Updated: December 22, 2019 2:23:32 pm
This year has been a good one some smartphone manufacturers like Apple. The numbers also show the same. According to Couterpoint’s ‘Global Handset Industry Profit Share’ report, Apple has captured 66 per cent of industry profits and 32 per cent of the overall handset revenue in 2019. Following Apple is Samsung in the list capturing 17 per cent of the overall handset Industry profits. The research agency notes, among the top ten brands only Samsung and Huawei has managed to raise their revenue on a yearly basis. “The increased mix of Galaxy A Series along with the positive start of Galaxy Note 10 Series was the key reason for the growth,” notes Counterpoint.
According to the Counterpoint report, the overall global handset profit has declined by 11 per cent, to USD 12 billion in Q3 2019, compared to this time last year. The reason behind the decline is said to be “due to an increased mix of entry to mid-tier products and a fall in revenues for key smartphone OEMs.” The decline is also likely because of lengthening of the replacement cycle for premium smartphones as this year’s hardware features have been unable to offer a reason to consumers to upgrade to a new smartphone.
Following the top two companies, Apple and Samsung, in the list are Huawei, Oppo, Vivo and Xiaomi. Talking about low-profit margins of the Chinese smartphone companies the research agency notes, “Chinese smartphone brands operate at low-profit margins, but better than in previous years, even though they are expanding outside China and also penetrating high-tier price bands.”
“Chinese brands offer attractive propositions to mature smartphone users with new feature-packed flagships at affordable prices. Some of these Chinese brands are also now looking at monetizing their user base by launching services like financial services, IoT products and others. However, it is becoming a challenge for Chinese brands to increase their smartphone ASPs and margins due to a combination of longer consumer holding periods and Apple lowering pricing on some key SKUs, which has limited the headroom that Chinese vendors had used to increase their ASPs,” the report further states.
Apple tops the list
Like last year, Apple tops the list with maximum profit share this year. And it is clearly due to the company’s latest ‘not-so-expensive’ iPhone 11, which launched in the month of September this year. iPhone 11 has received great response from the consumers around the world including India. Starting last year, with the launch of the iPhone XR, Apple changed its strategy by getting into the ‘affordable’ segment. The same strategy was carried forward this year with the launch of iPhone 11, making the phone accessible to wider range of consumers. The positive response helped Apple top Couterpoint’s ‘Global Handset Industry Profit Share’ chart.
The research agency notes, “the loyal premium user base in the major markets like the USA, EU and Japan is one of the reasons that Apple can still operate at a profit level that its competitors can only wish for. Now with a strong service strategy, Apple’s overall ecosystem is strong enough to guarantee it a steady inflow of revenue in the coming years. In the immediate future, we believe that Apple’s profit for the holiday season will increase with the new line up of iPhones gaining good traction.”
5G will bring change
The coming year, 2020, will see some changes as far as the smartphone industry is concerned. It is due to 5G entering the market. Several OMEs like Xiaomi, Samsung, Vivo, Oppo, among others have already started working on their 5G smartphones to launch in the coming year. The adoption of 5G is said to drive some upgrades among the consumers. “While revenue growth is probable, bill of materials (BoM) costs will also tend to rise, so profit margins may not benefit to the same extent,” notes the report.
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