25 ms·

Apple Captures 75% of Global Handset Market Operating Profit in Q2 2021

182 points by 1cvmask 5y ago

gbrown 5y ago
I really wish there was more competition in this space. Here's hoping someone like Canonical tries again now that the open-hardware world is starting to expand.
- skc 5y ago
  A lot of people in tech like to say this but I'm never sure it's genuine. When Microsoft made a go of it there seemed to be a concerted effort to laugh them out of the room, and they had a genuinely decent product that should have been a third option in my opinion. I think we've now reached a point where a third player is pretty much impossible
  - lostgame 5y ago
    Also, Palm's WebOS was fantastic - the issues were too little, too late; stupid carrier exclusivity, and underpowered hardware. WebOS had some real potential, too.
    - skc 5y ago
      Oh yes, loved the premise of WebOS
      - lostgame 5y ago
        It’s a damn shame we never got any hardware worthwhile.
- itg 5y ago
  I would like to try something different but the fact that almost all my family members and friends communicate through imessage & facetime keeps me locked to iphones. The network effects here in the US are really strong.
- InTheArena 5y ago
  there will be - but it will be in the form of a Chinese mandate to provide phones that do not use Western Operating systems or without western data privacy protections. Ideas like what Canonical and Firefox tried to do were great, but didn't have enough in it for the powers that be to be successful.
  - ericmay 5y ago
    Yea but kind of a dangerous game to continue playing - does China want to have factories and suppliers close down and relocate out of China? Where will those people work? It may happen anyway but these scenarios are never easy or clean-cut.
    - InTheArena 5y ago
      China has no problem using the power of the state to ensure that factories and suppliers don't relocate out of china.
      - ericmay 5y ago
        Doesn't really work when the factories and suppliers supply companies located outside of China and who can make that happen without the consent of the CCP. Either way, it's not clear-cut. Sure China can do that. Great now they can pay those workers since companies like Apple won't be paying them...
  - gjsman-1000 5y ago
    There was also, to be frank, incompetence. Mozilla is paying their director, what, $2.4 million just this year while their browser becomes more irrelevant each year in the usage metrics? And Canonical thought releasing generally-crappy hardware and refusing to support Wayland and requiring a centralized App Store of their own (later the Snap Store) was a winning strategy for getting Linux enthusiasts.
  - rjzzleep 5y ago
    Chinese actually just passed a bunch of data privacy protections. I'd say they're to protect chinese users from western and private companies, whereas the government is free to influence and access. It's conceptually similar to the protections in the west. Protect users, but share data with the 5 eyes. It's just that they won't block you from searching for Uyghur or Winnie the Pooh or something similar in the process. It's kinda interesting because this concept seems to work fine in China for the simple reason that they have so many domestic services. Other countries that just try to copy the China model without the domestic information services(i.e. Iran) have a huge mess on their hands.
- archildress 5y ago
  There's plenty of competition - note that despite capturing 75% of profits, Apple accounted for only 13% of units shipped.
  - tonyedgecombe 5y ago
    I don't think there is for premium devices. If I wanted to buy an upmarket car there are a lot of choices but for phones it's just Apple or possibly a high end Samsung.
- conductr 5y ago
  Looks to me there’s plenty of competition. Apple just consistently wins. Consumers are willing to pay more per device and it flows through to profit. The others are competing on price and their margins reflect it.
  - gbrown 5y ago
    Let me be clear, I mean technological and software competition. A duopoly between Android and Apple isn't it. For comparison, see the dekstop/laptop market, where there are many totally usable open source software alternatives to Windows/OSX.
  - johnchristopher 5y ago
    I was talking with a MediaMarkt employee last week, we were talking smartphones and we both were dumbstruck about iphone prices. We agree it's good hardware/products but the price is insance. Yet people buy them in bulk. The brand is that strong. Apparently people also rush to replace their old models every year or two. Anyway, it just popped into my mind that I dreamt about buying a phone last night and the shop's owner just found a box with 60 iphones 13 that a customer finally didn't buy. But he had opened each box and the cardboard was ripped for each box so it was a massive loss for him. Funny coincidence.
    - xoa 5y ago
      >and we both were dumbstruck about iphone prices. We agree it's good hardware/products but the price is insane. I'm honestly dumbstruck that people like you are dumbstruck. It's not very hard, and whether you your self use powerful handheld computers/cameras much it's objectively obvious others do a lot. Just do the normal ROI calc. Apple makes a feature for this called "ScreenTime". How many hours a day is the average iPhone user on their phone? A quick google search indicates over two hours. So that's over 700 hours per year, with a life time of at least two years on average. Do the math. What is so shocking about spending <$1/hour on something so heavily used and important? What price privacy/security focus and long term upgrades? Subtract too the resale value. What is surprising here?
- CarelessExpert 5y ago
  Define "competition". Apple has a minority of the actual handset market, but they have a majority of the profits. You can speculate as to why they can wring so many extra dollars out of their customer base, but it's not clear to me that the overall handset market, itself, is structured in a way that gives Apple an unusual advantage.
