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Apple & RIM Make 3% of Handsets, 35% of Profits

Gordon Kelly


Apple & RIM Make 3% of Handsets, 35% of Profits

There has long been an argument made that Apple isn't really worried about expanding its share of the computer market because its circa 10 per cent share actually makes vastly more profit than any of its rivals given its premium positioning. Well, now we can say the same about the iPhone...

Extremely interesting research from Deutsche Bank analyst Brian Modoff this week has said that while Apple and RIM only account for approximately three per cent of the global mobile phone market they make 35 per cent of the operating profits. He predicts these figures will become even more staggering by the end of 2009 when the duo are expected to hold five per cent of the global mobile phone market and take home 58 per cent of total operating profits. Fifty-eight per cent!

To put this in context Modoff claims Nokia - which last year made a staggering 46 per cent of all mobile phones that were sold - earned 55 per cent of total operating profits and since then its share has hit 38 per cent according to its latest Q2 2009 financial results. Modoff concludes that there is virtually no profit margin in low end handsets and virtually any success in that sector relies on huge sales volume and high market demand. All of which rather explains the mess Motorola, Sony Ericsson and others find themselves in.

Less clear cut is how Palm will do given its shaky foundations though the Pre smartphone - and more importantly WebOS - should ultimately see it clear. HTC has also expanded significantly in recent years. As for new players like Acer and aspiring entrants such as Dell it seems that unless they plan to churn out non-descript handsets in their 10s of millions the advice is clear: stick to quality not quantity...


via The WSJ


July 21, 2009, 1:22 pm

Impressive figures.

This is of course all to be put in context however. Apple and RIM need to make vast profits to continue to invest in developing the cutting edge tech that will keep them at the high end of the market, and making those great figures.

There is no shame in being a low margin high volume manufacturer. Cell phones are a commodity item now, and the market will always need a spread of devices. Whether we need an SE, Moto AND Nokia remains to be seen I guess.

Luan Bach

July 21, 2009, 1:56 pm

Sticking to the quality end of the market brings it's own problems, for one it is a tiny part of the market for another brand loyalty is very much stronger than the mid/low end so an established high end brand like Apple can break into that market fairly easily but I doubt any other brands will be able to get any significant market shares.


July 21, 2009, 3:17 pm

It's an incredible achievement, both companies have had great success carving out niches in what was/is a very over-supplied market with most manufacturers facing pressure on their profits (or making repeated losses in the case of Moto). Both look to be reaping the rewards of innovation, and hopefully that will be an incentive to innovate further.


July 21, 2009, 5:03 pm

Figures. Obviously there are large profit margins to be made by Apple, seeing how willing their fans are to pay whatever they command.


July 21, 2009, 5:14 pm

@ farki80 - Yeah... no. Apple do have a lot of fans, but not enough to take a fifth of the markets profits to itself. You can't be flippant about results like these, they speak for themselves.


July 21, 2009, 5:45 pm

I agree with farki80, personally. And since I'd like to get a word in before 'cub' arrives: when has Apple ever developed cutting edge tech? I'll give them very good UI design.

As for fans + "results like these", I need only point to the survival of the PSP...


July 21, 2009, 7:43 pm

I never realised I was expected... Am we really as inevitable as each other, DrDark?

Actually not going to jump on this fanboy bandwagon, the results aren't surprising in the least... It's figure twisting.

The iPhone is a smart phone. Smart phones generally are the only phones that people pay good money for. RIM and Apple (and potentially HTC) are the only companies that don't make freebie phones. Of course they're taking a large bulk of the profit! Figures showing the breakdown within the Smartphone market would be much more telling...

Plus, I seem to remember Apple having special ongoing profit sharing deals with their mobile partners in each region to ensure an ongoing income. I would also assume that profits from the App Store are included in the figures, boosting them even more?

Let's not also forget that 3% is still a rather large number of phones...

@DrDark - Do you consider Apple's UI design cutting edge then? I would consider a cutting edge company to be those that are inventing and developing new and unheard of technology. A lot of what Apple implements is fantastic, and could be considered 'cutting edge' in comparison to what else is publicly available, but even I know that Apple didn't invent touch screen computing, not even multi-touch... They've just created the best implementation of it and thrust it into the public consciousness.


July 21, 2009, 9:29 pm

This is a meaningless article. You can't compare one corner of the market with the rest. It could be that Nokia's smartphones have 2% of the market and made 40% of the profit, which would make the figures from RIM and Apple look average. There isn't even any mention of HTC.

Come on TR, you can do better than this.


July 22, 2009, 1:11 am

"when has Apple ever developed cutting edge tech?"

How many iPhone-Clones were there before the iPhone?

Obviously, these "news" are not surprising. But it gives the response to the legions of people who claim Apple needs to offer a netbook.


July 22, 2009, 7:47 am

@Xiphias - sorry, I understand your logic but I disagree entirely. This is a hugely important article - as I stress in the story itself. It will also hopefully lead to manufacturers being more open about their market profit shares. You mention HTC but when you subtract RIM, Apple and Nokia's shares and factor in every other company remaining there isn't a lot left for HTC.

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