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

Posted:
in iPhone edited January 2014
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.

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Comments

  • Reply 1 of 182
    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.
  • Reply 2 of 182
    Pwned!
  • Reply 3 of 182
    Quote:
    Originally Posted by AppleInsider View Post


    ...



    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.
  • Reply 4 of 182
    justbobfjustbobf Posts: 261member
    Sounds like we are all being a bit over-charged, here...
  • Reply 5 of 182
    Quote:
    Originally Posted by winterspan View Post


    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.
  • Reply 6 of 182
    princeprince Posts: 88member
    Quote:
    Originally Posted by iPhone1982 View Post


    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.
  • Reply 7 of 182
    Quote:
    Originally Posted by justbobf View Post


    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.
  • Reply 8 of 182
    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.
  • Reply 9 of 182
    Quote:
    Originally Posted by Prince View Post


    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.



    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.
  • Reply 10 of 182
    tofinotofino Posts: 697member
    Quote:
    Originally Posted by iPhone1982 View Post


    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...
  • Reply 11 of 182
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by iPhone1982 View Post


    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.
  • Reply 12 of 182
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by iPhone1982 View Post


    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.
  • Reply 13 of 182
    Quote:
    Originally Posted by .:R2theT View Post


    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.



    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.
  • Reply 14 of 182
    brucepbrucep Posts: 2,823member
    Quote:
    Originally Posted by iPhone1982 View Post


    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
  • Reply 15 of 182
    Quote:
    Originally Posted by melgross View Post


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



    Continue what? The Truth?
  • Reply 16 of 182
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by iPhone1982 View Post


    Continue what? The Truth?



    What you accuse others here of doing, and you know exactly what I mean.
  • Reply 17 of 182
    Quote:
    Originally Posted by melgross View Post


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



    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.
  • Reply 18 of 182
    Quote:
    Originally Posted by Prince View Post


    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.





    Quote:
    Originally Posted by iPhone1982 View Post


    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?





    Quote:
    Originally Posted by iPhone1982 View Post


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



    Schizophrenia is such a terrible thing to witness.
  • Reply 19 of 182
    cmf2cmf2 Posts: 1,427member
    Quote:
    Originally Posted by iPhone1982 View Post


    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.
  • Reply 20 of 182
    sflocalsflocal Posts: 4,542member
    Quote:
    Originally Posted by iPhone1982 View Post


    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...
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