Apple's iPhone Domination Is Total (At Least in Terms of Profit)
The research firm rates the iPhone as the top smartphone for the second year running, with the latest iPhone 4S model capping another dazzling year of growth for the entire Apple handset portfolio.
While other vendors, most notably Samsung and HTC, are battling strongly to achieve the enviable appeal of Apple, one of the principle issues these aspiring smartphone players face is the colossal profits Apple is generating.
A recent report issued by the investment bank Canaccord Genuity estimates that while Apple only accounted for 4.2 per cent of handsets shipped in the third quarter of this year, it managed to collect more than half of the smartphone industry's profits.
According to Canaccord Genuity analyst Michael Walkley, within the eight top handset vendors in the world, Apple accounted for 52 per cent of total operating income between them. "With only 4.2 per cent global handset unit market share, it is remarkable Apple captures more than 50 per cent of industry profits," wrote Walkley in a research note last week carried by Boy Genius Report.
Canaccord Genuity now forecasts Apple to ship 29 million iPhone handsets in the fourth quarter of 2011, up from the firm's earlier estimate of 27 million. "Our monthly channel checks indicated very strong sales trends for the new iPhone 4S and lower priced legacy iPhone 4 and 3GS models," Walkley wrote.
Samsung, meanwhile, accounted for 29 per cent of third-quarter profit among the top eight handset suppliers, up from 18 per cent in the quarter ending in June. Much of this leap forward has, according to Walkley, been due to its Android-powered Galaxy S II smartphone.
As an indication of the mountain Nokia has to climb, albeit that its new Lumina Windows Phones smartphones have received praise, Canaccord Genuity states that the Finnish company's handset profits margins have continued to decline, standing at 4 per cent in the third quarter. In comparison, Apple's handset profits margins have continued to climb steadily and now stand at 35 per cent.
- IDC: Smartphones blitz Europe with 100% growth
- IDC: Smartphones outstrip feature phones in Western Europe
- Analyst: Smartphones at saturation point, profitability under threat
- Report: Apple demands Samsung stop European sales of Galaxy phones, tablets
At the time this article was published The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.