John Paczkowski

Recent Posts by John Paczkowski

Apple, Samsung Share of Handset Industry Profits Declines to 100 Percent

If you’re a smartphone manufacturer whose name isn’t Apple or Samsung, condolences on your March quarter. Because according to new research from Canaccord Genuity, it was a massive, will-crushing disappointment.

In the first quarter of the year, Apple captured 57 percent of global smartphone industry profits. That left 43 percent for the taking. And Samsung, says Canaccord Genuity, took all of it — leaving nothing for BlackBerry, Nokia, or anyone else competing for the currently mythical title of “third smartphone platform.”

Ugly news for would-be smartphone players, but not quite as ugly as it could have been. For them, the first quarter of 2013 is actually an improvement over last quarter, when Apple and Samsung captured 103 percent of handset industry profits — a milestone achievement made possible only by their heroic operating-loss sacrifice.

“Due to operating losses from smaller scale competitors trying to compete, Apple and Samsung’s combined share of industry profits have exceeded 100 percent in previous quarters,” Canaccord Genuity T. Michael Walkley explained. “While Apple and Samsung continue to dominate the share of industry profits, improving cost structures and results from other OEMs have reduced Apple and Samsung’s combined share to 100 percent from levels above 100 percent the past several quarters.”


Japes aside, it is worth noting that even as Apple and Samsung continue to utterly dominate the handset market’s operating profits, there are shifts occuring in their duopoly. A year ago, Apple’s share topped out at 74 percent and Samsung’s at 23 percent.

So, clearly, the operating profit balance between the two companies is changing.* Indeed, Canaccord Genuity figures that Samsung is on track to surpass Apple to claim the largest share of handset industry profits, perhaps within the next few months. Said Walkley, “During the June quarter, we believe softer iPhone sales combined with strong Samsung Galaxy S4 sales could result in Samsung surpassing Apple for the top share of handset industry profits.”

Certainly possible, given the trend in Canaccord Genuity’s numbers — but for how long? Samsung’s ascension hinges on softening iPhone sales, and iPhone sales typically only soften ahead of the launch of a new iPhone, which will inevitably spike Apple’s handset sales and its share of the industry’s profits.

* Caveat: According to Canaccord Genuity, “some Android OEMs such as Samsung and HTC include tablet sales in reported smartphone sales and profits,” so there’s a wild card to consider here.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus