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Apple's iPhone takes 75% mobile phone profits with just 9% of units sold

post #1 of 78
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Apple has reached new heights in unit sales and revenues, but its remarkable profitability in doing so has inhaled three quarters of the oxygen in the room.

While Apple only sells smartphones, its sales are now large enough to make up 9 percent of all phones sold, highlighting how rapidly the smartphone is taking over the basic phone market.

Despite that relatively low share of all unit sales however, Apple takes in the most revenues and earns by far the most profits, as graphically depicted by Asymco writer Horace Dediu, a former Nokia analyst.

Dediu has previously presented how Apple rapidly became the most profitable phone maker by the end of 2008, when the company's iPhone franchise was bare a year and a half old. Apple subsequently took the top spot in mobile revenues last year, although Samsung briefly surpassed Apple in revenues the third calendar quarter.




In terms of profit share however, Apple has led the industry almost from the start, and its share of profits among mobile phone vendors has regularly gone up since.

The only other highly profitable smartphone maker is Samsung, which earned 16 percent of the industry's profits, or as Dediu notes, combined with Apple to earn 91 percent. RIM is third with 3.7 percent profit share, followed by HTC at 3 percent and Nokia at 1.8 percent.




The figures only look at profits for the top phone makers that report their earnings; other phone makers, including ZTE and Huawei, aren't figured into the profit share figures. Given the cutthroat competition in the mobile industry, figures from these and other smaller manufactures would likely reduce Apple's unit share figures but may possibly have little to no impact on its profit share.




LG, Motorola and Sony Ericsson all failed to report any significant profits over the last few quarters, similarly lowering Apple's iPhone unit and revenue shares but having no impact on its profit share.

It follows that Apple could maintain or grow its share of profits while dramatically increasing its unit share as iPhone sales continue to increase, aided significantly by even wider rollouts into new markers and on new carriers. It has been less than a year since Apple added Verizon Wireless as a US carrier, and just a few months since it added Sprint. A large number of carriers still do not carry iPhone.


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post #2 of 78
75% mobile phone profits with just 9% of units sold .... Holy Crap! That is all I can say.
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post #3 of 78
I think that the obverse of this statistic is even more stunning: all the rest of them put together - Samsung, Motorola, RIM, HTC, Nokia, LG, SE, etc - even though they account for 91% of revenue, could muster only 25% of the profits.

How pathetic is that?
post #4 of 78
So what you are saying is apple is ripping us off?
post #5 of 78
Quote:
Originally Posted by S8ER01Z View Post

So what you are saying is apple is ripping us off?

You must be a very weak person to subject yourself to being ripped off in this way.

Why do you put up with it? Where's your self-esteem? Unless, of course, it's dwarfed by your consumer surplus.....
post #6 of 78
Apple is an amazing tech company, their momentum isn't slowing anytime soon.
post #7 of 78
Quote:
Originally Posted by S8ER01Z View Post

So what you are saying is apple is ripping us off?

What's being said is, Apple doesn't make junk phones that has little to no profit. Hello Nokia, Samsung, LG, Motorola... Sooner or later, these companies will wake up and stop selling junk phones. No money in it and simply having the title "most marketshare" means nothing if you aren't making any money, or losing money in Nokia and Motorola's case.
post #8 of 78
As an Apple stockholder, I think this is great news.

But another way to read the headline is:

Apple customers pay far more beyond above unit cost than customers of competitive phones.


Nothing inherently wrong with that, just pointing out that most of us are Apple customers. Why would a consumer celebrate the profit generated at his expense?
post #9 of 78
Quote:
Originally Posted by igxqrrl View Post

As an Apple stockholder, I think this is great news.

But another way to read the headline is:

Apple customers pay far more beyond above unit cost than customers of competitive phones.


Nothing inherently wrong with that, just pointing out that most of us are Apple customers. Why would a consumer celebrate the profit generated at his expense?

Because a smart consumer doesn't worry about the company's profit. A smart consumer evaluates the alternatives and decides which one is the best choice for him, given the features, price, and so on.

