Apple Controls 75% Of The Profits In The Key Mobile OEM Space
Speaking of crazy charts… these great ones by Horace Dediu of Asymco are just bonkers.
In the first, you’ll see that Apple retains the top rank in profitability among mobile phone OEMs for the third straight year…
In the second chart, you’ll see that Apple snatched the revenue crown back from Samsung last quarter.
But the third one is the best. It’s not just that Apple is ahead in profit share, they’re destroying everyone else. That includes Samsung.
(And if you can’t see Sony, LG, and Motorola on that chart, it’s because they’re making little or no profit.)
Apple now makes an astounding 75% of the profit in the industry amongst their peers. That’s with just 9 percent unit share (smartphones and feature phones are combined), as Dediu points out. Amazing.
Samsung's Q4: $4.7 Billion In Profit
In other words, they’re the bizarro-Motorola.
Or, put another way, in order to acquire such a company at the market price Google sets, it would take something like $14 trillion.
More Like "MehViolet"
For once, a bit of upbeat news for UltraViolet, the awful idea that Hollywood seems dead set on implementing: Amazon and Samsung are now on board.
That’s good news for the don’t-call-it-DRM newfangled DRM, which has been swimming in a sea of shit since it launched last year.
Of course, the one name still not on board remains the most important: Apple. Wake me up when that happens — which given the customer response to UltraViolet seems unlikely anytime soon.
One Out Of Three Ain’t Bad…
All we’ve heard for the past year-plus is how Android is killing it. The phones are taking over the world. And that’s true — from a unit perspective. But from an actual business perspective, things are decidedly murkier. Google says they’re making a good amount of money as a result of Android, but it’s clearly nothing compared to their main business. The carriers are doing well too — but carriers always do well. Being overly greedy tends to have this effect. As for the OEMs… well, that’s a different story.
The three largest Android OEMs are Samsung, HTC, and Motorola. Samsung just posted record quarterly profit. So far so good. But HTC just reported its first profit drop in two years. And Motorola just warned that its 4th quarter sales were going to miss as well. When you have to warn ahead of actual earnings, that’s a very bad sign.
So one of the three top Android OEMs is doing well. The other two are doing poorly. This matters because of what it means for the future.
The Other Side Of Choice
I fully agree with this editorial by Chris Ziegler calling for the Android OEMs to stop making so many phones each year. His intro:
The seed for this editorial was planted in my brain the day that the HTC Amaze 4G was released on T-Mobile 120 days after its predecessor, the Sensation 4G. It bears repeating: one hundred and twenty days. Even now, it makes my head spin.
If I had bought the Senstation 4G, the senstation I’d be feeling is something akin to a swift kick in the nuts.
Ziegler’s graphic in the post is pretty amazing when you consider that it’s Apple versus only HTC (and not even all HTC phones) — just one Android manufacturer. Factor the others in and it would look like a big gray mass — exactly what I see when I look at the Android phone market.
Ziegler does say there’s hope given that manufacturers like Samsung seem to be trying to establish routine updates and branding with their Galaxy S line. Of course, not mentioned is that this very line made headlines this morning for its inability to upgrade to the newest Android version — even though it was released just 18 months after the phone itself.
Reading this piece over, another thought popped into my head: what if this once-a-year phone upgrade mentality pushes the carriers more towards one-year contracts? I could see someone like Sprint doing this to differentiate themselves and win customers. Of course, either the subsidy would have to be less upfront or the monthly contracts a bit more to sustain such a move. Still, I don’t think it’s so crazy.
Samsung: no ICS upgrade for Galaxy S and Galaxy Tab because of TouchWiz
Downside: 10 million-plus Android users getting screwed.
Upside: TouchWiz is living up to its name.
Apple vs Samsung
Pictures from minimally minimal via Daring Fireball
Put another way:
Good (iPhone 3GS) — Better (iPhone 4) — Best (iPhone 4S).
Vs.
You should get this one, it has a nicer screen than this one. But wait, it’s slower. Maybe get this other one. But this one has a keyboard. But I hate keyboards. So get this one, it runs Windows Phone. But maybe I should go Android. Oh, so get this one. Well, but I sort of like the clamshell. Then this is the one you want. But I hate the color. Okay, then this one. Well, I also kind of like this one, but it’s running an older version of Android. So then this is the one you want. The screen is too damn big. Okay, just close your eyes and pick one goddamnit.
Choice sounds great until you have to choose.
ATTENTION HENRY BLODGET: YOUR CAPS LOCK KEY IS STILL ON
Fine, I’ll take the bait. A few things here.
First, Blodget sets up his argument by saying that Apple fans are more or less in denial. He cites the continued march of the Android platform both in terms of phone quality and market share which are huge blows to Apple.
