Apple Grabs 73% of Smartphone & Tablet Industry Profits

Apple Grabs 73% of Smartphone & Tablet Industry Profits

Samsung shipped double the number of smartphones last quarter than Apple did. According to IDC, the about 50 million units Samsung shipped is is a record for units ever shipped by a handset vendor in a single quarter. Does that matter?



Because when you look at the broader mobile industry, Apple — thanks to the higher gross margins of the iPhone and iPad — far outshines its rivals in both revenue and operating profits.

Even though Apple only shipped about 6 percent of the industry’s smartphones and tablets in the second quarter, according to Raymond James analyst Tavis McCourt, they captured about 43 percent of the industry’s revenue. It generated an incredible 77 percent of the industry’s profits.

So Samsung’s outselling of the iPhone by two to one might be a feel good opportunity for the Korean electronics maker, it’s not a financial plus. Samsung may ship more, but Apple shines where it matters, profit.

“Ultimately, profits are the feedstock of innovation; and, innovation drives profits,” McCourt writes. “Until Samsung starts generating more profits than Apple, we would not be overly concerned with who has the unit share lead. Remember, HP and Dell still sell a lot more PCs than Apple sells Macs, but does it matter?”

Not on the bottom line it doesn’t.