Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd. have established quite a stranglehold on the smartphone marketplace, and that duopoly is expressed once again in operating profit in the smartphone market space as reported in a research note by a Canaccord Genuity analyst. Let’s just say these two companies don’t like to share – they’ve eaten everything on the plate, and there are no crumbs for the rest.
Analyst Michael Walkley looked over the books for the top smartphone producers and figured out that Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd. accounted for 106 percent of the total available operating profit for the sales quarter that ended in September. Apple Inc. (NASDAQ:AAPL), specifically, accounts for 59 percent of the profit on 15 percent of market share, while Samsung recorded 47 percent of total profits on 32 percent of market share. Some key players – like Motorola Mobility, Nokia Corporation (NYSE:NOK) and Research in Motion, Ltd. (NASDAQ:RIMM), lost money to help explain the more than 100-percent figure for the Big Two.
With Apple Inc. (NASDAQ:AAPL) and Samsung taking up nearly half of the smartphone market and the only companies that make a profit on their handsets, it will be interesting to see if and how Microsoft Corporation (NASDAQ:MSFT) can leverage its Windows Phone 8 marketing into developing market share for Nokia Corporation 9NYSE:NOK) and HTC – and accompanied profits, to be sure – with two companies that are already so dominant.
There are projections that Apple Inc. (NASDAQ:AAPL) will see its market share jump to more than 20 percent in the current quarter thanks to the iPhone 5, while Samsung share may drop slightly to 30 percent. Samsung continues to have a stranglehold on the market due to its versatility, as it makes handsets that run on the Android operating system by Google Inc. (NASDAQ:GOOG) and the Windows OS by Microsoft Corporation (NASDAQ:MSFT), while Apple Inc. (NASDAQ:AAPL) has only its own OS.
So when one looks at it through that lens, Apple Inc. (NASDAQ:AAPL) seems to be positioned well as a market leader, and is may carry forward, as the company is projected to sell about 194 million smartphones in 2013, compared to more than 300 million by Samsung between its two OS platforms. This will be something to watch closely for investors in Apple Inc. (NASDAQ:AAPL) stock, like billionaire fund manager David Einhorn of Greenlight Capital.