Apple has taken the Lion’s share of Q3 smartphone profits globally but loses the steam in China to Oppo and Vivo. While Samsung takes $5 billion hit to end Galaxy Note 7 fiasco.
Apple Inc. (NASDAQ: AAPL) might just have had another blockbuster quarter what with research firm Strategy Analytics pegging the Cupertino company’s share of the Q3 mobile industry profit at an astounding 91 percent. The report further claimed the total profit for the mobile industry as a whole during the same period at $9.4 billion.
That makes $8.5 billion in profit for Apple from proceeds from its entire mobile business, which includes sales of hardware as well as services. The above figure does tally with what Apple revealed officially – an operating profit of $9 billion from $46.9 billion in revenue that it earned during the period from July through September. Apple though has been expecting slightly higher revenue of $46.94 billion.
Apple, during the conference call also added it sold 45.5 million iPhones along with 9.2 million units of the iPad and 4.8 million Macs during the third quarter. CEO Tim Cook also thanked consumers for their strong response to the new iPhone 7 and iPhone 7 Plus as well as the Apple Watch Series 2.
However, the iPhone 7 sales might just have had a marginal effect on the company’s Q3 figures since it went on sale late during the quarter. So much of it had to do with the sale of iPhone 6s even though the sale of the iPhone 7 predecessor had slowed down considerably during the time in anticipation of new iPhones.
Experts attributed Apple’s strong performance to their exceptional ability to maximize profits while keeping production costs to a minimum. That is not all as Apple reported strong performance of the Services sector that too reported an impressive growth of 24 percent.
However, while all of the above should be enough to bring cheers to the company, it does have to contend with a few aspects that are adding to its worries. Take for instance the 30 percent plunge that its operations in China reported. The company though put up a brave face and said it still is optimistic of returning back to favor in China. Apple also stated devaluation in currency also had an adverse effect on its profits from China.
Meanwhile, Huawei came in at the second spot, having secured 2.4 percent of the mobile industry profits. This is the first time it has been ranked this high with domestic competitors Vivo and Oppo taking up the third and fourth slots with 2.2 percent profit each.
The rise of the Chinese companies has been at the expense of Samsung Electronics Co. Ltd. (NASDAQ: SSNLF) that is having to stomach a massive $5 billion in losses thanks to the infamous Note 7 failure. Another reason that led to the surprise growth of brands like Oppo and Vivo is the higher commission they have been doling out to the sellers.
The commission varies from $40 yuan to 200 yuan depending on the cost of the handset, which is reason enough for the sellers to promote such brands. Both Vivo and Oppo also targeted the rural and far flung areas to push sales of their handsets. This is in stark contrast to the urban areas where Apple or even domestic competitor Xiaomi largely operates in.