  - gbrown 5y ago
    Software alternatives.
- tootie 5y ago
  There's tons of competition in terms of products, but Apple wins on marketing every time. They are able to charge a massive markup by leveraging their market placement as a luxury brand.
  - thefounder 5y ago
    Apple wins because of its software not because of its marketing. It seems the competition still doesn't get that Android is not good enough to compete with Apple on the luxury/premium market. Most of the "extra" software developed by the competition is bloatware and spyware. The core design is developed only by Google who is weaker on design than Apple. That's why Apple gets the bulk of the premium market and leaves the competition to battle on the cheap segment.
    - jvolkman 5y ago
      This is pretty subjective. I find iOS pretty aggravating and lacking after using Google's (Pixel) variant of Android for years. Agree that many manufacturers stuff bloatware onto their devices, but the Pixels don't have that problem.
  - gbrown 5y ago
    Maybe competition was the wrong word for what I meant - I meant software alternatives. I've recently owned laptops from Acer, Asus, Dell, and Apple, and I put various flavors of Linux on all of them (pre M1).
- numbsafari 5y ago
  Competition for profit share or market share? Globally Apple has a marketshare of about 26%. Even in the US, Apple has just over 50% marketshare. The fact that they are capturing the majority of the profit is reflective of business strategy and priorities. Apple makes a lot of money from the smartphone itself. Other providers are making their money by selling out their users. You would either need to go head-to-head with Apple on price and quality of the device and OS and distribution, or compete with Google in terms of selling out your users. Or you would need to find a back-end monetization strategy based on paid services that, so far, seems elusive. Mostly, I think, because it requires a huge portfolio of services (e.g. a "Netflix phone" won't cut it). As an aside, I've long felt that that latter strategy could be applied in the browser market. Make a browser with a subscription-based services package. ChromeOS+Workspace is mostly there, except for the focus on crap devices and poor distribution and the never ending customer exploitation (Google's product playbook: crap sold at flea markets with AI support). The challenge folks like Canonical face is that they try to compete with Google on price and distribution, and compete with Apple on privacy alone. So they skip out on both proven ways of making money. That's just not going to scale. Such players will always be niche players, and there are plenty of them out there toiling away without a scalable business model. Which is fine, if you accept them for what they are.
dangoor 5y ago
They're losing their touch. A few years ago, Apple made more than 100% of the industry profit because the other handset makers almost all lost money.
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lapdanz 5y ago
Apple will dominate the market until the market itself becomes irrelevant. Good news for Apple is that in the next 5 years I don’t see something in the horizon to challenge the market of smartphones.
- echelon 5y ago
  Apple does, which is why they're planning their next moves into XR.
- intrasight 5y ago
  The good news for Apple is that the next phase is AR, and I expect that Apple will captures the lion's share of the profits there too.
  - kleiba 5y ago
    My bet is that AR is going to go the way of 3D TVs.
    - thefounder 5y ago
      100% sure...or shall I say like the VR? It has its use but we are not there yet. Maybe in 10-20 years.
    - lostgame 5y ago
      Since 3D TV's never got to a glasses-less state, they were always an incredible compromise. AR already works better than 3D TV's ever did, in that regard. I always said, back in the day - 'I'll invest in 3D when we don't need glasses for it' - and I guess enough people collectively said that at the same time that it shut down the industry and never matured to that level.
    - handrous 5y ago
      Every major tech vendor seems certain AR glasses are going to be the "next Smartphone", if you will, in terms of UI and market trends. Nothing else could explain their continued emphasis on AR tools & demos for platforms that suck to use for AR except as a novelty (i.e. all current platforms).
hnaccount_rng 5y ago
Wasn’t it more than 100% a couple of years ago?
- deleted 5y ago
  [deleted]
- evilduck 5y ago
  How do you capture more then 100% of a market?
  - macintux 5y ago
    You can get more than 100% of the profits if everyone else loses money. I do remember that being very nearly true for Apple at one point.
  - hnaccount_rng 5y ago
    It’s “just” about profit not revenue. And that was while companies like Sony still did smartphones in earnest. I remember being rather shocked when I read that… but I’m also far too lazy to google for it so… make of that what you will
  - malshe 5y ago
    I believe it was because a large majority was making losses. So the total profit was less than Apple’s profit alone.
- SanchoPanda 5y ago
  Correct, It was north of 100% for several quarters when HTC was flailing and Samsung was net burning money trying to establish the Galaxy as the dominant premium Android phone. I'll try to pull up the industry report that had those numbers. Quick link while I look: https://www.forbes.com/sites/parmyolson/2016/11/04/apple-grabs-more-than-100-of-smartphone-profits https://www.forbes.com/sites/parmyolson/2016/11/04/apple-gra...
stuff4ben 5y ago
Begs the question of if one would rather sell the most but make just a moderate amount money or sell moderately but make the most money? In the short-term I could see that being a good thing as you build up your war-chest and invest. But long-term your marketshare will erode and you'll be making a lot of profit on fewer sales. I'm no economist, so I have no idea which is the better position to be in.
- zepto 5y ago
  Apple’s market share is growing, not eroding.
cs702 5y ago
