pound out low cost low margin phones and people will laud the marketshare but the high end will be owned by Apple just like it is for PC

I agree with everything you said, except your last bit.
Dalbir444 pretty much nailed that part.

But back on the PC, if Microsoft can get its act together with Windows 8 and manufacturers keep pushing the Macbook Air clones out with better and better specs, oops, I mean Ultrabooks, the potential is ripe to pull a lot of potential buyers away from Apple. Of course, that is a really big IF.

 

[dalbir4444]

The bigger question is can anyone outside of Apple pose a threat to Samsung? Right now it seems the only Android (or Windows) OEM making money is Samsung. We could have a future where the only smartphone players are Apple and Samsung.

I'm hoping LG can make a comeback with the Nexus 4.

 

[nuckinfutz]

I wouldn't be too sure about that. If we are comparing phone manufacturers, Samsung's profits have quickly closed the gap to Apples' in the past two years.

Samsung's uniquely aligned for profit because of their vertical businesses (displays, DRAM, Foundry)

They could move to Windows 8 and still reap the same profits because the common denominator is their vertical biz.

So there's nothing really in Android itself that has the power to usurp Apple's profits and in fact we're only two revisions in of iCloud support on iOS which is going to be huge for the Apple ecosystem.

Microsoft will begin to leverage their desktop platform to bootstrap Windows 8.


It's going to be interesting to see how Google and Samsung's relationship plays out. Google's play for Android was mobile advertising yet Samsung is beginning to take the lion's share of profit and that means a bit more control than Google may be comfortable with. Watch this relationship and see how it turns out now that Google owns Motorola.

This is just getting fun.

 

[michaeljohn]

Samsung makes most of their money off their TVs, computers, washers and dryers, stoves, microwaves...not $50 Android phones given away when you buy another one. The Galaxy line are their only high end phones. The other 20 or so models they make are bargain basement garbage phones priced so low they probably lose money on them. Same goes for LG. My 55 inch LG TV is made much better than any LG phone I have ever held. HTC is in the toilet financially. So no, I cant see any Android manufacturer coming anywhere close to the money Apple makes off the iPhone.

 

[dalbir4444]

Samsung makes most of their money off their TVs, computers, washers and dryers, stoves, microwaves...not $50 Android phones given away when you buy another one. The Galaxy line are their only high end phones. The other 20 or so models they make are bargain basement garbage phones priced so low they probably lose money on them.

Sources?

 

[michaeljohn]

Sources?

Its been posted numerous times, even in here I believe. Its in a couple of the threads regarding Apple suing Samsung. Some people were saying it didnt matter much because they make most their money off appliances and not their phones with links to articles on how Samsung makes their profits. You go look it up if you want to read it so bad, I have already seen it

 

[dalbir4444]

Its been posted numerous times, even in here I believe. Its in a couple of the threads regarding Apple suing Samsung. Some people were saying it didnt matter much because they make most their money off appliances and not their phones with links to articles on how Samsung makes their profits. You go look it up if you want to read it so bad, I have already seen it

I'm sure those conversations are completely unbiased and trustworthy just like yours usually are. /s

Samsung's solid performance is mainly attributed to increased sales of handheld phones and stronger demand for display panels. The Mobile Communications Business posted 26.25 trillion won in revenue for the quarter, accounting for more than half of Samsung's total revenue.

http://www.engadget.com/2012/10/25/samsung-Q3-earnings/
http://www.samsung.com/us/aboutsams...se/downloads/2012/20121026_conference_eng.pdf

 

[unlinked]

The bigger question is can anyone outside of Apple pose a threat to Samsung? Right now it seems the only Android (or Windows) OEM making money is Samsung. We could have a future where the only smartphone players are Apple and Samsung.

HTC may be doomed but they still (currently) make a profit.

 

[matttye]

So there's nothing really in Android itself that has the power to usurp Apple's profits and in fact we're only two revisions in of iCloud support on iOS which is going to be huge for the Apple ecosystem.

Sure there is: popularity. Manufacturers build to meet demand. They're not going to order millions and millions of parts from Samsung for Windows Phone devices if they're only going to sell a handful. However, Android is very popular and will sell.

Obviously the "handful" thing isn't meant to be taken literally

 

[Oletros]

not $50 Android phones given away when you buy another one.

Apart that your claim is totally false, you know that carriers pay full price for those phones, don't you?

 

[nuckinfutz]

Sure there is: popularity. Manufacturers build to meet demand. They're not going to order millions and millions of parts from Samsung for Windows Phone devices if they're only going to sell a handful. However, Android is very popular and will sell.

Obviously the "handful" thing isn't meant to be taken literally

Android is still a carrier driven platform. Verizon has been slamming people into Android phones for a while now. Even when they launched the iPhone they still heavily promoted Android phones in stores. Why? Because they got what they wanted from Google ..control. Google had to create their Nexus lineup so that the carrier crap wasn't there.

It's funny how people on here laud Google. They sold out before they even hit the battle field. I've got zero respect for Google. They want me to bend over and take just like they have.

