Apple, Samsung monopolise phone profits

People, understandably, get hung up on Android’s huge share of the total phone market. On raw unit numbers alone it often looks as if Google’s phone software is eating Apple’s lunch. Some commentators extrapolate from this point to say daft things like "Apple is doomed". Which is nonsense.

It’s a classic case of misreading the market dynamics. As Matthew Yglesias reports for Slate, the only two phone companies that count are Apple and Samsung. They are the only two companies making money from phones. Everyone else operates at a loss. This is not sustainable.

Apple, which sells about one smartphone in six, accounting for roughly 15 percent of unit sales, makes a whopping 87 percent share of the total profits taken from phones. Samsung makes 32 percent. The two numbers add up to more than 100 percent because everyone else is losing money. They are losing a lot of money.

Apple and Samsung are tightening their grip on the industry – last year their shares of the profits were 78 and 26 percent respectively.

At this rate we can expect to see many of the other phone brands exit the market in the near future.