...with only a 13% share of units. That is, all other vendors together sold 87% of units, but earned only a combined 25% of industry-wide profit. The vast majority of those other vendors are companies headquartered in Asian countries with a long history of promoting market share, access to information, and knowledge transfer at the expense of short-term profit. They might be making less money willingly to grow/maintain volume, grow/maintain access to a large volume of user data, and acquire/maintain expertise.
- NineStarPoint 5y ago
  I expect it’s more about the competition than those companies willingly leaving that level of profit on the table. In the android market, people have the option of switching to a competitor if you’re not price competitive yourself. For IOS, apple is the only game in town on hardware.
  - cs702 5y ago
    Maybe. I'm not so sure. In theory, a company like, say, Samsung could stop making cheaper, money-losing phones and invest primarily on making increasingly better, premium, profitable phones like the Galaxy Fold, but they choose not to do that, year after year.
    - chii 5y ago
      > focus primarily on making premium, profitable phones like the Galaxy Fold believe it or not, apple's supply chain and verticals and operations are much more efficient than samsungs'. Tim cook did wonders during steve job's era to scale out their operations. So much so that samsung cannot really compete at the same quality.
    - cies 5y ago
      What differentiates those premium phones? It runs the same Android of which I rather have a stock version than the bloat-ware rubbish that phone makers install on there for me. The iOS devices link into a web of ease-of-use, and come with a reasonably well make stock version of iOS. And then there's trust. Whom does an average user trust more with their data? (Apple/USgov, or Google/USgov+Samsung/SouthKorea+...)
gtirloni 5y ago
> In Q2 2021, it captured 75% of the overall handset market operating profit and 40% of the revenue despite contributing a relatively moderate 13% to global handset shipments So they charge a premium for their phones, that's all. Android completely obliterates Apple if you count number of units shipped.
- icelancer 5y ago
  Making more profit on way fewer units is something I think most companies would like a lot more than shipping the most units.
- r3trohack3r 5y ago
  Android is an operating system. Apple is a company. “That’s all” is disingenuous. If Samsung could charge a similar premium for their phones, and capture a similar profit, I’m fairly confident they would.
  - gtirloni 5y ago
    It's hard to say Apple is some kind of king of the hill when 9 in 10 people around the globe have an Android. Congrats to them on extracting more money from their customers though, I don't see how that helps in general (unless you hold Apple stock).
criddell 5y ago
I think one of the smartest things Apple did was open physical stores and not depend on carrier stores and Best Buy. I've often wondered why their competitors don't do the same thing? Why isn't there a Samsung store a block away from every Apple store? Having a physical location for purchases, repairs, and support is why I always recommend Apple devices when somebody who isn't super technical asks me what to buy. Microsoft made a half-hearted effort, Sony was there too soon with their stores, Dell had crappy little mall kiosks. Apple has shown you can make pretty great revenue-per-sq-ft with a store. Samsung copies everything else Apple, why not the stores?
- cozzyd 5y ago
  Motorola tried opening a store in downtown Chicago. Didn't seem very busy at all...
- tmoravec 5y ago
  Samsung does have its stores in my country (Czechia). Very much inspired by Apple, touting flagship phones and all.
  - alanlammiman 5y ago
    yep. Brazil too. AFAIK there is only one Apple store in Sao Paulo (though there are Apple resellers too) but Samsung has stores in virtually all high end malls. Xiaomi had a pilot store here too. The context is that Brazil has high import duties on manufactured goods. Apple doesn't manufacture domestically. Samsung does.
- curiousllama 5y ago
  Apple sells a luxury product. Physical stores are the type of thing you do for a luxury product. You can buy basic macarons at the grocery store, or go to Laduree for the luxury version. Same deal.
  - criddell 5y ago
    The most expensive (non-novelty) phones sold right now are from Samsung. At every price point that Apple sells at, Samsung has a similar product. Apple also sells their handsets through carriers, big box stores, and online through places like Amazon. You can often buy their stuff for less at these places yet the stores are still packed because people will pay more if it's a better experience.
samfisher83 5y ago
Really in us it's Samsung and apple, and Samsung is content just matching Apple's price for it's flagship. Wonder why we don't have a phone market like China with all these phone makers.
- ksec 5y ago
  1. Carrier Subsidy Model. 2. 4G / 5G as well as other Patent arrangement. 3. All of that along with higher operation cost means their current selling price are not sustainable in the US market without some adjustment.
1cvmask 5y ago
I think we might be missing the big picture here. Apple captures 75% of the profit from handset market share. The rest is split between high end Android devices from say Samsung and low-end commodity Shanzhan android devices. But in the Android sphere Google is clearly capturing the profits from Android devices on software. https://www.theverge.com/2016/1/21/10810834/android-generated-31-billion-revenue-google-oracle https://www.theverge.com/2016/1/21/10810834/android-generate... In addition to profits, Google does not have to pay for the search bar to be highlighted and their apps to be installed: https://9to5mac.com/2021/08/25/analysts-google-to-pay-apple-15-billion-to-remain-default-safari-search-engine-in-2021/ https://9to5mac.com/2021/08/25/analysts-google-to-pay-apple-...
- oblio 5y ago
  From Wintel to Goocomm. Android OEM are (almost) commodity product makers.
- CarelessExpert 5y ago
