Canaccord Genuity analyst T. Michael Walkley told clients that Apple’s share of smartphone profits dipped to 64% during the June quarter. While huge, it’s a significant dip from the 84% share of the profits Apple enjoyed during the March quarter. The blame, according to Mr. Walkley (via Barron’s), goes to Samsung’s spring release of the Galaxy 8.
Mr. Walkley said the Galaxy 8 distorted results, and that Apple will claw back profit share this fall. Apple is expected to announce iPhone 7s and iPhone 7s Plus in September. The company is also expected to announce a higher-end model dubbed iPhone 8 or iPhone Pro.
While Apple’s share of smartphone sales is somewhere around 11%—a percentage that has fallen over time—the company has always enjoyed a massively disproportionate piece of the profit pie. As noted above, Apple routinely scoops up 84%-90% of hardware profits, while Samsung sweeps up what’s left. The rest of the industry is losing money on every device sold and trying its best to make it up on volume.
The Samsung Galaxy 8, however, has been successful, and reportedly enjoyed a successful rollout. Wall Street, investors, and smartphone partisans alike will be watching to see if Apple’s fall announcement recapture the company’s dominance. I’ve seen, however, perennial stories about how this year will at long last be the year that Apple fails to deliver a device that’s worthy. Never mind that this has yet to be the case, true believers are going to believe.