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

Posted:
in iPhone edited January 2014


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.





[ View article on AppleInsider ]

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Comments

  • Reply 1 of 77
    MacProMacPro Posts: 17,884member
    75% mobile phone profits with just 9% of units sold .... Holy Crap! That is all I can say.
  • Reply 2 of 77
    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?
  • Reply 3 of 77
    s8er01zs8er01z Posts: 144member
    So what you are saying is apple is ripping us off?
  • Reply 4 of 77
    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.....
  • Reply 5 of 77
    zindakozindako Posts: 468member
    Apple is an amazing tech company, their momentum isn't slowing anytime soon.
  • Reply 6 of 77
    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.
  • Reply 7 of 77
    igxqrrligxqrrl Posts: 105member
    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?
  • Reply 8 of 77
    jragostajragosta Posts: 10,473member
    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?
  • Reply 9 of 77
    just_mejust_me Posts: 590member
    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
  • Reply 10 of 77
    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)
  • Reply 11 of 77
    just_mejust_me Posts: 590member
    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.
  • Reply 12 of 77
    shadashshadash Posts: 470member
    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.
  • Reply 13 of 77
    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.
  • Reply 14 of 77
    gtrgtr Posts: 3,231member
    Apple is doom.
  • Reply 15 of 77
    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.
  • Reply 16 of 77
    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?
  • Reply 17 of 77
    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.
  • Reply 18 of 77
    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.
  • Reply 19 of 77
    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.
  • Reply 20 of 77
    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.
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