According to the latest data from MarketResearch, global smartphone profits in the third quarter of 2019 were about $12 billion, with Apple accounting for 66 percent, or about $8 billion. The remaining 34% was mainly won by Samsung, Huawei, OPPO, Vivo and Xiaomi. Samsung’s total profit share is closest to Apple’s, at 17%. Overall, the Android camp’s total profitises is only half of Apple’s.
“Services include two aspects, one is the software level, the other is the after-sales service level, the former includes the theme, the game’s props, browser app store share and advertising revenue, the latter includes financial services, after-sales service and so on. Zhai Zhanmeng told the first financial reporter.
Occupying the high end of the market
Mr Counterpoint said Apple’s loyal high-end user base in key markets such as the US, the European Union and Japan was one of the reasons apples remained profitable. In addition, with its service strategy, Apple’s overall ecosystem is sufficient to ensure a stable revenue stream.
While Apple continues to face competition from domestic handset makers in China, its share of the high-end smartphone market above $400 in the third quarter was still more than 50 per cent, while the second and third-largest, Samsung and Huawei, accounted for 25 per cent and 12 per cent, respectively.
According to Counterpoint, consumer demand for smartphones with prices ranging from $600 to $800 has risen significantly, from 31% of high-end computers in the third quarter of last year to 43% this year, driven mainly by Apple’s iPhone XR. Demand for smartphones, priced between $800 and $1,000, also jumped 60 percent, accounting for 21 percent of overall sales in the high-end smartphone market, driven mainly by Samsung’s Galaxy S10 and Galaxy Note 10 series. Huawei, on the other hand, accounts for more than 80% of the domestic market share of high-end smartphones with models such as the Mate 30 and P30.
“While Huawei’s profits continue to grow steadily, it is still less than a point compared to Apple and Samsung.” Yu Chengdong, head of Huawei’s consumer business, told reporters that there are two major gaps between Huawei and Apple: on the one hand, brand building, and consumer trust and recognition, and second, Huawei’s ability in channeland and retail. At the time, Huawei’s consumer business’s full-year revenue figures were less than Apple’s quarterly profit.
In recent years, as the average unit price of smartphones has risen, the sales gap between domestic phones and Apple and Samsung has begun to narrow, and there has been more noise in mid- to high-end gears, but Apple is also lowering the price of some iPhones. According to Counterpoint, this poses significant challenges to some Chinese smartphone brands’ increased profits and price increases, and limits their ability to move into the high-end market.
Zhai Zhanmeng told reporters that the current domestic manufacturers, Huawei, OPPO, vivo several profit situation is not bad, in the new product release period, Huawei’s P-Series and Mate series profits are higher than OV, but in the end of the product, OV profit increase will be more obvious.
Profit flow to software
“In hardware, local manufacturers have to adapt to micro-profit survival. “A domestic mobile phone manufacturer in charge of the reporter, should not only focus on the phone itself, but to widen the track.
Zhai Zhanmeng told reporters that the current software service revenue has become the main source of profits of some mobile phone manufacturers.
Judging by Apple’s trajectory over the years, service providers including Apple Music and iCloud are giving Apple more room to imagine. While there are concerns about whether Apple’s iPhone sales will hit another record high, the technology company has made big profits from the best performances of iTunes, iCloud, Apple Music, Apple Pay and Apple Care.
In the second quarter of fiscal 2019, Apple Services’ gross profit was 64.1%, twice as much as its product division. In the latest results, Apple’s service division has the second-highest growth rate after wearables. The App Store, the strongest driver of Apple’s services sector, is the most important component of its service revenue and a major contributor to the company’s profits.
Macquarie Securities expects App Store revenue to reach $16 billion in 2019. The App Store’s sales will grow 28 percent by 2021, meaning the Apple App Store’s revenue will be close to $100 billion in 2021.
And from the domestic head mobile phone manufacturers of the development of the status quo, services and software to bring benefits are also expanding.
Take Xiaomi, for example. In the third quarter of 2019, Xiaomi IoT and consumer products generated revenue of 15.6 billion yuan, up 44.4% YoY, while Xiaomi Internet Services revenue was RMB5.3 billion, up 12.3% YoY. In September 2019, MIUI’s global monthly users were 292 million, up 29.9% year-on-year. Advertising revenue was RMB2.9 billion, excluding pre-installed advertising revenue, up 6.9% YoY.
OPPO, Vivo and Huawei have not disclosed revenue from the software. But OPPO’s vice president and president of the Internet division, Duan Yanhui, has previously publicly disclosed that OPPO has 320 million global users and 780 million daily distributions in software stores and game centers.
Huawei said that in 2018, huawei terminal cloud service users more than 500 million, Huawei terminal signed developers worldwide has exceeded 560,000, and partner revenue increased by more than 100% year-on-year.
Sina Statement: This message is reproduced from Sina Cooperative Media, Sina.com published this article for the purpose of transmitting more information, does not mean to agree with its views or confirm its description. The content of this article is for informational purposes only and does not constitute investment advice. Investors do so at their own risk.