Apple’s Share Of Smartphone Profits? 92 Percent!

Of the nearly thousand or so smartphone makers in the world, one of them is racking up 92 percent of profits, leaving the remain 999 to fight over that 8 percent sliver.

Two guesses who the big winner is. The first one doesn’t count.

According to estimates from Canaccord Genuity Managing Director Mike Walkley, Apple snapped up 92 percent of the total operating income from the world’s top eight smartphone makers in Q1 2014. It’s nearest rival — Samsung — grabbed up 15 percent.

This may leave the more math savvy of our readers scratching their heads — since it seems as though Apple and Samsung have achieved an impossible 106 percent of industry profits — but that is because you are assuming everyone in the top eight made money. They didn’t — some broke even, some actively lost money.

The headlines back up the analysis. Apple is spinning up a record number of new phones while Samsung is reporting smaller than hoped for profits. HTC is losing money, and Microsoft wrote down the value of the smartphone business it bought off of Nokia at a stunning 80 percent rate.

Perhaps more amazing than the profits themselves is how Apple is getting there. Twenty percent of smartphones sold are iPhones. The magic is in the lack of dilution — “not Apple” people flock to Android — but Android is an OS for any number of operators who (unable to compete on software) compete on hardware or price. Slashing prices is more effective for Android buyers.

“There is that danger that you get trapped in the middle,” said Neil Mawston, executive director at market researcher Strategy Analytics. Mawston told The Wall Street Journal that the problem for Android members is being trapped between the high-end (Apple) and the least expensive versions of a smartphone they can manufacture in China.

“That high-end tier has really shifted away from Samsung to Apple,” noted Walkley.

So how is the competition taking the news that Apple is eating their lunch and eyeing their dinner?

Representatives of Samsung and HTC didn’t comment. Neither did Microsoft. A spokesman for China’s Huawei Technologies Co. said the company’s consumer business is profitable and growing more so as the firm’s higher quality phone begins to sell.

An Apple spokeswoman declined to comment.

Apple’s iPhone last year sold for a global average of $624, compared with $185 for smartphones running Android, according to Strategy Analytics. Those bigger price tags greatly inflate Apple’s profit.

“The dominance of Apple is something that is very hard to overcome,” said Denny Strigl, former chief operating officer of Verizon Communications Inc. “Apple has to stumble somehow or another, and I don’t think that’s going to happen.”