Third quarter profits from the smartphone industry went to one single big player, Apple, which grabbed 104 percent of profits, a figure higher than 100 percent owing to the fact that Apple rivals lost money.
The whole Samsung Galaxy Note 7 fiasco was a huge blessing for Apple. With two Note 7 recalls over exploding batteries, Samsung basically took itself out of the race in the quarter and profits landed in Apple.
The Cupertino company had a tremendous quarter on account of Samsung's failure, ruling the smartphone market and grabbing its highest profit share in ages. The news comes from BMO Capital Markets analyst Tim Long, who revealed in a research note on Thursday that Apple grabbed 103.6 percent of smartphone industry profits in Q3.
That's a notable jump from the 70 percent profit share Apple scored in the second quarter of this year. At the same time, it also marks a substantial increase compared to the slightly more than 90 percent profit share Apple grabbed in the third quarter of last year.
"Its share is over 100 percent because other vendors lost money in the business, resulting in Apple having more smartphone profit than the industry netted overall," Investors Business Daily reports.
Apple placed on top by far, followed by Samsung in the second spot with a meager 0.9 percent share, Long adds. Smartphone makers who lost money last quarter include HTC and LG.
Apple's impressive Q3 success was not only due to Samsung's Galaxy Note 7 failure, however. The iPhone 7 played a big role in that success, hitting the market in September and enjoying high demand.
Samsung, meanwhile, had a weak third quarter partly due to the decision to start selling the Galaxy Note 7.
"After registering the highest operating margin since early 2014 last quarter, Samsung's profitability fell to near-breakeven levels in September," Long further tells investors.
Samsung's market share dropped in the quarter to just 22 percent of global smartphone shipments, Long points out. And it will likely hit its lowest level since 2011 next quarter.
As Apple and Samsung have long been the two top players, dominating the smartphone industry by far, Samsung's fall from grace naturally left Apple as the king.
Profit shares of more than 100 percent are possible because other smartphone makers posted losses, leaving the big guys to reap all profits. In this case, Apple bagged enough profit for all.
It remains to be seen just how Samsung will manage to bounce back from this rough patch, especially since it had just issued another recall — this time related to top-loading washing machines. It may have nothing to do with smartphones, but it's still hurting the brand at a time when Samsung's reputation has already taken a heavy blow from the Note 7.
