Apple Dominates Over 90% of Cellphone Industry Profit
The cellphone industry is being commoditized. We see faster reiterations and improvements than we did before, to the extent that it’s become a predictable annual routine by most manufacturers.
However, despite its commoditized nature, it’s Apple and Samsung that dominate the profit. Brands like HTC, Sony, Microsoft, Huawei are merely playing as fillers, picking up scrapes as the two giants absorb the bulk of the profit available in the industry.
This is especially true for Apple, who now according to Bloomberg dominates the business by accumulating over 90% of the net profit from the cellphone industry. Samsung takes most of what is left, while the remaining bit is left to be shared by others.
This shouldn’t be confused with the number of sales though; Samsung still leads the charge in that category, shipping over 72 million in the past year while Apple shipped 48 million cellphones.
However, Samsung’s more diverse range of phones – which include cheaper models – meant that despite selling more, the profit would be substantially less when compared to Apple, who limit their quantity to sell flagship, high-end cellphones exclusively (save for 2013, which saw Apple lose a lot of market share due to their iPhone 5C).
While Apple may see this as a compelling success, many renowned personnel in the industry see a technological industry turned into a commoditized consumer war between giants, and a duopoly that only truly benefits themselves.
Kirt McMaster, CEO of Cyanogen, puts this in perspective perfectly:
“[Phones have] gone from being technological devices to fast-moving consumer products. It’s like Coke and Pepsi now. That’s the war these companies are fighting. It’s not a sexy business anymore.”