Apple, Samsung take 108% of handset profits -- wait, what?

The top two players continue to dominate as several companies posted losses in the second quarter.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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  • SABEW Best in Business 2011 Award for Breaking News Coverage, Eddie Award in 2020 for 5G coverage, runner-up National Arts & Entertainment Journalism Award for culture analysis.
Roger Cheng
2 min read
The Galaxy S III and the iPhone 4S stand apart from the rest of the field. CNET

Apple and Samsung Electronics' lead over the rest of the handset field only widened in the second quarter, with the two companies combining for a staggering 108 percent of the industry's operating profit.

How can two companies exceed the 100 percent mark? When several of the other companies, including Research in Motion, Nokia, Motorola, and Sony, posted hefty operating losses in the period.

"With Apple enjoying leading share of the high-end smartphone market and Samsung extending its overall smartphone and Android market share, competing smartphone (original equipment manufacturers) are increasingly struggling to compete with these dominant smartphone OEM," Canaccord Genuity analyst T. Michael Walkley said in a note published today.

The numbers continue to tell a sobering tale in the handset industry: that barely anyone can survive with much of the profits swallowed up by the two juggernauts in the field. It's unclear how any of these companies will get back on their feet with competition from Huawei and ZTE applying pressure on the low end.

Apple impressively generated 71 percent of the industry's operating profit with only 6.5 percent of the global handset market, according to Canaccord.

Samsung, which has the largest market share at 25 percent, saw its share of profit rise to 37 percent, Walkley said.

HTC was the other company able to eke out a profit in the second quarter, but it was down from a year ago. Walkley said that while it continues to enjoy strong carrier support, its One line of phones haven't sold as well with consumers.

Samsung is expected to increase its market share lead in the third quarter as its Galaxy S III continues to perform well. Apple, meanwhile, is expected to have a stronger end of the year with the expected unveiling of its next iPhone in September.

Android has likewise been dominant, Walkley said, noting that its share continues to rise at the expense of BlackBerry and Symbian.