Report: iPhone grabs 32% of global handset profits in 2009

[AppleInsider]

Apple's iPhone now accounts for 8% of all mobile phone revenue and a whopping 32% of the industry's handset profits, according to figures published by Bernstein Research analyst Toni Sacconaghi.

The numbers, published by All Things Digital blogger John Paczkowski, aren't limited just to the smartphone segment market, but look at all mobile phones sold in the first half of 2009, a $65.7 billion industry.

Apple earned just over $5 billion in the first half of the year, making it the fifth biggest player in terms of revenue, behind Nokia, Samsung, RIM, and LG. Apple lead the world in actually making money however, with just over $2 billion in operating profits. The company earned just over $100 million more than second place Nokia, gobbling up a 32% share of the global profits made in handset sales and achieving operating margins of 40%.

Because these numbers reflect the first two quarters of 2009, they only take into consideration less than two weeks of the surge in sales generated by the new iPhone 3GS. Historically, the first half of the year has been the slowest for Apple's mobile sales as buyers begin to anticipate the next refresh.

In terms of operating margins, second place RIM earned closer to 20%, while Nokia, Samsung, and LG made closer to 10% margins. Sony Ericsson and Motorola continued to actually lose money in their handset sales, with the former losing $841 million and the latter loosing $762 million.

Ignoring the losses of Sony Ericsson and Motorola, but still considering their $8 billion in sales, Apple's 8% share of the industry's revenue still accounts for 25% of the world's profits earned from phone sales.

The numbers vindicate Apple's strategy of exclusively selling smartphones, rather than trying to soak up unit market share by marketing huge volumes of many models of low profit 'feature phones.' Nokia, the leader in phone sales worldwide, has watched its market share evaporate under competition from Apple and RIM by doing just the opposite.

Apple's smartphone business is structured similar to the company's approach to selling computers, where it owns a disproportionally large segment of the premium market. As with feature phones, Apple has largely ignored low profit PC segments such as high volume but low priced $400 desktops.

[ View this article at AppleInsider.com ]

[davebarnes]

Pwned!

[winterspan]

Originally Posted by AppleInsider

...

Those are definitely great numbers, but I can only imagine how well the iPhone would be doing if the device was available on more networks in the United States. Even just a second carrier like Verizon (using an EVDO iPhone) would have an enormous impact on Apple's bottom line as their smartphone marketshare in the United States would most likely nearly double.

[justbobf]

Sounds like we are all being a bit over-charged, here...

[Johnny Mozzarella]

Originally Posted by winterspan

Those are definitely great numbers, but I can only imagine how well the iPhone would be doing if the device was available on more networks in the United States. Even just a second carrier like Verizon (using an EVDO iPhone) would have an enormous impact on Apple's bottom line as their smartphone marketshare in the United States would most likely nearly double.

If it didn't have exclusivity and couldn't guarantee that consumers would stick with them, I doubt they would be subsidizing as much as they are.

[Prince]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can..

Apple consistently earned higher profits and margins on its iPod line than other MP3 vendors, not because it was "over charging," but because it was selling the optimal product mix effectively. Microsoft's PlaysforSure options and the Zune were no cheaper, they just a) didn't benefit from economies of scale due to low sales, b) aimed at selling models that customers didn't like as much, resulting in inventory problems and other profit-sapping losses.

In the phone market, Apple isn't selling its products at a premium price. No competitors offer similar devices for any less. Apple actually got started by including more value, such as much more internal storage than other vendors, 8-16GB in climate where phones rarely had more than 512MB. Apple has remained feature-competitive since, at prices that are competitive or even lower than those of its larger rivals.

Having one iPhone rather than a sea of hundreds of incompatible, fractured models and platforms and brands, Apple simply makes its money more efficiently. It also uses its iPod economies of scale to bring prices down, features up, and make operations more efficient.

Complaining that Apple 'must be overcharging' because it is making profits its competitors can't is simply faulty reasoning. Apple is in business to make profits, not to lose money. Even so, the company has forced intense competition into the smartphone industry and has brought overall prices down by introducing a high end product as its mainstream offering, killing the appeal of basic phones and deflating the steep prices of what was formerly considered to be high end.

