​Apple takes 89 percent of all smartphone profits worldwide

With a 20 percent share of all smartphone shipments in Q4 2014, Apple took nearly all the industry's profits. It's a situation that could could spell trouble for Google.

A record quarter following the launch of the iPhone 6 and iPhone 6 Plus has left Apple in control of nearly all profits in the smartphone business.

Google's Android OS might dominate smartphone market share, but for all the volume, Android OEMs are battling out over a rapidly shrinking share of profits in an industry where that has seen them grow significantly over the past year.

According to Strategy Analytics, with $18.8bn in operating profits for Q4 of last year, Apple took a record-breaking 89 percent share of the $21bn the smartphone industry made in profit that quarter.

While Apple's premium pricing combined with strong sales of iPhone 6 and iPhone 6 Plus helped drive its share of profits, Android handset makers slid to just 11 percent of all profits made by the industry, down from 29 percent in the corresponding quarter a year ago.

Over the period, Android handset makers' total profits declined from $4.8bn to $2.4bn.

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Q4 2014 worldwide smartphone profit split. Image: Strategy Analytics

Declining profits for Android OEMs could spell trouble for Google, but may present an opportunity for Microsoft, Neil Mawston, executive director of Strategy Analytics' global wireless practice, said.

"Android's weak profitability for its hardware partners will worry Google. If major smartphone manufacturers, like Samsung or Huawei, cannot make decent profits from the Android ecosystem, they may be tempted in the future to look at alternative platforms such as Microsoft, Tizen, or Firefox," he said.

On the other hand, the reduced profits for Android OEMs may not mark much of a change for most OEMs besides Samsung, which reported its fifth consecutive quarterly decline in operating profit year over year in January.

"Samsung was the main downward driver of Android profits worldwide in Q4 2014," Mawston told ZDNet.

Bleak as the profits for Android OEMs may seem, Microsoft, BlackBerry and other smartphone makers accounted for almost zero percent of the industry's profits during the quarter.

Huawei, Xiaomi, and Lenovo all saw large increases in year on year shipment numbers in Q4 2014, according to analyst firm IDC. Over the period, Samsung's shipments fell by nearly 10 million. Meanwhile, Apple's shipments, which trailed Samsung by 25 million for the quarter last year, reached 74 million last quarter putting it neck and neck with Samsung.

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