  This is an excellent point. If "operating profit" also includes app store revenues, payment revenues (remember, Apple requires apps use their payment platform), and content revenues, the likes of Samsung, et al, are at a serious disadvantage and can only compete on device margins as they can't tap into any of those revenue streams.
  - tadfisher 5y ago
    AKA the 3DO problem.
  - fomine3 5y ago
    Also Samsung has Galaxy Store, but maybe not much contributed to profit.
lindseymysse 5y ago
I wonder, by percentage, how much of these profits are owed to click farmers: https://en.wikipedia.org/wiki/Click_farm https://en.wikipedia.org/wiki/Click_farm Apple devices claim to be "luxury" -- something I find hilarious, but the marketers certainly believe. It makes the clicks from an Apple device more valuable than a click from an Android device. Therefore, there's just going to be more sales to click farm companies. And they buy in bulk: https://www.equedia.com/wp-content/uploads/2017/05/clickfarm.jpg https://www.equedia.com/wp-content/uploads/2017/05/clickfarm... The entire mobile phone ecosystem is a hilarious ouroboros of marketing nonesense in the end. I would be laughing if the environmental and human costs weren't so extreme.
neogodless 5y ago
Apple has brand loyalty, and apparently, they earned it. In buying an Android handset, your options shift over time. Samsung has the most brand loyalty, and some high-end handsets, as well as some lower end ones. The rest of the brands seem to waffle between trying to be high-end, and being the best value. For example, OnePlus set out to be compete against the high-end with really low prices, but over time, the prices caught up to the competition. Google has made affordable Nexus handsets, moved towards high-end Pixels, but then backed off and started selling mainstream handsets. It's hard, as a consumer, to know what to replace your handset with when the time comes, because what was good might still not be good. And maybe a newer brand offers a better deal that sways you. While competition is mostly a good thing in the Android handset market, it also makes for some unpredictability, and few companies figure out where to position themselves, and maintain excellence.
- mytailorisrich 5y ago
  Huawei went after Apple, including on quality. They were shot down right when their sales overtook Apple's (maybe a coincidence, who knows...)
  - handrous 5y ago
    Were they taking sales from Apple, to any major extent? Or just shifting around the Android market? If the latter, I can't imagine Apple'd care. Samsung's been doing the same thing (being the Apple of Android) for quite a while, and it hasn't mattered much.
    - dagw 5y ago
      Were they taking sales from Apple, to any major extent? I can't speak for China, but in Europe everybody I know who bought a Hauwei phone did so because they wanted a 'cheaper Samsung'.
  - seanmcdirmid 5y ago
    Huawei and Apple have a similar market share profile in mainland China (Huawei sells more, Apple earns more) where government interference is lacking.
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throwawaymanbot 5y ago
the surveillance infrastructure now makes more sense..
coreyp_1 5y ago
I would still buy a Windows phone, if it were available. :(
- mrjin 5y ago
  Me too. Never liked iPhone. Android, was kinda okay, but now I'm at the brink to ditch it. Unfortunately, there is no alternative yet...
- soneca 5y ago
  Same here. I still think the tiles interface with vertical scroll was the best one for phones. I don’t dislike either Android or iPhone, but I still miss my Windows phone.
  - BoorishBears 5y ago
    WebOS was the best interface and every other interface has spent the last decade slowly catching up.
    - Yhippa 5y ago
      They're _still_ not caught up and don't have the clean design it had. Unbelievable. I still can't align my phone correctly on my wireless charger like I could with my Palm Pre.
marricks 5y ago
As others have said, Apple does this with only 13% share. The important point is Apple has to make money selling phones, that is their business model. Android's is making money in a number of other ways, mainly user's data.
- burnte 5y ago
  Apple absolutely doesn't HAVE to make money on the hardware, they could sell them at a loss and still rake in billions thanks to the AppStore.
  - marricks 5y ago
    That's a good point!
  - dev_tty01 5y ago
    Services (App store, Music, TV, ...) accounted for 21% of revenue last quarter. The rest is hardware. App store is some fraction of that 17 billion services revenue. Hardware was 64 billion. So yes they could make billions in services, but it pales in comparison to their hardware revenue. Also, services revenue doesn't happen without selling a huge amount of hardware first, and building the ecosystem, ... All of that had to happen for years before services revenue started to become significant.
    - burnte 5y ago
      Revenue, but a much larger part of the profit.
musicale 5y ago
Does this include profit from the App Store?
perryizgr8 5y ago
But remember, there is no monopoly.
- p2t2p 5y ago
  You guys are tiresome. 13% of sold handsets.
  - perryizgr8 5y ago
    You guys are tiresome. 75% of global mobile profit.
    - Terretta 5y ago
      Among plenty of competition, consumers voted with their wallet. Consumer preferences remain clear. That’s not a monopoly. If one doesn’t like consumers’ choice, one can try to understand why the value one thing over another and out deliver that. But first one must really grok it. HN threads show that’s hard as supporting the non-tech user-centric approach requires an atypical world view among Makers. Numbers show it’s hard as a majority of the competitors are not engineered or marketed with that understanding. There’s likely a connection.
      - perryizgr8 5y ago
        > Among plenty of competition Can you name 2 other OSes that compete meaningfully against Ios? Keep in mind I'm not talking about ecosystems that make less than half of the profit Ios makes for Apple. Hence the "meaningful".