If an iPhone is the best choice for you at its price, why should you object to the fact that Apple is more efficient at producing phones and able to reduce its costs enough to make money?
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post #10 of 78
Quote:
Originally Posted by Mac.World View Post

What's being said is, Apple doesn't make junk phones that has little to no profit. Hello Nokia, Samsung, LG, Motorola... Sooner or later, these companies will wake up and stop selling junk phones. No money in it and simply having the title "most marketshare" means nothing if you aren't making any money, or losing money in Nokia and Motorola's case.

Graph is percentages. Doesnt mean that Samsung's profits are shrinking. You would need to compare each company's year over year growth and not as an industry as a whole.

No one can argue that Apple's profit margin is by far the highest in the market. This could be due to better deals with cell providers, lower streamlined cost, or simply charging more, which is not the case.

iPhone 4s 32 GB = 749.99 or 199.99 w/ contract
Galaxy Nexus 32GB = 799.99 or 299.99 w/ contract
post #11 of 78
Quote:
Originally Posted by S8ER01Z View Post

So what you are saying is apple is ripping us off?

ahem, seems to demonstrate how gullible average Apple buyers are (duck)
post #12 of 78
Quote:
Originally Posted by jragosta View Post

Because a smart consumer doesn't worry about the company's profit. A smart consumer evaluates the alternatives and decides which one is the best choice for him, given the features, price, and so on.

If an iPhone is the best choice for you at its price, why should you object to the fact that Apple is more efficient at producing phones and able to reduce its costs enough to make money?

Exactly. You are free to pay whatever you want for the phone you like. If you like the iPhone you get one. If you like android you have to first one that fits you and you get one.
post #13 of 78
Quote:
Originally Posted by igxqrrl View Post

But another way to read the headline is:
Apple customers pay far more beyond above unit cost than customers of competitive phones.

Only if you view "customers" as the carriers. Otherwise you can get an iPhone 4S or whatever piece of crap HTC happened to release that week, for the same 200 bucks.
post #14 of 78
Quote:
Originally Posted by tooltalk View Post

ahem, seems to demonstrate how gullible average Apple buyers are (duck)

Not necessarily. To my mind this simply demonstrates how much control Apple exerts over its supply chain. Apple iPhone's are really more expensive than competitor devices, but Apple produces in such quantity and with such efficiency that it reaps a larger profit share. If anything, this should serve as a lesson to competitors: less product variations produced in a higher quality makes for a better operation.
post #15 of 78
Apple is doom.
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post #16 of 78
Can this not point to channel stuffing?

Apple sells all of the phones that they make.

Other vendors stuff the channel and hope to sell what they can. In other words, other vendors ship as many phones, but they sell a small percentage of phones to end customers.
post #17 of 78
I do wonder if Apple might do better in the long term if they dropped the price of the iPhone.

Obviously the profitability they have at the moment is frankly stunning - it's hard to believe that data is possible! WIth that said, as lower end of the market increasingly becomes smart phone based as well, is it possible that Apple might find themselves losing out in app development, due to their lower volumes?

What I'm getting at is, is there a tipping point where application developers, who don't make any money on hardware sales, will decide to focus all of their efforts on the high volume platform, as opposed to the platform that makes most money for the hardware manufacturer?
post #18 of 78
Quote:
Originally Posted by tooltalk View Post

ahem, seems to demonstrate how gullible average Apple buyers are (duck)

Gullible has nothing to do with an educated purchase. The buyers of Apple products know what they're buying and why. If you ask me, iPhone buyers are the antithesis of gullible because those non-Apple smartphone buyers are wasting time dealing with inherent BS problems with their units while I work and play flawlessly without interruption all day on my iPhone.

Why does Apple bashing and trolling make people feel so good?

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post #19 of 78
Quote:
Originally Posted by PaulMJohnson View Post

I do wonder if Apple might do better in the long term if they dropped the price of the iPhone.

Why should they? They sell every single unit that rolls off the production line.

Heck, they have to stagger the worldwide release because they can't make enough of them. And they don't even need to sell refurbs. They're probably comped or distributed internally.
post #20 of 78
Quote:
Originally Posted by cvaldes1831 View Post

Why should they? They sell every single unit that rolls off the production line.