Note that iOS users don't have to get carrier blessing to update their software and because of that many choose to upgrade quickly.

http://www.cultofmac.com/197280/one-month-later-ios-6-market-share-climbs-beyond-60-report/

There's no chance that Android harms Apple's margins so long as Apple continues to open up retail stores.

 

[matttye]

Android is still a carrier driven platform. Verizon has been slamming people into Android phones for a while now. Even when they launched the iPhone they still heavily promoted Android phones in stores. Why? Because they got what they wanted from Google ..control. Google had to create their Nexus lineup so that the carrier crap wasn't there.

It's funny how people on here laud Google. They sold out before they even hit the battle field. I've got zero respect for Google. They want me to bend over and take just like they have.

Note that iOS users don't have to get carrier blessing to update their software and because of that many choose to upgrade quickly.

http://www.cultofmac.com/197280/one-month-later-ios-6-market-share-climbs-beyond-60-report/

There's no chance that Android harms Apple's margins so long as Apple continues to open up retail stores.

Android is taking market share that might otherwise have been Apple's - even though it's not something that Apple has actually "lost" (only speculatively lost), that could be classed as usurping Apple's (potential) profits, as Apple probably would've had said market share were it not for Android.

Android is a threat, clearly.

 

[ChazUK]

Its been posted numerous times, even in here I believe. Its in a couple of the threads regarding Apple suing Samsung. Some people were saying it didnt matter much because they make most their money off appliances and not their phones with links to articles on how Samsung makes their profits. You go look it up if you want to read it so bad, I have already seen it

Michael.

2012: http://www.guardian.co.uk/technology/2012/oct/26/samsung-galaxy-profit-shares

Strong sales of Galaxy phones propelled Samsung's quarterly profits to a record high, but its shares dropped on the prospect that its growth will slow in an increasingly crowded smartphone market.

2011: http://www.bbc.co.uk/news/business-16441330

South Korean technology giant Samsung says it made record profits in the last three months of 2011 - up more than 70% on the previous year.

That is largely thanks to booming sales of its smartphones.

I'm not saying The Guardian or The BBC are more credible than good old michalejohn, but could you please share these financial results which were not helped by Samsung's strong phone sales?

I would have thought you would have had a few quote notifications from people asking for clarification so here is another one.

Can you deliver?

 

[dalbir4444]

Michael.

2012: http://www.guardian.co.uk/technology/2012/oct/26/samsung-galaxy-profit-shares


2011: http://www.bbc.co.uk/news/business-16441330



I'm not saying The Guardian or The BBC are more credible than good old michalejohn, but could you please share these financial results which were not helped by Samsung's strong phone sales?

How dare you question michaeljohn?

 

[nuckinfutz]

Android is taking market share that might otherwise have been Apple's - even though it's not something that Apple has actually "lost" (only speculatively lost), that could be classed as usurping Apple's (potential) profits, as Apple probably would've had said market share were it not for Android.

Android is a threat, clearly.

Same could be said for lowend PC ..they sell in huge numbers but Apple's profits are continuing to rise along with increased sales. Apple not going to play in cheap phone arena. $450 outright is about as low as they're going to go. Plus Microsoft and Apple are going to extract as many licensing fees as they can from "free" Android.

 

[Switchback666]

Same could be said for lowend PC ..they sell in huge numbers but Apple's profits are continuing to rise along with increased sales. Apple not going to play in cheap phone arena. $450 outright is about as low as they're going to go. Plus Microsoft and Apple are going to extract as many licensing fees as they can from "free" Android.

The only product apple have that is "comparable" to laptops and competes with hp and dell is the ipad and i dont think it outsell those, regarding profit if you compare mac computers sells/profit with dell or hp they dont hold a candle.

Apples baby is iOS, if they loose that they are back to underdog apple again.

 

[dalbir4444]

Samsung's uniquely aligned for profit because of their vertical businesses (displays, DRAM, Foundry)

They could move to Windows 8 and still reap the same profits because the common denominator is their vertical biz.

So there's nothing really in Android itself that has the power to usurp Apple's profits and in fact we're only two revisions in of iCloud support on iOS which is going to be huge for the Apple ecosystem.

Microsoft will begin to leverage their desktop platform to bootstrap Windows 8.


It's going to be interesting to see how Google and Samsung's relationship plays out. Google's play for Android was mobile advertising yet Samsung is beginning to take the lion's share of profit and that means a bit more control than Google may be comfortable with. Watch this relationship and see how it turns out now that Google owns Motorola.

This is just getting fun.

Not quite. Over half of Samsung's revenue for the last quarter came from the mobile industry.

 

[nuckinfutz]

The only product apple have that is "comparable" to laptops and competes with hp and dell is the ipad and i dont think it outsell those, regarding profit if you compare mac computers sells/profit with dell or hp they dont hold a candle.

Apples baby is iOS, if they loose that they are back to underdog apple again.

Apple owns a commanding marketshare of computers over $1000 in the consumer realm.

http://arstechnica.com/apple/2009/07/apple-nabs-91-of-premium-computer-market-in-june/