182 points by 1cvmask 5y ago

I really wish there was more competition in this space. Here's hoping someone like Canonical tries again now that the open-hardware world is starting to expand.

skc 5y ago
A lot of people in tech like to say this but I'm never sure it's genuine. When Microsoft made a go of it there seemed to be a concerted effort to laugh them out of the room, and they had a genuinely decent product that should have been a third option in my opinion. I think we've now reached a point where a third player is pretty much impossible
- lostgame 5y ago
  Also, Palm's WebOS was fantastic - the issues were too little, too late; stupid carrier exclusivity, and underpowered hardware. WebOS had some real potential, too.
  - skc 5y ago
    Oh yes, loved the premise of WebOS
    - lostgame 5y ago
      It’s a damn shame we never got any hardware worthwhile.
itg 5y ago
I would like to try something different but the fact that almost all my family members and friends communicate through imessage & facetime keeps me locked to iphones. The network effects here in the US are really strong.
InTheArena 5y ago
there will be - but it will be in the form of a Chinese mandate to provide phones that do not use Western Operating systems or without western data privacy protections. Ideas like what Canonical and Firefox tried to do were great, but didn't have enough in it for the powers that be to be successful.
- ericmay 5y ago
  Yea but kind of a dangerous game to continue playing - does China want to have factories and suppliers close down and relocate out of China? Where will those people work? It may happen anyway but these scenarios are never easy or clean-cut.
  - InTheArena 5y ago
    China has no problem using the power of the state to ensure that factories and suppliers don't relocate out of china.
    - ericmay 5y ago
      Doesn't really work when the factories and suppliers supply companies located outside of China and who can make that happen without the consent of the CCP. Either way, it's not clear-cut. Sure China can do that. Great now they can pay those workers since companies like Apple won't be paying them...
- gjsman-1000 5y ago
  There was also, to be frank, incompetence. Mozilla is paying their director, what, $2.4 million just this year while their browser becomes more irrelevant each year in the usage metrics? And Canonical thought releasing generally-crappy hardware and refusing to support Wayland and requiring a centralized App Store of their own (later the Snap Store) was a winning strategy for getting Linux enthusiasts.
- rjzzleep 5y ago
  Chinese actually just passed a bunch of data privacy protections. I'd say they're to protect chinese users from western and private companies, whereas the government is free to influence and access. It's conceptually similar to the protections in the west. Protect users, but share data with the 5 eyes. It's just that they won't block you from searching for Uyghur or Winnie the Pooh or something similar in the process. It's kinda interesting because this concept seems to work fine in China for the simple reason that they have so many domestic services. Other countries that just try to copy the China model without the domestic information services(i.e. Iran) have a huge mess on their hands.
archildress 5y ago
There's plenty of competition - note that despite capturing 75% of profits, Apple accounted for only 13% of units shipped.
- tonyedgecombe 5y ago
  I don't think there is for premium devices. If I wanted to buy an upmarket car there are a lot of choices but for phones it's just Apple or possibly a high end Samsung.
conductr 5y ago
Looks to me there’s plenty of competition. Apple just consistently wins. Consumers are willing to pay more per device and it flows through to profit. The others are competing on price and their margins reflect it.
- gbrown 5y ago
  Let me be clear, I mean technological and software competition. A duopoly between Android and Apple isn't it. For comparison, see the dekstop/laptop market, where there are many totally usable open source software alternatives to Windows/OSX.
- johnchristopher 5y ago
  I was talking with a MediaMarkt employee last week, we were talking smartphones and we both were dumbstruck about iphone prices. We agree it's good hardware/products but the price is insance. Yet people buy them in bulk. The brand is that strong. Apparently people also rush to replace their old models every year or two. Anyway, it just popped into my mind that I dreamt about buying a phone last night and the shop's owner just found a box with 60 iphones 13 that a customer finally didn't buy. But he had opened each box and the cardboard was ripped for each box so it was a massive loss for him. Funny coincidence.
  - xoa 5y ago
    >and we both were dumbstruck about iphone prices. We agree it's good hardware/products but the price is insane. I'm honestly dumbstruck that people like you are dumbstruck. It's not very hard, and whether you your self use powerful handheld computers/cameras much it's objectively obvious others do a lot. Just do the normal ROI calc. Apple makes a feature for this called "ScreenTime". How many hours a day is the average iPhone user on their phone? A quick google search indicates over two hours. So that's over 700 hours per year, with a life time of at least two years on average. Do the math. What is so shocking about spending <$1/hour on something so heavily used and important? What price privacy/security focus and long term upgrades? Subtract too the resale value. What is surprising here?
CarelessExpert 5y ago
Define "competition". Apple has a minority of the actual handset market, but they have a majority of the profits. You can speculate as to why they can wring so many extra dollars out of their customer base, but it's not clear to me that the overall handset market, itself, is structured in a way that gives Apple an unusual advantage.
- gbrown 5y ago
  Software alternatives.
tootie 5y ago
There's tons of competition in terms of products, but Apple wins on marketing every time. They are able to charge a massive markup by leveraging their market placement as a luxury brand.
- thefounder 5y ago
  Apple wins because of its software not because of its marketing. It seems the competition still doesn't get that Android is not good enough to compete with Apple on the luxury/premium market. Most of the "extra" software developed by the competition is bloatware and spyware. The core design is developed only by Google who is weaker on design than Apple. That's why Apple gets the bulk of the premium market and leaves the competition to battle on the cheap segment.
  - jvolkman 5y ago
    This is pretty subjective. I find iOS pretty aggravating and lacking after using Google's (Pixel) variant of Android for years. Agree that many manufacturers stuff bloatware onto their devices, but the Pixels don't have that problem.
- gbrown 5y ago
  Maybe competition was the wrong word for what I meant - I meant software alternatives. I've recently owned laptops from Acer, Asus, Dell, and Apple, and I put various flavors of Linux on all of them (pre M1).
numbsafari 5y ago
Competition for profit share or market share? Globally Apple has a marketshare of about 26%. Even in the US, Apple has just over 50% marketshare. The fact that they are capturing the majority of the profit is reflective of business strategy and priorities. Apple makes a lot of money from the smartphone itself. Other providers are making their money by selling out their users. You would either need to go head-to-head with Apple on price and quality of the device and OS and distribution, or compete with Google in terms of selling out your users. Or you would need to find a back-end monetization strategy based on paid services that, so far, seems elusive. Mostly, I think, because it requires a huge portfolio of services (e.g. a "Netflix phone" won't cut it). As an aside, I've long felt that that latter strategy could be applied in the browser market. Make a browser with a subscription-based services package. ChromeOS+Workspace is mostly there, except for the focus on crap devices and poor distribution and the never ending customer exploitation (Google's product playbook: crap sold at flea markets with AI support). The challenge folks like Canonical face is that they try to compete with Google on price and distribution, and compete with Apple on privacy alone. So they skip out on both proven ways of making money. That's just not going to scale. Such players will always be niche players, and there are plenty of them out there toiling away without a scalable business model. Which is fine, if you accept them for what they are.