[.:R2theT]

Originally Posted by justbobf

Sounds like we are all being a bit over-charged, here...

Remember people, we live with a free-market economy(for the most part).

If the iPhone were over-priced it would not be selling. Apple seems to be selling iPhones as quickly as it can make them. Sure seems like Apple has it priced appropriately. As the market saturates, Apple will have to adjust its pricing just as it has with iPods over the years. Maximizing monetization of a product is called "making hay while the sunshines".

I still feel like my 1st. generation was a good value. I originally paid the $599 but got $200 back because I bought it within 2 weeks of the price drop. I still have that phone and love it each and every day.

[whatisgoingon]

overcharging compared to what?

Here in the US, the cost of the iPhone is sold at pretty much the same price (after subsidy) as the Palm Pre and similar RIM devices. And if anything, they've driven the price down for all other phones because the other phones can't compete on usability or the app store, so they have to compete on price.

Apple has made a decent quality handset that doesn't cost them a lot to make, but uses their software advantage to generate margin. EVERY other manufacturer wishes they could do that.

[Tofino]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can.

With the number of other Smart Phones on the Market (WinMo 6.5 soon to be here and looks great, Android will only give Apple what they want to now that they are an OS and Mobile OS & Palm, which will likely be bought out ((hopefully by Microsoft)) all of which multi task the consumers and Vendors will start the

"YEAH IT'S AN IPHONE BUT THEY OVER CHARGE YOU FOR THE SAME PRODUCT". Campaigns.

huh? android will what?

i guess the proof is in the pudding as far as winmo is concerned. if you're right, and microsoft actually delivers, then android will be doooooomed and apple will be crushed.

let's see if redmond can actually come through and see if that stops the smartphone manufacturers from defecting to google for their high end (and apparently highly profitable) gear. if you're right, then why would microsoft want buy palm? Don't you believe in winmo 7? The next version fill fix everything! Coming soon! No really!

i hope they do and you find a phone you're happy with...

[melgross]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can.

With the number of other Smart Phones on the Market (WinMo 6.5 soon to be here and looks great, Android will only give Apple what they want to now that they are an OS and Mobile OS & Palm, which will likely be bought out ((hopefully by Microsoft)) all of which multi task the consumers and Vendors will start the

"YEAH IT'S AN IPHONE BUT THEY OVER CHARGE YOU FOR THE SAME PRODUCT". Campaigns.

What did we just talk about?

The first post here, with no one to complain about, and you're starting in with the bashing. Can you prove anything you're saying, or is it only your need to believe it? Just be careful.

[melgross]

Originally Posted by iPhone1982

Is this the reason why Apple has reduced their 8gb phone to $99.00. Heck, Touch users pay 10% of that for the software upgrades to their MUSIC PLAYERS>

Apple has reduced almost every product they sell and what consumers don't know is they are paying for 2 year old tech.

I think the only product they haven't reduced the price in is the Apple TV which nobody cares about anyway. They have other devices XBOX, Sony PlayStations that understand Quality video.

iTunes Video Sucks Big Time. Give me VHS or BetaMax. At least I could get porn in those formats. The Jesus Store says NO.

I would have thought Apple to be Democratic but it's SCREAMING. I'm SARAH PALIN AND NEED TO BE NOTICED.

Ok, continue with this, and you're gone.

[brucep]

Originally Posted by iPhone1982

Is this the reason why Apple has reduced their 8gb phone to $99.00. Heck, Touch users pay 10% of that for the software upgrades to their MUSIC PLAYERS>

Apple has reduced almost every product they sell and what consumers don't know is they are paying for 2 year old tech.

I think the only product they haven't reduced the price in is the Apple TV which nobody cares about anyway. They have other devices XBOX, Sony PlayStations that understand Quality video.

iTunes Video Sucks Big Time. Give me VHS or BetaMax. At least I could get porn in those formats. The Jesus Store says NO.

