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

Quantity verses quality argument is conclusively won.

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

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