Apple Inc.’s iPhone X Over Twice as Profitable As Android Manufacturers

iPhone X sales - Apple Inc.’s iPhone X Over Twice as Profitable As Android Manufacturers

Source: Counterpoint Research

There has been much hand wringing about lower than expected iPhone X sales. With iPhone revenue being the primary driver of AAPL stock, that’s understandable. But a new report sheds more light on the situation, with Apple Inc. (NASDAQ:AAPL) — and especially the iPhone X — coming out looking pretty good.

According to the data, AAPL captured 86% of total smartphone industry profit in Q4 2017. Not only that, but iPhone X sales alone accounted for 35% of all profit made in the smartphone industry.

That puts Apple’s position in some context, and suddenly the iPhone X doesn’t sound like a flop. Yes, there are still signs that Apple’s flagship hasn’t sold as well as the company had hoped. But on the other hand, the Counterpoint Research data validates Apple’s strategy of pricing the iPhone X high. Despite the grumbling about that lofty price tag, it has meant a much higher Average Sales Price (ASP), and it has resulted in impressive profitability despite a slowing smartphone market.

Counterpoint Research Shows iPhone X Sales Dominate Industry Profits

Counterpoint Research just released a report showing a detailed analysis of Q4 2017 smartphone industry profitability. Among the findings are that global smartphone profits declined 1% year-over-year (no surprise given that smartphone sales also declined for the first time in that quarter), and Chinese smartphone manufacturers like Huawei managed to boost their gains from smartphone sales considerably.

But the big stories were Apple, and iPhone X profitability.

According to Counterpoint Research, AAPL took 86% of overall smartphone industry profit for the quarter. That’s a good showing, even for Apple. At various points through the iPhone’s dominance, AAPL has pulled in anywhere from 79% to over 100% (a point where other manufacturers were operating at a loss), but 86% is a solid showing. Especially in a quarter where its flagship wasn’t flying off the shelves the way many had expected.

But in Q4 2017, Apple managed to dominate, despite those lower than expected iPhone X sales. The top five smartphones by profitability were from Apple, and the company scooped eight of the top 10 slots. And speaking of Apple’s expensive flagship, iPhone X profitability puts the rest of the industry to shame.

Counterpoint Research says iPhone X sales alone accounted for 35% of total smartphone industry profits for the quarter. With just 14% of profits going to everyone who isn’t Apple — including Samsung, Huawei, LG and Alphabet Inc.’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google — that means the iPhone X was more than twice as profitable as all the Android manufacturers combined. In fact, Counterpoint Research says that the iPhone X alone “generated 5x more profit than the combined profit of 600+ Android OEMs during Q4 2017.”

BGR has access to the full report and notes that iPhone X profitability alone was more than three times that of Android leaders Samsung, Xiaomi, Huawei, LG, HTC, Sony and OnePlus put together.

The report definitely puts those lower than expected iPhone X sales in context.

Of course AAPL doesn’t break out individual iPhone sales data, so the information Counterpoint is working with isn’t official Apple numbers. But the trend seems clear and helps to shed a more positive light on those lower than expected iPhone X sales. It shows that by going with a higher ASP, Apple is having success in continuing to dominate the profit in a smartphone market that’s both slowing overall and facing the growing threat of Chinese smartphone makers going upscale. That’s good news for AAPL stock. 

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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