I would have thought Apple to be Democratic but it's SCREAMING. I'm SARAH PALIN AND NEED TO BE NOTICED.

Well now did we forget our meds today ??
Little odd media bits seem to randomly form in your brain. >google bot is watching

[melgross]

Originally Posted by iPhone1982

Continue what? The Truth?

What you accuse others here of doing, and you know exactly what I mean.

[Logisticaldron]

Originally Posted by Prince

Complaining that Apple 'must be overcharging' because it is making profits its competitors can't is simply faulty reasoning.

Don’t forget who you are replying to. That guy hasn’t made a single post here that involved valid reasoning.

Originally Posted by iPhone1982

Apple has reduced almost every product they sell and what consumers don't know is they are paying for 2 year old tech.

Let’s see, it’s 3G, not 3GS, so I think people know it’s last year’s model, especially when they see the price is $100 lower. Even you should be able to figure out that device is not the latest iPhone.

http://www.apple.com/iphone/compare-iphones/

PS: THe *new* Nokia N97 uses the same old ARM11 that was in the original iPhone, has a 128MB RAM and its HSDPA radios only have half the potential throughout, yet it costs the same as the iPhone 3GS, $700. How 'bout them Apples?

Originally Posted by iPhone1982

Nothing I have said on this board or forum is nothing but the truth.

Schizophrenia is such a terrible thing to witness.

[cmf2]

Originally Posted by iPhone1982

Was Apple's Credit $200 or $100 for the 1st Gen iPhone?

I still have my $100 credit so I know the answer to this. Nothing I have said on this board or forum is nothing but the truth.

That is why I always give CREDIT to the author or Site for my reaction to the this board.

AppleInsider should start doing the same with credible resources that are not 5 years old.

"Nothing I have said is nothing but the truth."

Removing one set of double negatives...

"Nothing I have said is the truth."

Wow you are actually right.

[sflocal]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can.

With the number of other Smart Phones on the Market (WinMo 6.5 soon to be here and looks great, Android will only give Apple what they want to now that they are an OS and Mobile OS & Palm, which will likely be bought out ((hopefully by Microsoft)) all of which multi task the consumers and Vendors will start the

"YEAH IT'S AN IPHONE BUT THEY OVER CHARGE YOU FOR THE SAME PRODUCT". Campaigns.

Increase the dosage of your meds you ignorant little troll. If any company overcharges for their products, obviously no one would buy them. Based on Apple's performance (especially in this economy), it's obvious they make products consumers desire and the consumers feel they are getting value for their hard-earned money. Apple has been outperforming for years yet people like you think doomsday is right around the corner. How much longer does a company need to be successful before you come to the conclusion that perhaps they are doing something right?

There are opinions, and there are whiners. Can that little brain of yours figure out which group you belong to? Bug off...

[NasserAE]

Originally Posted by iPhone1982

You got a $100 credit on the Apple Store that could not be used for iTunes.

I was the same sucker you were.

I still have my $100 credit because there is nothing in the Apple Store for a $100 that I want (after 2 years).

Wait...

Please sell me the POS earphones that ship with every iPod and iPhone. They make my ears bleed but I'll look cool. NOT.

Wait... You are saying you have bought the first gen iPhone and even though you didn't like it you went ahead and bought not one but two iPhone 3G when they came out?! And you are here now bashing the iPhone?!

[Logisticaldron]

Originally Posted by NasserAE

Wait... You are saying you have bought the first gen iPhone and even though you didn't like it you went ahead and bought the 2 iPhone 3G when they came out?!

He’s a self hating Luddite so he’s compelled to buy that which he despised… or he is lying, as usual.

[DavidW]

Originally Posted by iPhone1982

Was Apple's Credit $200 or $100 for the 1st Gen iPhone?

I still have my $100 credit so I know the answer to this. Nothing I have said on this board or forum is nothing but the truth.

That is why I always give CREDIT to the author or Site for my reaction to the this board.

