Rivals left with loose change as Apple, Samsung pwn mobile industry profits

Apple and Samsung have pwnd the entire cell phone market, which includes smartphones, feature phones and dumb phones, one analyst noted. Together, the two frenemies have managed to gulp literally all of the cell phone industry’s profits during the first quarter of this year, leaving rival device makers with inadequate revenues to fund research and development and justify costs associated with carpet-bombing the market with numerous handsets…

Specifically, Apple accounted for a whopping 80 percent of all mobile industry profits while rival Samsung clung onto the remaining 20 percent. Together, Apple and Samsung accounted for more than an astounding three-quarters of the cell phone industry revenues…

Raymond James analyst Tavis McCourt, as quoted by Boy Genius Report:

It is getting increasingly hard to understand where the rest of the device vendors will get the capital to fund necessary R&D and sales and marketing investments to continue to compete with Apple and Samsung.

With essentially all of the other hardware vendors besides Apple and Samsung struggling to find profits to reinvest into R&D, Microsoft and Google have to be wondering who their hardware partners will ultimately be.

He’s got a point…

Such is the nature of the cut-throat cell phone biz.

It never ceases to amaze me how Apple has managed to pull such a feat – and against all odds, too – with just one handset family, in less than five years time. During the first quarter of 2012, Apple sold 35.1 million iPhones.

Quite a gap in estimates has Samsung’s fist-quarter smartphone shipments pegged at 44.5 million (Strategy Analytics) and 32 million units (IHS iSuppli). Samsung stopped divulging smartphone and tablet sales data last year, citing competitive reasons.

As Samsung and Apple continue to duke it out in the marketplace, their bosses are scheduled to meet in San Francisco on May 21-22 for court-moderated talks about the ongoing patent issues.

Faced with shrinking profits, some handset makers have already scaled back their smartphone portfolios for 2012, namely HTC and Motorola. In fact, both firms have been reporting losses many quarters in a row now.

We also know that the iOS platform earns Google four times the advertising revenue of Android.

Android and Motorola, of course, used to be a match made in heaven.

Remember this?


The Android promise is quite a bit different today than it was two years ago – and especially bleak for Motorola, currently in the process of being acquired by Google for $12.5 billion.

Wonder how long before one of the major handset vendors goes out of business.