Apple Leads Q2 Smartphone Profits Despite Market Decline
The global smartphone market saw a significant revenue drop in Q2 2023, declining by 8% year-on-year (YoY) and 15% quarter-on-quarter (QoQ), settling below the $90 billion mark.
This is notably the weakest Q2 performance since the intense lockdowns of the 2020 pandemic, according to data from Counterpoint’s Market Monitor Service. The market’s operating profits weren’t spared either, tumbling by 3% YoY and a substantial 27% QoQ.
Amidst the downturn, Apple maintained a steady footing, as shown in its Q3 earnings report this week. Jeff Fieldhack, Research Director at Counterpoint, highlighted, “Despite the market’s 9% drop in smartphone shipments YoY, Apple’s shipments merely reduced by 3%. Further, its Average Selling Price (ASP) benefitted from the popular Pro series and diminished SE series influence.”
“With the iPhone 13 Mini’s substitution by iPhone 14 Plus, Apple’s iPhone revenue did see a slight 2% dip YoY. However, its revenue market share surged, hitting a Q2 record of 45% – an increase of nearly 3% from last year’s Q2. Impressively, Apple’s global operating profit share also climbed by 4% from Q2 2022, achieving another Q2 record at 85%,” added Fieldhack.
A 9% YoY drop in shipments combined with a mere 1% growth in ASP triggered the overall market revenue decline.
Adding to the insights, Research Director Tarun Pathak commented on the broader market, “The modest ASP growth this quarter is primarily seasonal, as Q2 is positioned between the peak iPhone demand and a fresh iPhone release while missing out on Samsung’s top-tier S or Z-series launches. This drop in annual revenue directly affected the market’s operating profits. The sequential decline in operating profit was even more pronounced given Apple, the chief contributor to the overall operating profit, saw almost a 4% shipment share reduction QoQ.”
Yet, with all these shifts, the upward trend in premium smartphones is predicted to persist. Emerging markets are poised to propel this trend, along with mid-range brands eyeing the premium bracket and luxury brands pushing their priciest models. This suggests a potential rebound in both global smartphone revenues and operating profits by the second half of 2023, providing a much-needed boost in an era of dwindling shipments.
When inflation is still here and the cost of living remains out of control, it becomes hard to justify that new iPhone upgrade every year. With the slow rate of changes to the iPhone, it’s better to upgrade every few years now instead.