AppleInsider should start doing the same with credible resources that are not 5 years old.

If I remember correctly people that bought an iPhone within 30 days before the price drop got back $200 in cash. That's becuase there's a 30 days return policy on the phone. So these people could have just returned the phone and bought the cheaper one anyways.

People that bought the iPhone 30 days or more before the price drop got back $100 credit at the Apple Store. Which Apple didn't have to give at all.

[newbee]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can.

With the number of other Smart Phones on the Market (WinMo 6.5 soon to be here and looks great, Android will only give Apple what they want to now that they are an OS and Mobile OS & Palm, which will likely be bought out ((hopefully by Microsoft)) all of which multi task the consumers and Vendors will start the

"YEAH IT'S AN IPHONE BUT THEY OVER CHARGE YOU FOR THE SAME PRODUCT". Campaigns.

You know I'm going to hate myself for even replying to this ridiculous rant but what the hell ...

The marketplace is the ONLY one who can determine whether Apple is overcharging or not ... and it is saying in ever increasing numbers ... they're NOT ! Just because you or I don't want to pay that price for a phone does not in ANY way mean it is overpriced.

As far as WinMo taking over because of a cheaper device arriving soon .... tell me, how is that Zune thingy working out against the iPod, hmmmm ?

In closing ... if you're going to be a troll ... at least be a GOOD one, o.k.?

[irnchriz]

After careful consideration I have decided that not to dignify 'iPhone1982' with a response.

[diamondgeeza]

Originally Posted by whatisgoingon

overcharging compared to what?

Here in the US, the cost of the iPhone is sold at pretty much the same price (after subsidy) as the Palm Pre and similar RIM devices. And if anything, they've driven the price down for all other phones because the other phones can't compete on usability or the app store, so they have to compete on price.

Apple has made a decent quality handset that doesn't cost them a lot to make, but uses their software advantage to generate margin. EVERY other manufacturer wishes they could do that.

I paid the same for my 16bg iphone as my previous samsung sgh i600 which was a god awful phone for the record. I looked at plenty of other things such as the nokia n95 and it was by far the best value. It is also a far better phone but most of us know that by now.

SAying that we are being overcharged because a company makes big profits is faulty logic. Lets not forget the cost of R&D and the future R&D to come. Since I bought my phone there have been many updates, the app store etc, bundles of added value. My samsung died when i tried to make it WM6 as WM5 was awful.

[jfanning]

Originally Posted by iPhone1982

Is this the reason why Apple has reduced their 8gb phone to $99.00. Heck, Touch users pay 10% of that for the software upgrades to their MUSIC PLAYERS>

The iPhone 3G does not cost $99, never has, never will

[jfanning]

Originally Posted by Prince

In the phone market, Apple isn't selling its products at a premium price. No competitors offer similar devices for any less. Apple actually got started by including more value, such as much more internal storage than other vendors, 8-16GB in climate where phones rarely had more than 512MB. Apple has remained feature-competitive since, at prices that are competitive or even lower than those of its larger rivals.

That is rubbish, most smart phones supported, and came with more storage than that at the same time as the iPhone

[diamondgeeza]

Originally Posted by iPhone1982

Is this the reason why Apple has reduced their 8gb phone to $99.00. Heck, Touch users pay 10% of that for the software upgrades to their MUSIC PLAYERS>

Apple has reduced almost every product they sell and what consumers don't know is they are paying for 2 year old tech.

I think the only product they haven't reduced the price in is the Apple TV which nobody cares about anyway. They have other devices XBOX, Sony PlayStations that understand Quality video.

iTunes Video Sucks Big Time. Give me VHS or BetaMax. At least I could get porn in those formats. The Jesus Store says NO.

I would have thought Apple to be Democratic but it's SCREAMING. I'm SARAH PALIN AND NEED TO BE NOTICED.

The Jesus store? That's pretty offensive. You are applying that people who don't like porn are Christians. There are plenty of atheists who think porn is exploitation and plenty of Christians who secretly watch porn.

