Apple gobbles 92% of smartphone industry's profits, analyst estimates

Apple (NASDAQ: AAPL) may have captured around just 18 percent of the global smartphone market in the first quarter, according to research firm IDC. Yet according to investment bank Canaccord Genuity, Apple grabbed nearly all of the smartphone profits that quarter.

Apple accounted for 92 percent of the total operating income from the world's eight largest smartphone makers in the first quarter, up from 65 percent a year earlier, according to estimates from Canaccord Genuity managing director Mike Walkley. Samsung grabbed 15 percent of the operating profits, according to Canaccord data cited by The Wall Street Journal.

Apple and Samsung account for more than 100 percent of industry profits because other OEMs either broke even or lost money, based on Canaccord's calculations.

This dynamic is actually not that new. In the fourth quarter, Canaccord noted that Apple captured 93 percent of the smartphone industry's profits. Yet the figures illustrate that even Samsung, the world's largest smartphone maker by volume in the first quarter and the leading Android device maker, is trailing Apple when it comes to profits in mobile. Samsung is reportedly looking to speed up the launch of its next Galaxy Note phablet to try to regain momentum in the smartphone market.

Meanwhile, Apple is reportedly asking suppliers to make up to 90 million new iPhones by year-end. Samsung, meanwhile, is forecasting weaker profits in the second quarter. HTC is expecting a loss in the second quarter, and last week Microsoft (NASDAQ: MSFT) said it will cut around 7,800 jobs, mostly from its phone business, and record an impairment charge of around $7.6 billion related to its purchase of Nokia's (NYSE:NOK) devices and services business

As Fortune notes, the Canaccord data is incomplete, since it only looks at the eight biggest smartphone makers. There are hundreds of manufacturers of Android devices, many of which post profits. Still, many Android OEMs or ODMs do not make a profit and often make phones with razor-thin profit margins.

Canaccord's data does not include privately held companies including Xiaomi and India's Micromax. Walkley told the WSJ those companies' profits are unlikely to alter the industrywide profit picture.

Strategy Analytics analyst Neil Mawston noted to the Journal that many Android vendors are caught between low-cost, high-volume brands like Xiaomi and Apple's high-end smartphones, which it has continued to sell at high margins.

"There is that danger that you get trapped in the middle," Mawston said.

For more:
- see this WSJ article (sub. req.)
- see this Fortune article 
- see this 9to5 Mac article

Related articles:
Apple's massive reported iPhone order could be driven by Chinese demand
Report: Apple asks suppliers to make up to 90M new iPhones by year-end
Report: Apple to start ramping up production of new iPhones with pressure-sensitive 'Force Touch' technology
Samsung reportedly moving Galaxy Note 5 launch up to mid-August
Samsung expects Q2 profit to fall, possibly due to misjudging Galaxy S6 Edge demand
Analysts lower Samsung Q2 earnings expectations amid concerns over Galaxy S6 sales

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