Heck, they have to stagger the worldwide release because they can't make enough of them.

Read the whole of my post and I explain what I'm speculating about.
post #21 of 78
The problem with that speculation is that it doesn't take into account the iPod touch (the most popular iPod model) as well as the iPad.

We've already heard from developers that they sell as many as ten times as much on Apple's App Store versus Android Marketplace.

We'll see if there is a tipping point in a few years. In a few years, Apple may be ready with something completely new in the wings.

I keep wondering how important the Apple ecosystem really is. Despite the relatively high prices of the iPods (you can buy a 4GB iRiver MP3 player for half of a $49 2GB iPod shuffle), Apple still owns the music player market. As for digital music stores, they're not even really competing on prices.

Plus, there's the whole customer satisfaction thing, Apple is always at the top in every product category. The 2.5 year old iPhone 3GS still outsells all other Android handsets.
post #22 of 78
Quote:
Originally Posted by PaulMJohnson View Post

I do wonder if Apple might do better in the long term if they dropped the price of the iPhone.

Obviously the profitability they have at the moment is frankly stunning - it's hard to believe that data is possible! WIth that said, as lower end of the market increasingly becomes smart phone based as well, is it possible that Apple might find themselves losing out in app development, due to their lower volumes?

What I'm getting at is, is there a tipping point where application developers, who don't make any money on hardware sales, will decide to focus all of their efforts on the high volume platform, as opposed to the platform that makes most money for the hardware manufacturer?

I don't think dropping the price would help much. Presumably the carriers are contractually obliged to sell the phones at set prices and the "high price" of the iPhone reflects how much of a premium Apple can charge carriers over what other manufacturers charge them. Dropping the price would only really help in territories where pay as you go is more common.
post #23 of 78
Incredible results, but it's not surprising, given the competition and their lackluster, uninspiring, copycat products.

Apple should never enter the low end market. The other manufacturers, like those who make phones for bums (Android), already have that market covered and there's not that much money to be made in that low end market, something which these charts prove. And who wants those kinds of customers anyway? Those people are cheapskates and they also aren't very tech savvy, as price is the main issue for them when getting a new device.

Out of all the figures that Fandroids like to regurgitate, the profitability figure is something that you won't see them mentioning at all, because Apple is just killing everybody else in that area. Apple is destroying the competition.

Apple's enormous success proves that people are willing to pay for excellent products. It's not all about the cheapest price, which is what many of the other companies use as their strategy.

As a matter of fact, I wouldn't mind if Apple would raise the price of the next iPad by $100 (especially if it's super hi-res), because the demand will be too great for it when it eventually comes out and Apple should weed out the cheapskates who go for low end tablets, and make sure that those kind of people stay in the low end of things. Those people aren't important to Apple's bottom line and Apple should never pursue that demographic. People who appreciate great tech don't have any second doubts about buying any Apple device.
post #24 of 78
Quote:
Originally Posted by leeeh2 View Post

Can this not point to channel stuffing?

Apple sells all of the phones that they make.

Other vendors stuff the channel and hope to sell what they can. In other words, other vendors ship as many phones, but they sell a small percentage of phones to end customers.

It points to the majority of th market buying cheaper, low end, feature and smartphones.

There's a lot of Android out there but it isn't all on Galaxy II's, Evo's, Nexus and other high end models.
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post #25 of 78
1) Horace to the rescue. 75% is where I estimated their profit just yesterday. Glad someone was willing to crunch the numbers.

2) On one side we have:
  • Apple products are more desireable and therefore are paid a premium by carriers to secure more customers.
  • Apple is more efficient in creating their product.
  • Apple has the money and the expertise to source components at lower prices.
  • Apple has economics of scale that far exceeds their competitors who push a new high-end phone every 2 months.
And on the other we have:
  • Apple is ripping us off.
It's not to see which would sounds more thought out and rational.

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post #26 of 78
Quote:
Originally Posted by PaulMJohnson View Post

I do wonder if Apple might do better in the long term if they dropped the price of the iPhone.

