While Apple doesn’t ship more phones than anyone else, a new report today shows that it continues to take home most of the global smartphone profits – even before the launch of the iPhone 13.
In the second quarter of the year, iPhones accounted for only 13% of global shipments, but it’s a very different story when it comes to revenue and profit …
Counterpoint says iPhones accounted for 40% of global smartphone revenue, and 75% of profits.
Apple has been the biggest profit and revenue generator in the handset business. In Q2 2021, it captured 75% of the overall handset market operating profit and 40% of the revenue despite contributing a relatively moderate 13% to global handset shipments.
While this performance shows the power of the Apple brand, it is still lower than the peak of Q4 2020 when its revenue share reached a staggering 50%, up from 28% in Q3 2020, and its profit share reached an unprecedented 86%, up from 51% in the previous quarter. While there was a significant jump in its shipment share, from 9% to 17% in the same period, the extent of its revenue share reflects the success of its first 5G-enabled iPhone series.
The market intelligence firm says that consumers are more interested than ever in Apple’s ecosystem.
Apple also benefits from interoperability between its devices. The convenience with which one may shift between a Mac, iPad and an iPhone encourages users of one Apple device to stay within the Apple ecosystem by acquiring other of the brand’s devices. This is made possible by Apple’s significant control over both hardware and software, enabling a seamless shift of work on an app between multiple devices.
While this has been the case for some time, it has become particularly pronounced with the stickiness of music, media, news, storage, etc. Apple is likely to retain this edge, enabling it to continue charging premium prices for its handsets, thus maintaining high operating profit margins.
Apple’s profitability reflects the fact that it sells only premium devices, while many Android brands sell handsets at a range of price points, some of which are barely profitable, or even lose money. The company noted last month that Apple had a 57% share of the $400+ smartphone market.
When it comes to the remaining 25% of profits, Samsung accounts for the bulk of them, while other brands made negligible profit – even Xiaomi, which ships more phones (and occasionally watches) than Apple.