It’s an open secret that Apple keeps big profit margins on all its products, including the iPhones. We also know that iPhones sell by millions every year. So when you put two and two together, it makes you wonder what massive amount of profits Apple must be making on iPhones.
Let me throw in another stat to make the equation even more mind-boggling. Last year, Apple made 79% of the profits achieved by the entire smartphone industry put together. That’s right! Just one company had almost 4/5th of the profits of the global market. And that too without being the top seller of smartphones. That’s right, Apple isn’t even in the top 3 sellers of smartphones!
That’s right, Apple isn’t even in the top 3 sellers of smartphones!
The report by Strategic Analytics estimated the cumulative profit of the smartphone industry in 2016 at 53.7 Billion USD. While Apple pocketed most of this, Samsung came a distant second with just 8.3 Billion USD profit (14.6%). The only other companies that managed to keep their balance sheets in green were Huawei, Oppo, and Vivo, with 1.6%, 1.5% and 1.3% profits respectively.
This overwhelming success of iPhones is a testimony to Apple’s approach to business. In spite of operating in such a highly contested market, Apple never participates in price wars. Instead, they focus on delivering top notch quality at a premium. It’s a deliberate decision to forfeit the ‘Top Seller’ tag for the more meaningful ‘Maximum Profits’ achievement.
Critics and competitors will continue to label Apple as a snob brand. Ads mocking the company’s cult following will keep coming. But the truth remains that, given a choice, all these competing brands would love to trade places with Apple in a heartbeat. Because, if you don’t have an iPhone, you don’t have an iPhone.