Obviously the profitability they have at the moment is frankly stunning - it's hard to believe that data is possible! WIth that said, as lower end of the market increasingly becomes smart phone based as well, is it possible that Apple might find themselves losing out in app development, due to their lower volumes?

What I'm getting at is, is there a tipping point where application developers, who don't make any money on hardware sales, will decide to focus all of their efforts on the high volume platform, as opposed to the platform that makes most money for the hardware manufacturer?

Paul,you seem to be Rip Van Winkle.

Are you not aware that most App developers choose Apple first for the simple reason they make much more money with iOS than any other OS?

Android, the only real competitor for Apple, is a nightmare for developers, because it is so fragmented. Additionally, Android users are less affluent than iPhones', and spend far less than iOS users on Apps.

Developers follow the money, and iOS is where the money is for them.
post #27 of 78
1. Does anyone else dislike these new multi-colored percentage charts AI likes to use?
2. Tim Cook is the supply chain genius behind these incredible profit margins.
post #28 of 78
Quote:
Originally Posted by S8ER01Z View Post

So what you are saying is apple is ripping us off?

No, Apple is not ripping their customers off. Their customers are willing to pay an exorbitant amount of money for a product that has very little advantages compared to their competitors.
post #29 of 78
Wow, Nokia. Ouch. That's gonna leave a mark.
post #30 of 78
Quote:
Originally Posted by Apple ][ View Post

Incredible results, but it's not surprising, given the competition and their lackluster, uninspiring, copycat products.

Apple should never enter the low end market. The other manufacturers, like those who make phones for bums (Android), already have that market covered and there's not that much money to be made in that low end market, something which these charts prove. And who wants those kinds of customers anyway? Those people are cheapskates and they also aren't very tech savvy, as price is the main issue for them when getting a new device.

Out of all the figures that Fandroids like to regurgitate, the profitability figure is something that you won't see them mentioning at all, because Apple is just killing everybody else in that area. Apple is destroying the competition.

Apple's enormous success proves that people are willing to pay for excellent products. It's not all about the cheapest price, which is what many of the other companies use as their strategy.

As a matter of fact, I wouldn't mind if Apple would raise the price of the next iPad by $100 (especially if it's super hi-res), because the demand will be too great for it when it eventually comes out and Apple should weed out the cheapskates who go for low end tablets, and make sure that those kind of people stay in the low end of things. Those people aren't important to Apple's bottom line and Apple should never pursue that demographic. People who appreciate great tech don't have any second doubts about buying any Apple device.

You're a bit dumb, aren't you? A 3GS for $49 is low end, they're already there.
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post #31 of 78
Quote:
Originally Posted by slapppy View Post


No, Apple is not ripping their customers off. Their customers are willing to pay an exorbitant amount of money for a product that has very little advantages compared to their competitors.

Exorbitant amount of money for the iPhone?

Oh crap... I got sucked into Slapppy's troll trap!
post #32 of 78
Quote:
Originally Posted by dasanman69 View Post

You're a bit dumb, aren't you? A 3GS for $49 is low end, they're already there.

The 3GS isn't a low-end phone. It's an older phone that is still being sold for a low-price. A low-end phone is one that comes to market at a low-price.

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post #33 of 78
Quote:
Originally Posted by slapppy View Post

No, Apple is not ripping their customers off. Their customers are willing to pay [snip] for a product that has [snip] advantages compared to their competitors.

Wow, even slapppy acknowledges iPhones have an advantage over the competition.

Thank you slapppy!
post #34 of 78
Quote:
Originally Posted by SolipsismX View Post

The 3GS isn't a low-end phone. It's an older phone that is still being sold for a low-price. A low-end phone is one that comes to market at a low-price.

Of course it is. It has a slow processor, can't run the newest OS, made of cheap plastic, and sells at a low price. That's low end.
So riddle me this Batman, why does Apple continue to manufacture and sell it?
Its a starter iPhone? Get more people into the ecosystem at a low price? That my friend is the low end market.
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post #35 of 78
Quote:
Originally Posted by dasanman69 View Post

Of course it is. It has a slow processor, can't run the newest OS, made of cheap plastic, and sells at a low price. That's low end.

The iPhone 3GS being a low-end phone when it debuted in 2009 will be your little secret.

