Why is the iPhone selling more expensive, but the total profit has plummeted?

According to a new report released Thursday by Research Group Counterpoint, the q3 global smartphone market will gross $12 billion in 2019, with Apple with a 66% share and a profit winner. In a note, Point analyst Karn Chauhan wrote that Apple leads the global mobile market, with 66% of industry profits and 32% of overall mobile phone revenue. In major markets such as the United States, the European Union and Japan, a loyal high-level user base is an important reason for Apple’s dominance in the industry.

While Apple’s share of this is still out of reach for other big factories, it is important to know that Apple’s contribution to total global smartphone profits reached 92% in 2017. Eight of the top 10 most profitable phones at the time were iPhones (the other two were Samsung phones);

That said, Apple’s share of the global smartphone market has fallen sharply.

Domestic Android machine outburst

Why is the iPhone selling more expensive, the more the total profit has plummeted?

Excluding Apple, the top profitmakers for Q3 Android in 2019 are Samsung, Huawei, OPPO, Vivo, and Xiaomi, according to the Point report. Samsung has a 17% market share with its Galaxy A-Series portfolio and galaxy Note 10 series;

Analyst Karn Chauhan also commented on the performance of the domestic Android machine, saying:

Profit margins for Chinese smartphone brands are low, but things are much better than in previous years. These mobile phone brands are expanding into markets outside China and penetrating high-end price ranges, offering affordable, fully functional flagship products that offer consumers more options. This has partly stimulated profit growth.

In fact, in q2 2018, the performance of the domestic Android machine is very “brave”. At the time, Apple’s iPhone’s share of total smartphone profits in the global smartphone market had fallen significantly, to 62%, while Samsung’s share had fallen from 17% year-on-year, followed by domestic phones Huawei (8%), OPPO (5%), vivo (4%) and Xiaomi (3%)

While the profit contribution of domestic Android machines may seem negligible, their profit growth is impressive, with Xiaomi’s Q2 profit growth of 746 per cent in 2018, Huawei’s profit growth of 107 per cent, vivo and OPPO at 24 per cent and 23 per cent, respectively.

While Apple’s handsets are still the industry leader in terms of profit margins, there is no denying that Android is “taking” some share stakes from Apple.

iPhone sales crisis still in the balance

In addition to external pressure, Apple’s decline in iPhone profits is also tied to the company’s financial movements.

By looking at Apple’s earnings results in the first three quarters of this year,” apple’s profit margin scored in the first three quarters of 2018 and Q1 began to decline in 2019, so the data before 2019 is no longer discussed:

Q2, 2019, Apple raw material costs increased 17% year-on-year and research and development costs increased 15% year-on-year

In Q3 2019, Apple’s research and development and sales management costs increased by 9.6% and 8.5%, respectively.

And while the iPhone is getting more expensive to sell, its contribution to Apple’s total revenue has been shrinking since Q1 in 2019. On a data perspective, iPhone revenue for the first three quarters of fiscal 2019 was down 15%, 17%, and 13% year-on-year, respectively, with q2 q2 in 2019 achieving revenue below 50% of total revenue for the first time since 2012.

The data reflects the downturn in iPhone sales from the side – as can be seen from Canalys’s report:

Q3, the global smartphone market, has a market share of 12.3%, lower than Samsung and Huawei, with shipments down 7% year-on-year.

Q3 in 2019, the market share of the iPhone in the Chinese market is 5.2%, after Huawei, vivo, OPPO, Xiaomi and other domestic Android, shipments decreased by 28% yoy.

Why is the iPhone selling more expensive, the more the total profit has plummeted?

In other words, while the iPhone is selling at a higher price than other phones, it means “luxury in the phone”, the increase in raw material costs, research and development costs, and sales costs will somewhat compress the iPhone’s profit margins; will affect the volume of the total profit.

On top of that, because the iPhone has become so hard to make innovative upgrades, it has allowed some iPhone users to extend their switching cycles, and now almost all of the world’s big mobile phone companies have launched 5G phones, and 5G iPhones are not yet available, even if users need a switch, the iPhone It may not be their best choice.

Fortunately, Apple has already felt the pressure from competition and has begun to take steps to launch the “true fragrance” of the iPhone 11- iPhone 11 at its new launch in September, sending it back to the top of the world’s market capitalisation, with its share price at one point in history.

But in the long run, there are cost problems, and android rivals, and the iPhone’s near-term profits may not change much.

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