A high tide does not lift all boats equally. Smartphone shipments topped 680 million last year, a 45 per cent increase from 2011. But only two handset manufacturers, Apple and Samsung, have meaningfully profited from the bonanza.
According to estimates from Canaccord Genuity, Apple and Samsung combined for a 103 per cent share of industry profits in 2012, up from an 83 per cent share a year prior.
The number is greater than 100 per cent because Canaccord calculates profit share as “value share,” which includes profits to offset other manufacturers’ losses (losses are counted as negative value share).
LG and HTC were also profitable, but just barely. The analysis did not include high-growth Chinese manufacturers like Huawei and ZTE.
Samsung continues to eat up a greater share of industry profits, accounting for 34 per cent of the value share, up from 17 per cent the year before. This has not come at Apple’s expense—the average selling price of iPhones is remarkably stable— but is mostly a function of scale. Apple still has 69 per cent of the value share. Canaccord estimates Samsung more than doubled its smartphone shipments in 2012, moving almost 80 million more devices than Apple.
This demonstrates just how brutal the hardware business can be: Despite selling millions of phones, most companies have little to show on the bottom line.
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