The result of these huge blows? Apple becoming the most valuable company in the world while pulling in more profits than most of its competitors combined.
It’s the most beautiful kind of losing ever, apparently.
Then Blodget dives into why the latest VERY IMPORTANT story about Samsung “winning” the smartphone sales war will be the latest disaster for Apple. Of course, as he notes, “winning” still needs a fairly large asterisk for a few reasons.
Doesn’t matter. Apple is still in big trouble. A company that sells dozens of models across all carriers is outselling a company that sells two models (now three) on a limited number of carriers (though expanding).
Just as with overall Android marketshare, it’s a bit pathetic that Samsung wasn’t ahead of Apple earlier.
Then, after essentially setting up why Apple is so fucked because history is repeating itself all over again, Blodget argues directly against that idea.
Sure, this time is different. But that doesn’t matter. Apple will fall because they just will.
They will be the most profitable failure ever. The most valuable failure ever.
And it’s their own fault! “Apple’s decision to move the launch of the latest iPhone back three months, as well as its decision not release a revolutionary new phone until next year, have helped Android close the gap,” Blodget notes.
Apple definitely had this incredible meeting a few months ago to say, “how can we best screw ourselves?” A decision was clearly made to not release the best device possible, but instead to release a shitty one — and also to delay the shitty one. This was all done on purpose.
That shitty one just set a record for sales — for any phone ever, mind you — with 4 million units sold in three days. Apple will sell by far a record number of iPhones — the shitty one, remember — this quarter. They’ll make more money than ever.
Doesn’t matter. They’re going down. Just as they have been. IN CAPS.
"Not the right time"
Everyone seems confused about Samsung and Google postponing their Nexus Prime/Ice Cream Sandwich announcement at the last second. Perhaps I’m reading it incorrectly, but the statement seems to point to one thing:
Samsung and Google decide to postpone the new product announcement at CTIA Fall. We agree that it is just not the right time to announce a new product. New date and venue will be shortly announced.
The middle sentence, to me, suggests that they’re postponing it out of respect to Steve Jobs and Apple.
The device/OS was set to be unveiled on Tuesday the 11th, which is in between when the iPhone 4S was announced (the 4th) and when it will go on sale (the 14th). Some people are interpreting this as Google/Samsung being afraid of going head to head. Others wonder if something is wrong with the device and/or the OS?
But again, I don’t think it’s either of those things. I think more likely is that their plan was to take a ton of shots at Apple and the iPhone during the announcement and now it would seem disrespectful to do so right after Jobs’ passing when all of Apple is in mourning.
Update: Sure enough, Google just sent the following statement:
“We believe this is not the right time to announce a new product as the world expresses tribute to Steve Jobs’s passing.”
“Free”
Buried under the massive Kindle news is something arguably more important: Microsoft just got Samsung to pay them to use Android.
This means that two of the major Android OEMs (Samsung and HTC) now pay Microsoft to use the “free” Android OS. The third (Motorola) was just bought by Google.
Think about that for a second.
Samsung was really the last remaining hope in the Android OEM ecosystem. Now that they’ve agreed that they have to pay Microsoft, it’s going to be hard for others to argue that they shouldn’t have to.
Evil or not, it sure looks like Steve Ballmer was right: Android is not free. No, you don’t have to pay Google to use it — but you do have to pay Microsoft.
And that’s genius. If you decide to use Windows Phone, Microsoft wins because you pay them a licensing fee. If you decide to use Android, Microsoft wins because you pay them a licensing fee.
This will force more vendors to consider Windows Phone because, why not? They’re paying Microsoft either way.
More broadly: what does this mean for companies like Amazon, which now have their own version of Android? Will they too pay the licensing fee?
After all, it sure looks like the Kindle Fire is about to become the Android tablet.
What a day for Android. It was just pushed behind the scenes as the thing that powers that awesome, cheap Amazon Kindle tablet. And made into that thing you pay Microsoft to use.
Oh My God, It's Full Of iPads!
Yes, Samsung is actually using Stanley Kubrick’s 1968 film 2001: A Space Odyssey as their claim of prior art for the design of the iPad (which Apple is suing them for copying).
What’s still unclear is why, with such advanced knowledge, Samsung would not have created their killer tablet between 1968 and 2010. For some reason they had to wait until the iPad came out.
American Airlines To Offer Galaxy Tab 10.1 For Premium Class In-Flight Entertainment
“Sir, can I offer you a Galaxy Tab 10.1 for the flight?”
“A what?”
“A Google Android-powered tablet computer.”
“Oh, like an iPad?”
“Sort of.”
“Well do you have an iPad?”
“Sorry sir, no.”
“It’d be a lot cooler if you did.”
