Tech Transformers

Apple captures record 91 percent of global smartphone profits: Research

Apple has captured a record share of profits in the global smartphone industry in the third quarter, according to new research, despite grappling with falling iPhone sales.

Third-quarter smartphone operating profit reached $9 billion globally of which Apple took 91 percent of the share, Strategy Analytics said in a note on Tuesday. This amounts to $8.19 billion for the U.S. technology giant.

Apple has the highest profit margins in the smartphone industry thanks to a loyal brand following and the ability to price its iPhones at a premium. And the figures come even after Apple reported three straight quarters of iPhone sales declines.

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In its official fiscal fourth-quarter results, which coincides with Strategy Analytics' third-quarter survey, Apple reported an operating income of $11.76 billion overall – not just for its iPhone unit. The U.S. hardware giant does not break out profitability for iPhones separately. Apple's gross margin was 38 percent.

"Apple's ability to maximize pricing and minimize production cost is hugely impressive and the iPhone continues to generate monster profits," Linda Sui, director at Strategy Analytics, said in the report.

Part of the reason Apple has also captured record share is because other players in the smartphone market have declined.

Strategy Analytics' estimate appears conservative compared to other studies. Earlier this month, BMO Capital Markets said Apple accounted for around 103.6 percent of profits in the smartphone market. The more than 100 percent figure reflects the fact that other vendors such as HTC and LG lost money.

No Samsung in sight

Sat a long way behind Apple is China's Huawei which managed to grab 2.4 percent of global operating profit share in the smartphone market, accounting for $200 million, according to Strategy Analytics. Huawei's third-quarter smartphone shipments rose 63 percent year-on-year, official figures from the company showed in October. The Chinese technology giant does not break out profitability figures, but it is now the world's third-largest smartphone maker behind Samsung and Apple.

It has been focusing on selling high-end devices to challenge its larger rivals and boost margins with the company aggressively expanding its marketing efforts.

Chinese start-up brands Vivo and OPPO are in third and fourth place, both capturing 2.2 percent of global smartphone profit each. Both firms have managed to grow rapidly through a strategy of selling low-cost but high-spec phones.

Apple's closest rival Samsung does not feature in the Strategy Analytics report.

"Three of the world's top four most profitable smartphone vendors are currently Chinese. Huawei, Vivo and OPPO have not only improved their smartphone product lineups this year, they have also enhanced their operational abilities and kept a tight lid on expanding distribution costs," Sui said.