Consumer Electronics

Just How Badly iOS Gobbles Up Android Profit Share

Source: courtesy of Google Inc.
Every report we see on smartphone operating systems — platforms — puts Android from Google Inc. (NASDAQ: GOOG) at the top of list with a market share of around 60% or more. However, where it counts — the bottom line — Apple Inc. (NASDAQ: AAPL) is picking up all the marbles.

Global operating profit for smartphones reached $21 billion in the fourth quarter of 2014, according to research firm Strategy Analytics. Apple’s iOS pocketed a whopping 89% of that, $18.8 billion, while second-place Android took home just 11%, or $2.4 billion. Apple’s take is a record high and Android’s is a record low.

Compared with the fourth quarter of 2013, Apple’s share grew from 70.5% to 88.7%, while Android’s share fell from 29.5% to 11.3%. When you do the math you also see that neither Microsoft Corp. (NASDAQ: MSFT) nor BlackBerry Ltd. (NASDAQ: BBRY) nabs any measurable share at all.

We all know that Apple had a killer fourth quarter and that Samsung Electronics, the largest seller of Android devices, did not. Samsung is expected to unveil its next high-end smartphone at the Mobile World Congress next week, and that might put a bit more jingle in Google’s pockets, but we shouldn’t expect a major change.

Apple has locked up the high-end of the smartphone market, and that is where all the money is. By focusing on the high end, Apple has never really been distracted by trying to push a mid-range or low-end device. Everything is premium.

The folks at Strategy Analytics suggest that if Samsung and Huawei and other smartphone makers cannot make a profit in the Android ecosystem, they may turn to alternate platforms like Samsung’s Tizen or Microsoft’s Windows Phone or Firefox. Maybe, but those ecosystems are nearly invisible and profits would probably be even harder to come by, although Samsung may eventually improve its profits somewhat because it owns Tizen.

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