Apple, Inc. Just Hit a Ridiculously Impressive Milestone

Apple's (AAPL -1.19%) iPhone unit sales may have come up slightly short over the holiday shopping season relative to expectations, but the company was still able to post a record quarter on a number of fronts. Among the records set was total revenue of $88.3 billion, which was made possible thanks in part to a spike in iPhone average selling prices (ASPs). In pushing further upmarket with iPhone X, which is priced between $999 and $1,150, the company is doubling down on its premium pricing strategy.

That strategy is already paying off.

Image source: Apple.

Half the battle

Market researcher Strategy Analytics has just released its estimates for the smartphone market in the fourth quarter, and the numbers show that Apple has just hit a ridiculously impressive milestone: The iPhone maker just took over half of all global smartphone revenue. Specifically, Apple grabbed 51% revenue share, with Samsung coming in at a distant No. 2.

Data source: Strategy Analytics.

It's worth pointing out that Strategy Analytics' revenue estimate of $61.4 billion differs from Apple's official figure ($61.6 billion) because the researcher is measuring wholesale revenues, while Apple's results include channel sales as well as direct sales.

Strategy Analytics executive director Neil Mawston points out that "Apple now accounts for more revenue than the rest of the entire global smartphone industry combined." iPhone ASP is flirting with $800, while the broader industry's ASP is approximately $300. This latter metric was up 18% year over year, as both Apple and Samsung saw success with their respective premium flagships. Samsung's Note 8 and Galaxy S8 remain popular, but Samsung is also a large player in terms of unit volumes at the lower ends of the market. However, the South Korean conglomerate has seen its position in low-cost smartphones slip in large markets like China, leading to its ASP jumping 21% to $254.

Huawei continues to gain share in China, thanks to aggressive pricing of low-cost devices. The Chinese company has the lowest ASP of the top three vendors at just $205. Strategy Analytics notes that in order to maintain growth, Huawei will "need to grab additional marketshare in the high-value United States market." That's far easier said than done for Huawei, which has been trying to do just that.

The challenge is that U.S. policymakers, law enforcement agencies, and intelligence agencies have all expressed national security concerns regarding the usage of Huawei phones, citing deep ties with the Chinese government. The two largest wireless carriers in the U.S. have recently decided to stop selling Huawei phones due to this pressure.

Apple often grabs nearly all of the smartphone industry's operating profits, and the company now represents the majority of global smartphone revenue as well. Mawston concludes, "Apple iPhone is an incredible money-making machine."