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Android phones are not profitable

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According to online ExtremeTech website, Apple currently carts home 90 percent of the profits of the mobile phone market. The clouded Android market has to scramble for the miserable remainder. With Samsung being so greedy on the leftovers, most of the erstwhile Android giants are on the downward spiral.

The Taiwanese HTC has been gasping for air of survival for some time now and resuscitation looks remote. The company’s value has been declining exponentially; HTC was valued at US$28 billion in 2011 but that has devolved to a mere US$1.4 billion.

Every good accountant will tell you that once a company’s assets fall below the value of its cash reserves that company is on a fast lane towards its own grave.

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HTC is just hanging on a fraction of its former market share; Forecasts in the third quarter showed that sales would fall by 48 percent. The company is holding on to 60 percent of stocks. In plain English, HTC phones are not selling!

While Samsung may seemingly be eating HTC’s lunch, the company has another fierce competition; upstart Chinese mainland brands.

With such stiff competition in the Android market, margins are very thin. Take LG’s popular G3 and G4 Android phones, the company only makes a mere cent per phone in net profit. That is by all means horrific.

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Now, what is it that Apple is doing that these Android Phone manufacturers aren’t? It is all about product portfolio. Android manufacturers bring to the market thousands of new devices every year. Samsung and the rest of the Android consortium do not focus on few devices to perfect their art.

These Android phone makers do not give a good reason to their customers to change phones. The only excuse has to be price and that has the effect of corroding profits.

This also creates a problem when security issues are detected with phones. Because so many models are present in the market, this may mean releasing so many securities updates which again can eat away profits.

Apple has a thin product portfolio and puts in quality time to do research and development. Apple always gives good reason its followers to migrate. Their phones do not have serious security issues and the company does not have to release too many updates.

Samsung is not spared; it has currently been complaining of failing sales and profits. The company announced earlier that it would reduce its product lines to increase profitability.

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