2 year old tech? In that case my intel chip is looking pretty tired. Better stop using my mouse and LCD monitor then - what on earth do you mean? At the end of the day you can choose to buy or not and if the price goes down well that's life. No one was offering me €500 when my mountain bike price was cut. Apple have been fair over this.

Talking about a company with words such as democratic is frankly idiotic. What do you mean exactly? Please find a dictionary or preferably read something by plato to get an idea of what it really means. Being not an American I assume the reference to Palin is republic vs democrat and not democratic? There is a world of difference. Last time I checked the republicans also believed in democracy.

[RichL]

Nokia, the leader in phone sales worldwide, has watched its market share evaporate under competition from Apple and RIM by doing just the opposite.

Huh?

Let's destroy some myths here...

1. Nokia's quarter-to-quarter smartphone marketshare is actually rising at the moment.
2. Nokia's overall marketshare is flat.
3. Nokia's overall marketshare is under threat from Samsung and LG, not Apple and RIM. Both companies make vast profits from their mobile operations but actual unit sales are too low to significantly affect Nokia's marketshare. In terms of units, Nokia sells in 4 days what Apple sells in a quarter.

[JeffDM]

Originally Posted by iPhone1982

With the number of other Smart Phones on the Market (WinMo 6.5 soon to be here and looks great, Android will only give Apple what they want to now that they are an OS and Mobile OS & Palm, which will likely be bought out ((hopefully by Microsoft)) all of which multi task the consumers and Vendors will start the

"YEAH IT'S AN IPHONE BUT THEY OVER CHARGE YOU FOR THE SAME PRODUCT". Campaigns.

You know, nobody has to buy the iPhone. As you say, there are alternatives. So why are you complaining about Apple's pricing? If it really is too high, the market should respond by not buying so many.

Where is that Android system? For being an open platform, if it's any good, shouldn't I be able to find it on more than one obscure phone with flaky hardware?

Wouldn't you be happier if you just bought that WinMo phone and go away? You're investing too much anger here, you would be better off if you don't come here and get even angrier. It's like you enjoy washing up with sandpaper or something.

Originally Posted by iPhone1982

Is this the reason why Apple has reduced their 8gb phone to $99.00. Heck, Touch users pay 10% of that for the software upgrades to their MUSIC PLAYERS>

Apple has reduced almost every product they sell and what consumers don't know is they are paying for 2 year old tech.

Maybe the other companies are using "newer" technologies prematurely because they don't know how to do good software? Better hardware is wasted on low quality software.

I would have thought Apple to be Democratic but it's SCREAMING. I'm SARAH PALIN AND NEED TO BE NOTICED.

We don't need asinine political sniping. How about you knock off this all-caps. If you lack the maturity to communicate without caps, maybe you just don't belong here.

Originally Posted by iPhone1982

Was Apple's Credit $200 or $100 for the 1st Gen iPhone?

I still have my $100 credit so I know the answer to this. Nothing I have said on this board or forum is nothing but the truth.

There are plenty of non-Apple products you can buy at the Apple store. Go buy yourself a portable hard drive or something. Buy some headphones. Anything but trolling here.

[mac_dog]

Originally Posted by iPhone1982

This is the exact reason the World will not like this article.

It shows that Apple is over charging for a hot product while they can.

waaaa...don't buy apple. stop crying and get a pc.

time and again i hear a bunch of whiners on this list, complaining about price. you don't have to buy apple products. no one is forcing your hand. get a pc, stop crying, and if you really want a pc (with the apple experience) take your complaints to microsoft and encourage them to innovate.

i don't own an iphone because i can't justify the cost—i also hate at&t.

however, i simply love apple and the user experience and they're doing just fine by me.

i just had to upgrade to a new workstation after my blue and white dual 400mhz couldn't handle large files. it was over 10 years old. it still runs beautifully. can you say that about a pc? i may pay more for apple, but it's all about quality, value and ease of use, for me.

[melgross]

Originally Posted by iPhone1982

Was Apple's Credit $200 or $100 for the 1st Gen iPhone?

