[NewsPoster]

In a blog post of all the notable developments in the mobile market for 2014, industry analyst Chetan Sharma includes a number of observations about Android hardware and its profit margins. The primary one is that the Android device manufacturer community suffered its "most significant ever" drop in profits during 2014, with earnings having dropped 50 percent from expected levels across 2014.

Even with Samsung generating over $100 billion in sales from phones (including smartphones and feature phones), and Xiaomi becoming the limited success as far as revenue goes, due to narrow profit margins.

Meanwhile, Apple will generate over $100 billion this year from the sale of iPhones alone, and has recently announced the Apple Watch, expected to become available next quarter. Total revenue for smartwatches currently is roughly $1.7 billion, with 75 percent of that coming from the US.

In western markets, 90 percent of mobile devices sold are smartphones, with a global share of 65 percent. Of that, Chinese device OEMs alone accounted for roughly 40 percent of smartphone sales in 2014. Despite the combined larger market share of devices based on Android, Apple continues to take more than half of the entire mobile device industry's profits, with Apple and Samsung effectively the only companies that make any real profit from smartphones at all.

2013 division of smartphone industry profits

A year ago, Apple took 56 percent of all the earnings made in smartphones, while Samsung claimed 53 percent (this totals 109 percent due to the addition of losses from all other makers). Since then, Samsung's sales and profits have fallen significantly, leaving Apple as likely to have taken at least 60 percent of the industry's profits for this year.

[climacs]

if Samsung follows through with their Tizen operating system, they'll start to lose money on smartphones too. Or, they can continue making Android devices that help make money for Google.

[Charles Martin]

I wonder how much money Google actually makes off Android. Microsoft appears to make more $$ off Android than even Google's ads do on the platform.

[aardman]

Yes Virginia, there really is a race to the bottom in Android phones.

[Charles Martin]

Over the next few years, we will finally get, I think, a definitive answer to the question of what matters more: marketshare, or profit share.

(though it's worth pointing out that Apple's marketshare is also going up nearly everywhere)

[coffeetime]

The future looks bright for Apple. Especially for their larger screen iPhones really helps.

[shawnde]

I also believe Samsung makes much less money than is estimated. ALL of the estimates on Samsung shipments and revenue are "un-official" i.e. they're guesses by the "analysts". Samsung doesn't report any of their numbers, most probably because they're not that impressive. They spend an inordinate amount on spiffs and marketing (i.e. bribes and cash-backs to the dealers), which means their profits are far less than reported. Analysts are just guessing based on shipment numbers and ASP, and guess on margins. We all know how reliable shipment numbers are .... even court documents revealed that they were grossly inaccurate. Therefore, I think in real terms, Apple probably has 90% of the profit in the industry, with the remaining 10% split between ALL other vendors. This is pretty much identical to the PC business.