Counterpoint: iPhone rakes in 66% of smartphone profits

By

International governments plan to rethink tax rules for the ‘digital age’
Who knew? Turns out that the iPhone is quite the money-spinner.
Photo: Pixabay/Pexels CC

When you hear about declining iPhone sales and factoids like Huawei overtaking Apple as the world’s second biggest smartphone maker, it’s easy to lose sight of just how successful Apple is at selling phones.

A new report from Counterpoint Research is a reminder just what a profit-generating powerhouse the iPhone actually is. In Q3 2019, Apple captured a whopping 66% of industry profits. Second place winner Samsung, by comparison, pulled in just 17% of handset profits.

The firm notes that:

“Apple dominates the global handset market by capturing 66% of industry profits and 32% of the overall handset revenue. The loyal premium user base in the major markets like the USA, EU and Japan is one of the reasons that Apple can still operate at a profit level that its competitors can only wish for. Now with a strong service strategy, Apple’s overall ecosystem is strong enough to guarantee it a steady inflow of revenue in the coming years.”

Counterpoint: iPhone and beyond

Not everything is good news for Apple, of course. Overall global handset profits declined 11% year-on-year to $12 billion in the third quarter of 2019. Only Samsung and Huawei were able to increase their revenue on an annual basis. The replacement cycle for premium smartphones has also lengthened. That means a lack of compelling new features is stopping people upgrading regularly.

How the profits stack up.
How the smartphone profits stack up.
Photo: Counterpoint

Nonetheless, there are big reasons to be excited. 2020’s iPhones are rumored to be the first 5G iPhones as well as having a big redesign. This would be the first major redesign for the iPhone since 2017’s iPhone X.

Most importantly, Apple’s experiencing growth elsewhere in its business. Subscription services will continue to rake in cash. But the really big winner is the wearables category. Between the Apple Watch and the ultra successful AirPods, Apple relies less on the iPhone as its major superstar product.

Even if, as Counterpoint makes clear, it’s still a phenomenally successful business.

Source: Counterpoint Research