dangoor 5y ago

They're losing their touch. A few years ago, Apple made more than 100% of the industry profit because the other handset makers almost all lost money.

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lapdanz 5y ago

Apple will dominate the market until the market itself becomes irrelevant. Good news for Apple is that in the next 5 years I don’t see something in the horizon to challenge the market of smartphones.

echelon 5y ago
Apple does, which is why they're planning their next moves into XR.
intrasight 5y ago
The good news for Apple is that the next phase is AR, and I expect that Apple will captures the lion's share of the profits there too.
- kleiba 5y ago
  My bet is that AR is going to go the way of 3D TVs.
  - thefounder 5y ago
    100% sure...or shall I say like the VR? It has its use but we are not there yet. Maybe in 10-20 years.
  - lostgame 5y ago
    Since 3D TV's never got to a glasses-less state, they were always an incredible compromise. AR already works better than 3D TV's ever did, in that regard. I always said, back in the day - 'I'll invest in 3D when we don't need glasses for it' - and I guess enough people collectively said that at the same time that it shut down the industry and never matured to that level.
  - handrous 5y ago
    Every major tech vendor seems certain AR glasses are going to be the "next Smartphone", if you will, in terms of UI and market trends. Nothing else could explain their continued emphasis on AR tools & demos for platforms that suck to use for AR except as a novelty (i.e. all current platforms).

hnaccount_rng 5y ago

Wasn’t it more than 100% a couple of years ago?

deleted 5y ago
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evilduck 5y ago
How do you capture more then 100% of a market?
- macintux 5y ago
  You can get more than 100% of the profits if everyone else loses money. I do remember that being very nearly true for Apple at one point.
- hnaccount_rng 5y ago
  It’s “just” about profit not revenue. And that was while companies like Sony still did smartphones in earnest. I remember being rather shocked when I read that… but I’m also far too lazy to google for it so… make of that what you will
- malshe 5y ago
  I believe it was because a large majority was making losses. So the total profit was less than Apple’s profit alone.
SanchoPanda 5y ago
Correct, It was north of 100% for several quarters when HTC was flailing and Samsung was net burning money trying to establish the Galaxy as the dominant premium Android phone. I'll try to pull up the industry report that had those numbers. Quick link while I look: https://www.forbes.com/sites/parmyolson/2016/11/04/apple-grabs-more-than-100-of-smartphone-profits https://www.forbes.com/sites/parmyolson/2016/11/04/apple-gra...

stuff4ben 5y ago

Begs the question of if one would rather sell the most but make just a moderate amount money or sell moderately but make the most money? In the short-term I could see that being a good thing as you build up your war-chest and invest. But long-term your marketshare will erode and you'll be making a lot of profit on fewer sales. I'm no economist, so I have no idea which is the better position to be in.

zepto 5y ago
Apple’s market share is growing, not eroding.

cs702 5y ago

...with only a 13% share of units. That is, all other vendors together sold 87% of units, but earned only a combined 25% of industry-wide profit. The vast majority of those other vendors are companies headquartered in Asian countries with a long history of promoting market share, access to information, and knowledge transfer at the expense of short-term profit. They might be making less money willingly to grow/maintain volume, grow/maintain access to a large volume of user data, and acquire/maintain expertise.

