People, understandably, get hung up on Android’s huge share of the total phone market. They would do better to look at phone profits.
On unit numbers alone it often looks as if Google’s phone software is eating Apple’s lunch. Some commentators extrapolate from this point. They say daft things like Apple is doomed.
The silly Apple is doomed story comes around every year. Some years they tell us: ‘this time it’s different’. Yet the company powers from strength to strength. One day the doomsayers may be correct. But not this year, or next.
Phone profits, market dynamics
It’s all 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 selling phones. Everyone else operates at a loss.
Apple, which sells about one phone in six, roughly 15 percent of unit sales, makes a whopping 87 percent share of the total profits taken from smartphones. It operates mainly at the higher end of the market. Samsung makes 32 percent. The two numbers add up to more than 100 percent because everyone else is losing money. That speaks volumes.
Apple and Samsung are tightening their grip on the industry – last year their shares of the profits were 78 and 26 percent respectively.