Apple Rakes in Over Half of Mobile Phone Industry's Fourth Quarter Profits

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An interesting series of charts from Asymco reveals that, despite a worldwide mobile phone unit market share of only 4%, Apple accounted for approximately half of the industry's profits for the fourth quarter of 2010.




4Q10 unit-based market share for mobile phone vendors
With only a small unit market share, Apple has managed to achieve its remarkable profits by focusing on the high-priced and rapidly-growing smartphone market while doing so at significant profit margins. That 4% unit share consequently translates to over 20% of industry revenue and just over 50% of industry profits.




4Q10 profit share for top eight public mobile phone vendors
Asymco's study based its calculations of revenue and profit shares on data compiled from reports issued by the top eight publicly-traded mobile phone manufacturers: Apple, HTC, LG, Motorola, Nokia, Research in Motion, Samsung, and Sony Ericsson. While included in the "Other" category for unit market share, companies such as Chinese manufacturer ZTE, which edged out Apple for fourth place in the quarterly unit sales rankings, are not included in the revenue and profit data as such information is not publicly available.

The results demonstrate the continuation of a trend that had seen Apple's share of mobile phone industry profits rise from 20% in 2008 to 39% for the first half of 2010. Asymco published a similar estimate of 50% profit share for Apple in the third quarter of 2010.

Article Link: Apple Rakes in Over Half of Mobile Phone Industry's Fourth Quarter Profits
 

Popeye206

macrumors 68040
Sep 6, 2007
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NE PA USA
It seems like all the other vendors are competing on price. Lower the price, make the 2 for 1 deals and move units at the cost of profits. Not a good way to run a business. Some of the vendors are dealing their way out of the business. Motorola was the most surprising since they seem to have one of the strongest Android lines.
 

ChazUK

macrumors 603
Feb 3, 2008
5,390
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Essex (UK)
That is an insane statistic but it's one of the benefits of having a highly desirable handset.

One things for sure, Nokia really need to change something...
 

BC2009

macrumors 68000
Jul 1, 2009
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Again, statistics can say anything, but this means one of several things to me:

1) Android is racing to the bottom in price and competitors try to undercut the iPhone or each other. That race to the bottom is driving overall unit sales by making smartphones more affordable. But while Android phones are becoming a commodity, Apple is the only manufacturer who has been able to differentiate itself and has not had to do the "race to the bottom" to sell units.

2) Other manufacturers are not nearly as cost-effective as Apple in their development of smartphones, hence their cost base is reducing their overall profitability, even though they may have very good revenue numbers.

3) Some combination of (1) and (2).

The fact that Apple's 20% revenue translating into 50% profits is interesting to me. However the 4% market-share number is based on all handset owners regardless if they purchased a new phone in the last 3 years or not. I'd be more interested in percentage of unit sales by quarter alongside the revenue and profit stats. The questions I would like answered are:

1) How many people are buying one manufacturers phone over another by quarter.

2) How much revenue did the manufacturer make per unit sold.

3) How much profit did the manufacturers make per unit sold.

4) How much of the revenue per unit sold was carrier-subsidy paid to the manufacturer (i.e.: how much is the average consumer actually willing to pay for the device).

Anyway, those are my thoughts.

EDIT: If you follow the link you do get number of units sold by quarter as well -- Apple is NOT shrinking in number of units by quarter, and Motorola is practically giving away the phones if you look at unit sales versus profit.
 

LagunaSol

macrumors 601
Apr 3, 2003
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I do own 2 iPhones... but this just shows how overpriced the iPhone's is. :(
Hardly, as the iPhone has the exact same retail price as competitive devices.

Apple is simply able to squeeze more subsidy dollars from the carriers because they have a hot, in-demand device. They also get better volume pricing on components vs. the multiple hardware manufacturers splitting the Android slice of the pie.

Hence higher profits for Apple.
 

gnasher729

macrumors P6
Nov 25, 2005
17,123
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That is an insane statistic but it's one of the benefits of having a highly desirable handset.