NineStarPoint 5y ago
I expect it’s more about the competition than those companies willingly leaving that level of profit on the table. In the android market, people have the option of switching to a competitor if you’re not price competitive yourself. For IOS, apple is the only game in town on hardware.
- cs702 5y ago
  Maybe. I'm not so sure. In theory, a company like, say, Samsung could stop making cheaper, money-losing phones and invest primarily on making increasingly better, premium, profitable phones like the Galaxy Fold, but they choose not to do that, year after year.
  - chii 5y ago
    > focus primarily on making premium, profitable phones like the Galaxy Fold believe it or not, apple's supply chain and verticals and operations are much more efficient than samsungs'. Tim cook did wonders during steve job's era to scale out their operations. So much so that samsung cannot really compete at the same quality.
  - cies 5y ago
    What differentiates those premium phones? It runs the same Android of which I rather have a stock version than the bloat-ware rubbish that phone makers install on there for me. The iOS devices link into a web of ease-of-use, and come with a reasonably well make stock version of iOS. And then there's trust. Whom does an average user trust more with their data? (Apple/USgov, or Google/USgov+Samsung/SouthKorea+...)

gtirloni 5y ago

> In Q2 2021, it captured 75% of the overall handset market operating profit and 40% of the revenue despite contributing a relatively moderate 13% to global handset shipments So they charge a premium for their phones, that's all. Android completely obliterates Apple if you count number of units shipped.

icelancer 5y ago
Making more profit on way fewer units is something I think most companies would like a lot more than shipping the most units.
r3trohack3r 5y ago
Android is an operating system. Apple is a company. “That’s all” is disingenuous. If Samsung could charge a similar premium for their phones, and capture a similar profit, I’m fairly confident they would.
- gtirloni 5y ago
  It's hard to say Apple is some kind of king of the hill when 9 in 10 people around the globe have an Android. Congrats to them on extracting more money from their customers though, I don't see how that helps in general (unless you hold Apple stock).

criddell 5y ago

I think one of the smartest things Apple did was open physical stores and not depend on carrier stores and Best Buy. I've often wondered why their competitors don't do the same thing? Why isn't there a Samsung store a block away from every Apple store? Having a physical location for purchases, repairs, and support is why I always recommend Apple devices when somebody who isn't super technical asks me what to buy. Microsoft made a half-hearted effort, Sony was there too soon with their stores, Dell had crappy little mall kiosks. Apple has shown you can make pretty great revenue-per-sq-ft with a store. Samsung copies everything else Apple, why not the stores?

cozzyd 5y ago
Motorola tried opening a store in downtown Chicago. Didn't seem very busy at all...
tmoravec 5y ago
Samsung does have its stores in my country (Czechia). Very much inspired by Apple, touting flagship phones and all.
- alanlammiman 5y ago
  yep. Brazil too. AFAIK there is only one Apple store in Sao Paulo (though there are Apple resellers too) but Samsung has stores in virtually all high end malls. Xiaomi had a pilot store here too. The context is that Brazil has high import duties on manufactured goods. Apple doesn't manufacture domestically. Samsung does.
curiousllama 5y ago
Apple sells a luxury product. Physical stores are the type of thing you do for a luxury product. You can buy basic macarons at the grocery store, or go to Laduree for the luxury version. Same deal.
- criddell 5y ago
  The most expensive (non-novelty) phones sold right now are from Samsung. At every price point that Apple sells at, Samsung has a similar product. Apple also sells their handsets through carriers, big box stores, and online through places like Amazon. You can often buy their stuff for less at these places yet the stores are still packed because people will pay more if it's a better experience.

samfisher83 5y ago

Really in us it's Samsung and apple, and Samsung is content just matching Apple's price for it's flagship. Wonder why we don't have a phone market like China with all these phone makers.

ksec 5y ago
1. Carrier Subsidy Model. 2. 4G / 5G as well as other Patent arrangement. 3. All of that along with higher operation cost means their current selling price are not sustainable in the US market without some adjustment.

1cvmask 5y ago

I think we might be missing the big picture here. Apple captures 75% of the profit from handset market share. The rest is split between high end Android devices from say Samsung and low-end commodity Shanzhan android devices. But in the Android sphere Google is clearly capturing the profits from Android devices on software. https://www.theverge.com/2016/1/21/10810834/android-generated-31-billion-revenue-google-oracle https://www.theverge.com/2016/1/21/10810834/android-generate... In addition to profits, Google does not have to pay for the search bar to be highlighted and their apps to be installed: https://9to5mac.com/2021/08/25/analysts-google-to-pay-apple-15-billion-to-remain-default-safari-search-engine-in-2021/ https://9to5mac.com/2021/08/25/analysts-google-to-pay-apple-...

oblio 5y ago
From Wintel to Goocomm. Android OEM are (almost) commodity product makers.
CarelessExpert 5y ago
This is an excellent point. If "operating profit" also includes app store revenues, payment revenues (remember, Apple requires apps use their payment platform), and content revenues, the likes of Samsung, et al, are at a serious disadvantage and can only compete on device margins as they can't tap into any of those revenue streams.
- tadfisher 5y ago
  AKA the 3DO problem.
- fomine3 5y ago
  Also Samsung has Galaxy Store, but maybe not much contributed to profit.

