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With recent iPhone releases from Apple and the expected future releases of the Galaxy S10 and Galaxy F, the smartphone has been getting lots of attention.
But did you know that the smartphone market holds hidden revenue growth too? They're definitely there but stay neatly tucked out of view.
Now I've told you about how likely situations can give you excellent business insights. However, some business success secrets just take place openly, right in front of your eyes. You just miss them because they're too obvious. Unfortunately, that means we can not learn from them and use ourselves.
Here's one you can take from the smartphone market.
The Samsung Galaxy F (concept) is a long awaited goal Apple's revenue holds a secretPhone Designer / NieuweMobiel
Where Is The Revenue In The Smartphone Market?
I recently noted why analysts look at income as business health. So let's look at where the revenue is in the smartphone market.
When it comes to the straight unit sales, Samsung took the lead in 2017.
Looking for total shipping units for 2017:
Apple = 215.8 million units.
Samsung = 317.3 million units.
So, Samsung sold almost 50% more smartphones than Apple in 2017. Lets zoom in.
Looking at 2017 Q4, total shipped units:
Apple = 77.3 million units.
Samsung = 74.1 million units.
Not as big as the annual figures. In fact this time Apple is slightly more than Samsung.
However, things get interesting when you look at Q4 2017 smartphone revenue:
Apple = US $ 61 billion
Samsung = US $ 19 trillion
So, although they are quite similar in terms of revenues (in comparison to the revenue results), Apple made almost three times more revenue from their smartphone sales than Samsung did.
In fact, Apple's smartphone sales account for more total revenue than the rest of the global smartphone industry combined.
What Is Causing This Revenue Imbalance?
For starters, the average selling price of a pink smartphone 18% in one year from $ 255 in Q4 2016 to $ 300 in Q4 2017, even though overall delivery volumes decreased. That tells you that the average price of a smartphone is going up.
But if you look at Apple, their iPhone's selling price is approaching US $ 800. That's almost three times higher than the overall industry average.
Spotting The Trend
So, Apple makes about their smartphone sales. Of course, you can see that the iPhone's average selling price is higher than the overall industry average too.
The average unit price is the driver of Apple's strong revenue.
The Business Takeaways
One method that is in practice, is to offer a greater range of products to a larger audience.
Then you need to include an ultra-high-end product, packed with new features.
Even though, this practice helps to boost the sales of regular high-priced products from the previous generation.
It's like offering a premium version of the regular version (and some people will still buy the premium option).
Here's a real life example.
The Williams Sonoma Bread Maker
When Williams Sonoma launched a bread maker, they decided to price it at $ 275.
The problem? Sales were really slow. They just could not figure out how to price it. In the end, the management looked at a marketing research company.
They suggest that Williams Sonoma make another bread maker. Only this time, they should give it some more features, make it bigger and better. The main suggestion was this second new bread maker should be twice the price of the first machine.
Williams Sonoma got to work. When they released the second bread maker as a premium product, sales instantly shot up. However, it was not the sales of the new premium bread maker that grew.
It was the salesman of the first bread maker that exploded.
What is going on?
The exact same thing happens in the smartphone market is what is happening here. And this is just one of many methods I'm going to grow your own revenue (because I've tested it).
In the box of Williams Sonoma, the first bread making machine was a new idea in the marketplace. No one knew what a bread maker really was or how much it was worth it to make bread at your home.
There was no true idea whether the $ 275 price point was good value or not. However, what the introduction of the first bread maker did not serve as a price anchor.
That way, when the second bread maker was released, it was much better. And that is essential when asking someone to make a purchasing decision.
All of a sudden, buyers could see that a $ 600 bread machine was available, and that seemed like a very expensive option. But in comparison, the first machine was a $ 275 price point like a bargain. Sales of the first machine rocketed.
So, when you're building a product or service, remember how pricing third party work. Can you introduce a regular and a premium version? May be more likely to pay a large sum of money. And remember, next time you see a commercial smartphone, be thankful that you can pick up your own mobile phone from Apple and Samsung battling it out in the smartphone wars.