I still have my $100 credit so I know the answer to this. Nothing I have said on this board or forum is nothing but the truth.

That is why I always give CREDIT to the author or Site for my reaction to the this board.

AppleInsider should start doing the same with credible resources that are not 5 years old.

As I've said, I don't care what your opinion is. Its how you express it.

[JeffDM]

Originally Posted by RichL

[*]Nokia's overall marketshare is under threat from Samsung and LG, not Apple and RIM. Both companies make vast profits from their mobile operations but actual unit sales are too low to significantly affect Nokia's marketshare. In terms of units, Nokia sells in 4 days what Apple sells in a quarter.[/list]

If Nokia's making so many phones, shouldn't they be making more money on them? How about some like-for-like?

How many of those phones are of the smart phone class? I don't think many of us here give a poop about the feature phone class. If it's a feature phone you want, you're not getting an Apple.

[JeffDM]

Originally Posted by mac_dog

i just had to upgrade to a new workstation after my blue and white dual 400mhz couldn't handle large files. it was over 10 years old. it still runs beautifully. can you say that about a pc? i may pay more for apple, but it's all about quality, value and ease of use, for me.

I have an 11 year old dual Xeon that still gets daily use. Seems to work just fine.

[melgross]

Originally Posted by JeffDM

I have an 11 year old dual Xeon that still gets daily use. Seems to work just fine.

That is unusual for most PC's though. Xeon machines are usually built to a higher standard.

[melgross]

Here is the source for the article:

http://blogs.barrons.com/techtraderd...f-smartphones/

[JeffDM]

Originally Posted by melgross

That is unusual for most PC's though. Xeon machines are usually built to a higher standard.

It's an apt comparison though, a dual PPC was hardly an ordinary consumer machine either.

[melgross]

Originally Posted by JeffDM

It's an apt comparison though, a dual PPC was hardly an ordinary consumer machine either.

Sure, but according to IDC, Macs last longer than PC's. It's been my experience as well.

[SGSStateStudent]

Originally Posted by iPhone1982

Was Apple's Credit $200 or $100 for the 1st Gen iPhone?

I still have my $100 credit so I know the answer to this. Nothing I have said on this board or forum is nothing but the truth.

That is why I always give CREDIT to the author or Site for my reaction to the this board.

AppleInsider should start doing the same with credible resources that are not 5 years old.

Are you a troll here? Please kindly proceed to Microshitrumors.com then instead of AI.

[RichL]

Originally Posted by JeffDM

How many of those phones are of the smart phone class? I don't think many of us here give a poop about the feature phone class. If it's a feature phone you want, you're not getting an Apple.

Whether you want one or not doesn't make AI's original statement any more factually correct.

But for the record, Nokia sold 17 million smartphones in Q2 2009 (vs. Apple's 5.2 million), giving Nokia an estimated 41% share of the smartphone market.

[Stephenbw]

Originally Posted by justbobf

Sounds like we are all being a bit over-charged, here...

How is anybody being overcharged?

This is not a food, water, heating or housing; it is a desirable, luxury product and, just like any other luxury product, it is not necessary to own one to live a happy, healthy life.

If anybody thinks that the iPhone is overpriced they have the option of not buying one

[SGSStateStudent]

Originally Posted by Stephenbw

How is anybody being overcharged?

This is not a food, water, heating or housing; it is a desirable, luxury product and, just like any other luxury product, it is not necessary to own one to live a happy, healthy life.

If anybody thinks that the iPhone is overpriced they have the option of not buying one

+1! Apple is for the people who can afford their stuff without complaining and gives better quality than other products IMO. ( More of the niche market ). If you cannot afford the iphone, go get some other Nokia phone out there. They are cheap.

[jfanning]

Originally Posted by Stephenbw

How is anybody being overcharged?

If anybody thinks that the iPhone is overpriced they have the option of not buying one

When a company makes an obscene margin on an item you are being overcharged, no matter who the company is, if you are happy to encourage with them taking more of your money than they need then carry on.