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post #36 of 78
Quote:
Originally Posted by SolipsismX View Post

The iPhone 3GS being a low-end phone when it debuted in 2009 will be your little secret.

But it's low end now in 2012. You getting a bit of Apple ][itis as well?
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post #37 of 78
Quote:
Originally Posted by dasanman69 View Post

But it's low end now in 2012. You getting a bit of Apple ][itis as well?

Low-end because it's been on the market for 3 years, NOT because it was introduced to market as a low-end phone, hence your comment about it being slower and having a plastic casing (really?) are pointless.

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post #38 of 78
Quote:
Originally Posted by dasanman69 View Post

You're a bit dumb, aren't you? A 3GS for $49 is low end, they're already there.

As Solipsism already pointed out to you, it appears that you are the dumb one. The 3GS is years old, it's not a new phone.

And the interesting thing is that even with that years old, low priced phone model, not many people are opting for that option anyway. Almost everybody is grabbing a new iPhone 4S when they go to make their purchase.

post #39 of 78
Quote:
Originally Posted by Apple ][ View Post

As Solipsism already pointed out to you, it appears that you are the dumb one. The 3GS is years old, it's not a new phone.

And the interesting thing is that even with that years old, low priced phone model, not many people are opting for that option anyway. Almost everybody is grabbing a new iPhone 4S when they go to make their purchase.


4% of how many millions? So when I walk into a Apple store am I buying a phone that's been sitting around since 2009? It outsells most if not all individual models of Android phones. So a great many people are choosing it. A "low end" Android sells at twice the price and has comparable specs. All that equates to low end. Neither you nor soli have given an explanation as to why Apple keeps selling it especially since its only 4% of iPhones sold. What market are they after? And what's the difference between that market and the so called "low end" market?
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post #40 of 78
I'm not an Apple stockholder.. and this new still makes me happy.

Why? Because it tells me that other people see the value in Apple products just like I do. And as long as the company continues to profit well of their formula thats been so successful, they will continue to deliver excellent products instead getting into low price leader wars like pretty much every other consumer electronics company. If their product model wasnt working and sales were falling (i.e. Netbooks) then you'd see a company change their ways and try another strategy (i.e. notice how everybody is now producing Ultrabooks instead of Netbooks).

For the longest I was an Apple hater. I thought they were overpriced, lacked features and only Apple sheep got them. Then I got a Creative Labs mp3 player in 2004. And it sucked. (Remember that, its the most important part of the story). After watching many other people, including my best friend start to use an iPod at the gym. I decided as a christmas present to myself.. to buy a 1st gen iPod Nano 4GB. It was awesome! (also an important part). It was so much better than the CL mp3 player.. I couldnt believe it. A few years later I got tired of my Blackberries dying and the poor web browser/game selection on them. They sucked. (see the trend). So in June 2009 I bought an iPhone3GS.. and again it was awesome. I later bought an HP laptop that same year. IT SUCKED!!!!! (did I even need to say it). Sold the HP within 6 months and bought a Macbook Pro 13".. and yes it was awesome. Long story short.. I now have an Apple Macbook Air 13", iPad2, Apple Extreme router, Apple TV, iPhone4 and 4S (still need to sale my old 4).. and they all fukking rock!! As if the story couldnt get anymore awesome, Apple just replaced my 1st Gen Nano with a new (free) replacement 6G iPod Nano 8GB. And I have the watch band.

While the Apple haters will call me a fanboy. The other millions of people who also enjoy Apple products.. and are the reason why they are making 75% of the profit, with just 9% of the market understand what I do. And thats that.. ultimately its worth the Apple "tax" for a product that looks great, works great and delivers a much better user experience. Its something you really cant explain in words, but when you use an Apple product you understand that difference. It doesnt feel cheap, it isnt laggy or bogged down, its so simple to use you dont need to read the manual, it looks and feels like its made out of 1st class materials.. and most importantly.. IT JUST WORKS. All of that leads to an awesome experience.. where price is really your last concern. You get so spoiled by the user experience.. that paying more becomes less of a concern. And its no secret millions of other people have found out exactly what I have.
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