In a report that shouldn’t come as a surprise to anyone, Canaccord Genuity earlier today revealed that Apple’s iPhone accounted for the lion’s share of smartphone industry profits during the 2016 holiday quarter. Specifically, the iPhone supposedly accounted for an impressive 92% of all industry-wide profits, a remarkable achievement given that Apple isn’t exactly killing it with respect to market share.
While Microsoft and LG’s smartphone divisions lost money last quarter, Samsung managed to withstand the negative fallout from its Galaxy Note 7 fiasco and enjoy upwards of 9% of the profits from the smartphone industry last quarter.
Underscoring Apple’s commitment to maintaining impressively high margins, the average selling point (ASP) for the iPhone this past quarter was $695, a whole world higher than the ASP of $182 that Samsung saw across the entirety of its phone lineup. That astronomical ASP, and the corresponding profit margins that Apple enjoys per phone, are the real key behind Apple’s profit share.
Also helping matters is that the more margin-friendly iPhone 7 Plus last quarter vastly outperformed even Apple’s internal projections. As Tim Cook explained during the company’s earnings conference call last week, demand for the iPhone 7 Plus was so great that Apple didn’t even manage to reach a supply/demand balance until January of this year.
Looking ahead, it stands to reason that Apple’s command of industry wide profits will only expand. The success of the iPhone 7 Plus illustrates that consumers are more than happy to pay Apple big bucks for additional features. That said, the premium priced iPhone 8 — with its rumored edgeless OLED display — will very likely be the most popular iPhone model in Apple’s 2017 lineup. And seeing as how the OLED iPhone 8 will likely boast stronger margins than the company’s other iPhone models, Apple’s already large profits will likely to increase dramatically in late 2017.
On a related note, a recent report from Barron’s suggests that demand for the iPhone 8 will be so immense that Apple is aiming to kick off mass production a bit earlier than usual. All the more impressive is that checks with the supply chain “suggest a 300% increase in iPhone 8/X builds in the June quarter.”