Apple Inc. recorded 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley. Samsung Electronics Co. took 15%, Canaccord says. […]
Apple’s share of profits is remarkable given that it sells less than 20% of smartphones, in terms of unit sales. […]
Neil Mawston, executive director at market researcher Strategy Analytics, said many Android vendors are stuck between low-cost, high-volume brands such as China’s Xiaomi Corp. and Apple’s premium smartphones.
You can compete on the basis of making differentiated products or on the basis of making low cost products. Successful execution of either approach is difficult and expensive. You’re either investing in technology development and the customer experience, or you’re investing in lowering your costs across your business and supply chain.
Most smartphone OEMs never wanted to invest enough to operate at one extreme or the other. “Too expensive” or “too risky” was probably the prevailing thinking. And so their products aren’t differentiated enough, and their costs aren’t low enough to enable a profit. They’re stuck in the middle. That’s a pretty expensive and risky place to be.