Apple Dominates Smartphone Industry With 93 Percent Of The Profits

Apple’s holiday quarter confirmed what many observers already suspected -- the iPhone rules the smartphone market. The company pulled in $18 billion in earnings, grabbing a hold of 93 percent of the handset industry’s total measurable profits, according to a report from New York City-based investment firm Canaccord Genuity.

South Korean multinational conglomerate Samsung grabbed the industry’s remaining profits, while other vendors, including Microsoft, LG and HTC, either lost money on smartphones or broke even.

Canaccord also confirmed that the iPhone user base is steadily growing, and that growth should help sales in the long term for the Cupertino-based company, since Apple has a strong track record of customer retention.

As of March of last year, Apple held 62 percent of the smartphone industry’s $216 billion net operating profits over a period spanning the past six years. Part of that may be due to the fierce loyalty many consumers have toward the sleek smartphone. Last year, Simonlycontracts.co.uk polled nearly 3,000 iPhone owners and found that 59 percent admitted “blind loyalty” to their iPhones. 78 percent said they couldn’t “imagine having a different type of phone now.”

The iPhone has been a staple for tech lovers for almost eight years -- the first-generation device launched in June of 2007, and though small details of the smartphone -- its thickness, edges, speed, storage capacity and side button placement -- have slightly changed, the user interface has largely remained the same.

That loyalty holds benefits for Apple’s other brands. Many iPhone users aggressively purchase only Apple products, such as iPads, Macbooks and iMacs. Apple is also preparing to launch its first smartwatch sometime this year, the Apple Watch, which was announced last September alongside the Apple Watch Sport and the Apple Watch Edition for $349.

“We anticipate steady long-term iPhone replacement sales within this growing iPhone installed base, and we believe this combined with our modest installed base growth expectations position Apple for steady sales of roughly 210M-215M iPhone units annually between C2015 to C2018,” Mike Walkley, an analyst for Canaccord Genuity, said in his company’s report.

The report cautioned that it may be overestimating Apple’s profit share since it didn’t include sales figures for certain Chinese vendors like Xiaomi, one of the largest smartphone manufacturers in China. Xiaomi is a private company and didn’t reveal its numbers from the last quarter.

However, one thing is clear -- Samsung is losing the smart phone battle with Apple. While Samsung still sells more cellphones than any of its competitors, its profit is decreasing due to Apple’s increasingly large share of the high-end smartphone market. Samsung is currently preparing to launch its Galaxy S6 in March, the company’s premium device of 2015. Meanwhile, Apple managed to sell 74.5 million iPhones during the last quarter. “If Apple continues to gain high-end smartphone market share,” Samsung will be the most affected maker of Android smartphones,” Walkley added.