Samsung profits surge 79% boosted by smartphone sales

[Yuriman]

Yup, Apple launches one great phone every 12-16 months. Yet it now has 73% of the smartphone profit share (source: http://arstechnica.com/business/201...handset-profits-as-smartphone-sales-shoot-up/ ). They're making nearly three times as much with iPhone as all of their competition combined.

I didn't read the article so please excuse if this was covered, but it's very difficult to nail a number on how much money Google makes off of Android. First glance says zero - it's a free OS. Rather, they make a little on app sales. However they also make tons of money via advertising, and Android phones keep users within the google ecosystem and deliver that advertising to them. Google mines tons of data and makes money with it.

Hardware manufacturers are a different story - they need people constantly buying phones to make anything, which is why you see Samsung releasing 30 phones a year.

Apple is a combined hardware and software company, with a different business model than either.

 

[smartpatrol]

I didn't read the article so please excuse if this was covered, but it's very difficult to nail a number on how much money Google makes off of Android. First glance says zero - it's a free OS. Rather, they make a little on app sales. However they also make tons of money via advertising, and Android phones keep users within the google ecosystem and deliver that advertising to them. Google mines tons of data and makes money with it.

Hardware manufacturers are a different story - they need people constantly buying phones to make anything, which is why you see Samsung releasing 30 phones a year.

Apple is a combined hardware and software company, with a different business model than either.

The article was specifically about hardware profit share. It had no data about Google's profits from Android, only their major handset partners. But yeah, I agree their business models are vastly different. I just find it worrisome that so many OEMs are cranking out Android hardware at breakneck speed, yet they're all losing money except Samsung.

 

[smartpatrol]

That prosperity will be short-lived if they ignore market share. Jobs said as much back in 2004 when asked why Macs never gained mass market appeal even though they had a head start over Windows:



It's happening all over again. iOS had a good head start over Android, but Google is going for the land grab, sacrificing hardware margins to lock potential customers into an ecosystem.

iOS is gaining market share. Last report I saw showed iOS gaining at a faster rate than Android for the last quarter. And for the most recent month, Android actually lost a bit of market share. I'll try to find it if you want.

At any rate, Apple's strategy has NEVER been about grabbing market share at any cost. Instead, they focus on taking the most profitable segment of the market. Remember "Microsoft doesn't have to lose in order for us to win"?

 

[jpeyton]

iOS is gaining market share. Last report I saw showed iOS gaining at a faster rate than Android for the last quarter. And for the most recent month, Android actually lost a bit of market share. I'll try to find it if you want.

comScore's latest US data:

Feb-12 May-12 Point Change
Google 50.1% 50.9% 0.8
Apple 30.2% 31.9% 1.7
RIM 13.4% 11.4% -2.0
Microsoft 3.9% 4.0% 0.1
Symbian 1.5% 1.1% -0.4

For the most recent month, "a bit of market share" translates to 0.1%. I think Android is doing okay if they still gained 0.8% overall during the slowest and worst quarter for Android phone shoppers. Q2 gains will be much higher with the release of the HTC One and SGS3.

FYI, Gartner's global marketshare data shows:

Q1-11 Q1-12 Point Change
Google 36.4% 56.1% 19.7
Apple 16.9% 22.9% 6.0

 

[akugami]

I didn't read the article so please excuse if this was covered, but it's very difficult to nail a number on how much money Google makes off of Android. First glance says zero - it's a free OS. Rather, they make a little on app sales. However they also make tons of money via advertising, and Android phones keep users within the google ecosystem and deliver that advertising to them. Google mines tons of data and makes money with it.

Hardware manufacturers are a different story - they need people constantly buying phones to make anything, which is why you see Samsung releasing 30 phones a year.

Apple is a combined hardware and software company, with a different business model than either.

App and music sales probably accounts for very little profits for both Apple and Google. Last I checked Apple only makes a sliver of its profits from the iTunes store.

So the only things left are software licensing, hardware sales, and data mining and advertising.

Now, neither Apple nor Google licenses their products for money. Apple doesn't license at all while Google's is a free license.

In terms of hardware sales, this is where Apple makes its money. No question here. Apple has put itself at the top of the ladder and become a premium brand. Essentially Apple has taken over the premium brand pricing that used to be enjoyed by Nokia and then some.

Google makes zip on hardware for the most part. Any profits from the Nexus line is probably negligible. And for this thread, this is where Samsung has been killing it compared to other Android OEM's. We used to have about 3-4 Android OEM's making some money. Samsung has basically become the Android OEM.

Data mining. Apple is starting to get into this game and they are starting to cut Google off. Apple has its own ad company, which isn't doing so hot. But more importantly to Google, Apple is starting to get into the data mining aspect with Siri searches and also cutting off Google from map search data on iOS.

Google still has the web searches on mobile Safari. The question is for how much longer? And this is really where Google makes its money on Android. Serving up ads and data mining. Last I checked, Google makes more money off of this on iOS than it does Android but I don't have any recent data so who knows what that's at right now.

 

[Mopetar]

At any rate, Apple's strategy has NEVER been about grabbing market share at any cost. Instead, they focus on taking the most profitable segment of the market. Remember "Microsoft doesn't have to lose in order for us to win"?

They might want it to be, at least for a small time. Here's another quote from Jobs: "The Mac user interface was a 10-year monopoly. Who ended up running the company? Sales guys. At the critical juncture in the late ’80s, when they should have gone for market share, they went for profits."

Maybe this is another critical juncture where Apple has an opportunity to grab a lot of new customers and keep many of them.