One things for sure, Nokia really need to change something...
True, but LG _really_ needs to change something... :(


1) Android is racing to the bottom in price and competitors try to undercut the iPhone or each other. That race to the bottom is driving overall unit sales by making smartphones more affordable. But while Android phones are becoming a commodity, Apple is the only manufacturer who has been able to differentiate itself and has not had to do the "race to the bottom" to sell units.
It's the same problem as in the PC market: Between Android devices, price is the only differentiator. If company A sells a phone for $199, and company B sells a phone for $198, and there is no visible difference between the phones, then 90+% will go and buy the phone for $198. So company A reduces the price to $197, and now 90+% buy from company A. So B changes the price to $196 and so on until one or both reach the point where reducing the price would actually lead to losses. And then they both have to reduce quality to save cost.

The iPhone, like the Macintosh, is not totally immune to this, but as long as plenty of people can afford one, Apple is fine.
 
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2992

macrumors 6502
Hardly, as the iPhone has the exact same retail price as competitive devices.

Apple is simply able to squeeze more subsidy dollars from the carriers because they have a hot, in-demand device. They also get better volume pricing on components vs. the multiple hardware manufacturers splitting the Android slice of the pie.

Hence higher profits for Apple.
Good point, indeed.
However, iPhone is still overpriced, hardware wise.
Experience wise, well... I have 2 of them, and that says all.
 

Popeye206

macrumors 68040
Sep 6, 2007
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I do own 2 iPhones... but this just shows how overpriced the iPhone is. :(
Do you feel ripped off? I don't. $200 well spent... especially considering I spent the original $200 with the iPhone 1 and have sold each old model to cover the cost of the new model.

I'm glad to see Apple makes money with this. Companies are in business to make money. When they don't, they fade away.

The value is there. With the iPhone, and their computers for sure as I type this on a 4+ year old MacBook Pro that still works flawless.
 

aristotle

macrumors 68000
Mar 13, 2007
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Good point, indeed.
However, iPhone is still overpriced, hardware wise.
Experience wise, well... I have 2 of them, and that says all.
You seem to know nothing about business. If it was overpriced then people would not be buying it. The iPhone is priced at what the market can accept.

It would be foolish to price it lower since they cannot increase sales or increase production. They are still selling as many as they can make.

Nobody is holding a gun to anyone's head to buy one. iPhones are a luxury and not a necessity.

Most of the profit comes from Apple not offering discounts in order to increase sales to carriers and leveraging of Apple's purchasing power for flash storage across several product lines including the Macbook Air, flash based iPods, iPod Touch, iPad and iPhone.
 

porky

macrumors regular
Oct 12, 2003
172
6
BELGIUM
Do you feel ripped off? I don't. $200 well spent... especially considering I spent the original $200 with the iPhone 1 and have sold each old model to cover the cost of the new model.

I'm glad to see Apple makes money with this. Companies are in business to make money. When they don't, they fade away.

The value is there. With the iPhone, and their computers for sure as I type this on a 4+ year old MacBook Pro that still works flawless.
In belgium we pay around 650 euro .... But it's worth it
 

ditzy

macrumors 68000
Sep 28, 2007
1,715
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I guess this shows that Market share isn't the most important thing when it comes to sales.
 

Popeye206

macrumors 68040
Sep 6, 2007
3,148
836
NE PA USA
In belgium we pay around 650 euro .... Butbit's worth it
But to my understanding, your monthly phone rates are much cheaper than ours. My plan costs about 90 Euros ($125) per-month with unlimited calling.

So you pay more for the hardware, but we pay more for the phone plans. Correct? :) I guess we all pay somewhere?
 

2992

macrumors 6502
How is the iPhone overpriced hardware wise? please do explain.
I don't have iPhone4. I have 3G models. When I have purchased them (without contract, so they were not 200$, but way more than that), the market was having better hardware for same money. But again, experience wise, at that time, it was nothing like that on the market. I am not looking at this from business point of view, I am looking from Joe the consumer point of view.

I am still going to buy iPhones as they do what I need and want them to do versus what else is on the market for now.
I don't feel like I was ripped off, as it was my choice to buy them.
I am just saying that Apple is making loads of money (beside subsidies and stuff) from overpriced hardware.
Same story for most of the Mac(Book)s out there. (I do own few kinds of MacBooks, and I am really happy with them, but that doesn't mean they are not overpriced, again, hardware wise. I don't talk s/w or QoE.)
 
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