lindseymysse 5y ago

I wonder, by percentage, how much of these profits are owed to click farmers: https://en.wikipedia.org/wiki/Click_farm https://en.wikipedia.org/wiki/Click_farm Apple devices claim to be "luxury" -- something I find hilarious, but the marketers certainly believe. It makes the clicks from an Apple device more valuable than a click from an Android device. Therefore, there's just going to be more sales to click farm companies. And they buy in bulk: https://www.equedia.com/wp-content/uploads/2017/05/clickfarm.jpg https://www.equedia.com/wp-content/uploads/2017/05/clickfarm... The entire mobile phone ecosystem is a hilarious ouroboros of marketing nonesense in the end. I would be laughing if the environmental and human costs weren't so extreme.

neogodless 5y ago

Apple has brand loyalty, and apparently, they earned it. In buying an Android handset, your options shift over time. Samsung has the most brand loyalty, and some high-end handsets, as well as some lower end ones. The rest of the brands seem to waffle between trying to be high-end, and being the best value. For example, OnePlus set out to be compete against the high-end with really low prices, but over time, the prices caught up to the competition. Google has made affordable Nexus handsets, moved towards high-end Pixels, but then backed off and started selling mainstream handsets. It's hard, as a consumer, to know what to replace your handset with when the time comes, because what was good might still not be good. And maybe a newer brand offers a better deal that sways you. While competition is mostly a good thing in the Android handset market, it also makes for some unpredictability, and few companies figure out where to position themselves, and maintain excellence.

mytailorisrich 5y ago
Huawei went after Apple, including on quality. They were shot down right when their sales overtook Apple's (maybe a coincidence, who knows...)
- handrous 5y ago
  Were they taking sales from Apple, to any major extent? Or just shifting around the Android market? If the latter, I can't imagine Apple'd care. Samsung's been doing the same thing (being the Apple of Android) for quite a while, and it hasn't mattered much.
  - dagw 5y ago
    Were they taking sales from Apple, to any major extent? I can't speak for China, but in Europe everybody I know who bought a Hauwei phone did so because they wanted a 'cheaper Samsung'.
- seanmcdirmid 5y ago
  Huawei and Apple have a similar market share profile in mainland China (Huawei sells more, Apple earns more) where government interference is lacking.

deleted 5y ago

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throwawaymanbot 5y ago

the surveillance infrastructure now makes more sense..

coreyp_1 5y ago

I would still buy a Windows phone, if it were available. :(

mrjin 5y ago
Me too. Never liked iPhone. Android, was kinda okay, but now I'm at the brink to ditch it. Unfortunately, there is no alternative yet...
soneca 5y ago
Same here. I still think the tiles interface with vertical scroll was the best one for phones. I don’t dislike either Android or iPhone, but I still miss my Windows phone.
- BoorishBears 5y ago
  WebOS was the best interface and every other interface has spent the last decade slowly catching up.
  - Yhippa 5y ago
    They're _still_ not caught up and don't have the clean design it had. Unbelievable. I still can't align my phone correctly on my wireless charger like I could with my Palm Pre.

marricks 5y ago

As others have said, Apple does this with only 13% share. The important point is Apple has to make money selling phones, that is their business model. Android's is making money in a number of other ways, mainly user's data.

burnte 5y ago
Apple absolutely doesn't HAVE to make money on the hardware, they could sell them at a loss and still rake in billions thanks to the AppStore.
- marricks 5y ago
  That's a good point!
- dev_tty01 5y ago
  Services (App store, Music, TV, ...) accounted for 21% of revenue last quarter. The rest is hardware. App store is some fraction of that 17 billion services revenue. Hardware was 64 billion. So yes they could make billions in services, but it pales in comparison to their hardware revenue. Also, services revenue doesn't happen without selling a huge amount of hardware first, and building the ecosystem, ... All of that had to happen for years before services revenue started to become significant.
  - burnte 5y ago
    Revenue, but a much larger part of the profit.

musicale 5y ago

Does this include profit from the App Store?

perryizgr8 5y ago

But remember, there is no monopoly.

p2t2p 5y ago
You guys are tiresome. 13% of sold handsets.
- perryizgr8 5y ago
  You guys are tiresome. 75% of global mobile profit.
  - Terretta 5y ago
    Among plenty of competition, consumers voted with their wallet. Consumer preferences remain clear. That’s not a monopoly. If one doesn’t like consumers’ choice, one can try to understand why the value one thing over another and out deliver that. But first one must really grok it. HN threads show that’s hard as supporting the non-tech user-centric approach requires an atypical world view among Makers. Numbers show it’s hard as a majority of the competitors are not engineered or marketed with that understanding. There’s likely a connection.
    - perryizgr8 5y ago
      > Among plenty of competition Can you name 2 other OSes that compete meaningfully against Ios? Keep in mind I'm not talking about ecosystems that make less than half of the profit Ios makes for Apple. Hence the "meaningful".