Huawei Is Now The Most Profitable Android Brand, As Samsung Falters

Huawei Technologies, the multinational telecommunications corporation based out of Shenzhen, China, is now the world’s most profitable Android brand, according to a new report from Strategy Analytics, a Massachusetts market research and consulting firm.

“We estimate Huawei generated US $0.2 billion of smartphone operating profit worldwide in Q3 2016,” said Neil Mawston, Executive Director at Strategy Analytics. “Huawei captured 2 percent share of all smartphone profits, taking second spot overall, and becoming the world’s most profitable Android vendor for the first time ever.”

Strategy Analytics was basing the Q3 estimates on sales for the quarter ending on September 30.

There is no doubt that Samsung’s recall of its Galaxy Note 7 Android smartphones, after several units reportedly began smoking or even caught on fire, played a huge role in Huawei taking over the second-place slot. As the Los Angeles Times reported, that recall is expected to cost the South Korean electronics giant at least $5.3 billion.

Samsung wasn’t even listed on Strategy Analytics’ list of “Global Smartphone Profits by Vendor.” Chinese electronic firms Vivo and OPPO came in third and fourth in global smartphone profitability for the third quarter, according the report. Each of those firms earned approximately 2.2 percent of the market’s profits.

Several other factors also influenced Huawei’s improved profitability ranking.

“An efficient supply chain, sleek products and effective marketing have been among the main drivers of Huawei’s robust profitability,” Mawston said. “Vivo and OPPO delivered relatively healthy profitability due to disciplined pricing and soaring shipments across Asia.”

While Huawei made impressive gains this year, it is still a far distant second when it comes to overall profitability in the smartphone market. Apple’s iPhone is clearly still king among smartphone users. The company captured a whopping 91 percent of all smartphone profits for the third quarter.

Strategy analytics estimated Apple earned roughly $9 billion in realized operating profits just from smartphone hardware sales in the third quarter.

“Apple dominated and captured a record 91 percent share of all smartphone profits worldwide,” said Linda Sui, Director at Strategy Analytics. “Apple’s ability to maximize pricing and minimize production cost is hugely impressive and the iPhone continues to generate monster profits.”

Huawei may be looking at an equally profitable fourth quarter as well. As the Inquisitr previously reported, the company launched its much-anticipated Mate 9 Android in early November. That launch came after the third quarter had already ended, and roughly two months after Samsung issued the recall of its Galaxy Note 7 Androids.

Huawei dubbed the Mate 9 “the most powerful smartphone in the world,” CNBC‘s Justina Crabtree noted in an article on the launch of the new phone.

“The manufacturer is making a big play on the handset’s processing power,” Crabtree added. “According to Huawei’s testing, software in the Mate 9 performed 80 percent better than major competitors after one year of use.”

Huawei could also potentially reap some rewards from Apple’s decision to scrap the earphone jack on the iPhone 7 and iPhone 7 Plus. Users of the new smartphones will have to purchase Apple AirPods instead of traditional earphones or headsets. AirPods retail for $159, making them an expensive — and easy to lose — accessory.

As CNN and others reported, the decision angered many iPhone users who saw it as a ploy for Apple to make extra money.

While there are several opportunities for Huawei to maintain strong profitability in the coming months, it will be tough to maintain its second place position in the next quarter. Samsung is pushing its Galaxy S7 and S7 Edge Androids to make up for losses incurred from the Note 7 debacle. Despite all the bad press the company received because of that, Samsung still enjoys high levels of consumer confidence, according to a report from Forbes.

[Featured Image by Carsten Koall/Getty Images]