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Apple Owns 92% Of Smartphone Profits

Anyone surprised by the news that Apple makes almost all of the profit in the smartphone market? I can't say I am, although basing it on a number that subtracts other company's losses makes the number look even larger than it really is.
Its easy to see why. The average selling price of an Apple iPhone is three to four times that of the industry average, despite costing little, if any, more to make. Those sky high profit margins ensure that Apple takes 92% of the profits despite selling only around 20% of the handsets.
There are other OEMs making profits, Samsung notably, but also Huawei and other smaller brands. Even Sony has managed to eke out profits from its Xperia smartphones. The profits might be small in comparison to Apple's, but they are profitable. For most OEMs these profits are being generated by selling lots of cheap phones at razor thin margins. For Sony it comes from selling fewer phones at better margins.
Whatever the case, if you aren't Apple - and to a much lesser extent Samsung - you are a niche player in the premium smartphone market and as a result aren't going to be making the sort of margin which allows you to book the enormous profits that Apple does. Samsung covers all bases, managing to sell lots of low end phones without tarnishing its premium brands in the process. Microsoft could potentially do the same, if it were able to drive some momentum behind its Lumia phones.
In the meantime it remains only to stand back and marvel at how Apple has managed to sell its brand of Kool-aid so widely and profitably.


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