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With recent iPhone releases from Apple and the expected future releases of the Galaxy S10 and Galaxy F, the smartphone has been getting lots of attention.
But did you know that the smartphone market holds hidden revenue growth too? They're definitely there but stay neatly tucked out of view.
Now I've told you about how likely situations can give you excellent business insights. However, some business success secrets just take place openly, right in front of your eyes. You just miss them because they're too obvious. Unfortunately, that means we can not learn from them and use ourselves.
Here's one you can take from the smartphone market.
The Samsung Galaxy F (concept) is a long awaited goal Apple's revenue holds a secretPhone Designer / NieuweMobiel
Where Is The Revenue In The Smartphone Market?
I recently noted why analysts look at income as business health. So let's look at where the revenue is in the smartphone market.
When it comes to the straight unit sales, Samsung took the lead in 2017.
Looking for total shipping units for 2017:
Apple = 215.8 million units.
Samsung = 317.3 million units.
So, Samsung sold almost 50% more smartphones than Apple in 2017. Lets zoom in.
Looking at 2017 Q4, total shipped units:
Apple = 77.3 million units.
Samsung = 74.1 million units.
Not as big as the annual figures. In fact this time Apple is slightly more than Samsung.
However, things get interesting when you look at Q4 2017 smartphone revenue:
Apple = US $ 61 billion
Samsung = US $ 19 trillion
So, although they are quite similar in terms of revenues (in comparison to the revenue results), Apple made almost three times more revenue from their smartphone sales than Samsung did.
In fact, Apple's smartphone sales account for more total revenue than the rest of the global smartphone industry combined.
What Is Causing This Revenue Imbalance?
For starters, the average selling price of a pink smartphone 18% in one year from $ 255 in Q4 2016 to $ 300 in Q4 2017, even though overall delivery volumes decreased. That tells you that the average price of a smartphone is going up.
But if you look at Apple, their iPhone's selling price is approaching US $ 800. That's almost three times higher than the overall industry average.
Spotting The Trend
So, Apple makes about their smartphone sales. Of course, you can see that the iPhone's average selling price is higher than the overall industry average too.
The average unit price is the driver of Apple's strong revenue.
The Business Takeaways
One method that is in practice, is to offer a greater range of products to a larger audience.
Then you need to include an ultra-high-end product, packed with new features.
Even though, this practice helps to boost the sales of regular high-priced products from the previous generation.
It's like offering a premium version of the regular version (and some people will still buy the premium option).
Here's a real life example.
The Williams Sonoma Bread Maker
When Williams Sonoma launched a bread maker, they decided to price it at $ 275.
The problem? Sales were really slow. They just could not figure out how to price it. In the end, the management looked at a marketing research company.
They suggest that Williams Sonoma make another bread maker. Only this time, they should give it some more features, make it bigger and better. The main suggestion was this second new bread maker should be twice the price of the first machine.
Williams Sonoma got to work. When they released the second bread maker as a premium product, sales instantly shot up. However, it was not the sales of the new premium bread maker that grew.
It was the salesman of the first bread maker that exploded.
What is going on?
The exact same thing happens in the smartphone market is what is happening here. And this is just one of many methods I'm going to grow your own revenue (because I've tested it).
In the box of Williams Sonoma, the first bread making machine was a new idea in the marketplace. No one knew what a bread maker really was or how much it was worth it to make bread at your home.
There was no true idea whether the $ 275 price point was good value or not. However, what the introduction of the first bread maker did not serve as a price anchor.
That way, when the second bread maker was released, it was much better. And that is essential when asking someone to make a purchasing decision.
All of a sudden, buyers could see that a $ 600 bread machine was available, and that seemed like a very expensive option. But in comparison, the first machine was a $ 275 price point like a bargain. Sales of the first machine rocketed.
So, when you're building a product or service, remember how pricing third party work. Can you introduce a regular and a premium version? May be more likely to pay a large sum of money. And remember, next time you see a commercial smartphone, be thankful that you can pick up your own mobile phone from Apple and Samsung battling it out in the smartphone wars.
