Why does Apple take 92% of the profits of global smartphones?

According to the latest report released by market research firm Canaccord Genuity on Tuesday, in the fourth quarter of 2016, although Apple's smartphone sales accounted for about 18% of the global total, its profits accounted for 92% of the entire industry.

Recently, market research firm Canaccord Genuity released a report that in the fourth quarter of 2016, Apple occupied 18% of the global smartphone market, but it gained 92% of the entire industry. How to achieve 92% profit with 18% share? How did Apple do it?

Apple monopolizes smartphone industry profits

According to the 21st Century Business Herald, the latest report released by market research firm Canaccord Genuity on Tuesday said that in the fourth quarter of 2016, although Apple’s smartphone sales accounted for about 18% of the global market, its profits accounted for the entire industry. 92%.

The report also pointed out that in the fourth quarter, Samsung accounted for 9% of the profits of the smart phone industry, Sony only 1%, and BlackBerry did not even 1%. There were also some corporate losses in the fourth quarter, such as Microsoft and LG Electronics. Chinese brands that have a good performance in shipments have not been mentioned.

It is not clear how the report calculates operating profit. After all, domestic mobile phone manufacturers such as Huawei, OPPO and vivo are not listed companies, and it is difficult to calculate their profits. According to data from IDC, a third-party data statistics agency, the top five mobile phone manufacturers in 2016 are Samsung, Apple, Huawei, OPPO and vivo.

But Apple has long monopolized the profits of the smart phone industry, but it is an indisputable fact. According to a report by another research firm, Strategy AnalyTIcs, Apple's mobile phone revenue in the third quarter was as high as 8.5 billion US dollars, accounting for 91% of the global operating profit of the smart machine industry. In the second place, Huawei has a market share of 2.4%, and the third and fourth OPPO and vivo respectively have a market share of about 2.2%.

High gross profit creates amazing profits for Apple

According to China Youth Network, Linda Sui, director of the research firm Strategy AnalyTIcs, said: "Apple has gained a dominant position in the global smartphone market operating profit, and its ability to maximize pricing and minimize production costs is very high. Impressive, and the iPhone will continue to create amazing profits for it."

In the third quarter of last year, Apple introduced two new phones with a starting price of $649. According to the analysis of market research company IHS, the cost of parts for Apple's mobile phone is 224.90 US dollars, which means that Apple's mobile phone still has a relatively high gross profit.

According to data provided by Counterpoint, as of December 2016, Apple accounted for 70% of global high-end smartphone sales. Although high-end smartphones only account for a small portion of smartphone shipments, they are the main source of profit for various manufacturers.

Samsung's poor performance "help" Apple's one big

Apple's high market share is also related to the poor performance of rival Samsung. According to IDC data, due to the impact of the Note7 explosion, Samsung shipped only 77.5 million smartphones in the fourth quarter of 2016, while Apple's smartphone shipments were 78.3 million, slightly ahead of Samsung Electronics.

According to the previous research report of Guohai Securities, Note7 originally planned to sell 10 million units in 2016. According to this calculation, the loss of opportunity after the suspension of production is conservatively estimated to be about 8 billion US dollars, which does not include the “explosion door”. "Involved in the losses caused by subsequent sales of other models.

At the same time, according to a 21st century report, Canaccord Genuity analyst Michael Walkley's research data shows that in the fourth quarter of 2016, the average price of Samsung smartphones was $182, while Apple's was up to $695, which is almost four times that of the former. .

Stimulate domestic mobile phones to develop in the middle and high end

Compared with the high profit of Apple's mobile phone, the profitability of domestic mobile phones has been criticized by the outside world. The China Daily once wrote that the domestic mobile phone manufacturers only sold mobile phones and relied on hardware to make profits. But such a business model is very old-fashioned. Basically, the final selling price minus the cost price, deducting labor, management and other expenses, is profit, and the scalability is too low.

At present, the most proud of the domestic mobile phone manufacturers is the thousand yuan machine, the profitability of the thousand yuan machine itself is not strong, too high sales will greatly squeeze the position of high-end mobile phones in the market. In addition, the existence of the thousand yuan machine is always not conducive to the brand building of domestic mobile phone manufacturers, always giving people a low-end feeling, it is difficult to compete with international companies such as Samsung and Apple.

Of course, domestic mobile phones are also trying to develop in the direction of high-end mobile phones. Since 2013, Huawei has launched the P series and Mate series, which are mainly in the high-end market. OPPO has launched the R series with a price of nearly 3,000 yuan since 2014, and vivo has also released the X series at the same time. By 2016, Huawei, OPPO, and vivo have become the top three in the domestic market. In the statistical report of Strategy AnalyTIcs, the profit share of the three ranked behind Apple, ranking two to four.

In addition, according to the Securities Daily, many domestic mobile phone manufacturers have repeatedly revealed to the outside world the information to increase the price of mobile phones this year. Telecom analyst Fu Liang believes that price increases and new products to improve performance price increase is the future trend. He believes that the short-term price increase is the shareholder's profit pressure, which is the transmission of component price increases, but the most important is the adjustment of the previous pricing strategy. The effect of the original low-price expansion of sales in the low-end market has been significantly reduced.

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