Apple's Share of Mobile Phone Industry Profits Pushes Toward 60%

[akm3]

to me that tells me that Apple is really ripping off its users by using cheaper parts and selling lower powered phones for huge profit.

Now apple only having 1 basic phone design really helps in savings as they only have 1 line to really deal with but still they sure as hell are not passing on the savings to us. Instead they just try to rip us off more.

No, Apple is ripping off it's CARRIER partners by demanding outrageous fees and terms, while simultaneously creating a product with unprecedented demand forcing the carriers to bow to them and their control and vision. Consumers win. Apple wins. Carriers, kicking and screaming, win too.

 

[NoNothing]

I would strongly disagree.

I watched the video and agreed with everything McCandless said. However the data that Asymco is trying to convey is very simple. The Treemap graph type that Asymco chose is for making very complex data easier to digest. The Treemap also works better in an interactive setting where you can drill down and change the color scale.

I think the best way to visualize data is to carefully choose the best way visualize the data.

The Asymco data has multiple aspects to the data it is portraying including profitability share that would be lost on a typical pie chart where color indicates different sets of data. Likewise, the human mind can visually see area differences in squares much faster than wedges of a pie.

In your pie chart, you presented a subset of the data Horace did. In short, you truncated some of the information.

 

[NoNothing]

Actually, the carrier is paying most of the difference.

Apple is getting the lions share of the profits on a very small percentage of the sales. Customer is paying a lot more than the product is worth. Apple is the king of marketing and every company dreams of having that kind of blind following where all rationality and sense is throw out the window.

Actually, the cost difference between an Android phone on AT&T or Verizon and an iPhone is minimal. On AT&T, you can get an iPhone for $1130 over 2 years. An Android phone will run you 1080-1130 over 2 years. A high end Android VS high end iPhone will set you back to within $50 difference on either platform.

The difference is Apple has a product people like using enough to actually pay a premium. In short, the user experience on iOS far exceeds the user experience on Android. Most manufactures would die to have that type of experience difference.

 

[johncarync]

The Asymco data has multiple aspects to the data it is portraying including profitability share that would be lost on a typical pie chart where color indicates different sets of data. Likewise, the human mind can visually see area differences in squares much faster than wedges of a pie.

In your pie chart, you presented a subset of the data Horace did. In short, you truncated some of the information.

I did not submit a pie chart here. If I had, you would have bowed to my greatness. I think your screen name says it all.

 

[mpb2000]

Am I the only one that doesn't want a smartphone? I mean, the iphone is great and everything (and I have nothing against other people wanting them), but the fact that I would have to pay an additional $360 a year for data prevents me from even considering it. It's not that I can't afford it, I just don't want to spend that kind of money on data service for my phone.

I have an ipod touch that I use all the time, but obviously not to do anything requiring internet access away from home (or the occasional wifi hotspot). I'm still fine with my env2; as long as I can make calls, text, and not pay for data, I'm good. The sad thing is, I noticed a while back that Verizon now requires data plans of some sort on almost all of their phones. They have a "smartphone" category, "multimedia" category, and dumb phone category, for lack of a better term. Even the "multimedia" category requires a data plan, which includes the env3, which is just the next generation of my phone. That thing would be useless for doing just about anything involving the internet. I guess I better hope my phone doesn't die anytime soon.

On the other hand, maybe the popularity of smartphones will drive down data rates at some point, but it sure doesn't look that way now.

 

[Snowy_River]

... Likewise, the human mind can visually see area differences in squares much faster than wedges of a pie...

You know, I think that I'd have to disagree with this, to some extent. While it may be true that if you lined up a whole bunch of pie wedges and then lined up a whole bunch of rectangles (note- the chart in question used rectangles, not squares), the average human may be able to identify area differences in the rectangles faster than in the pie wedges. But a pie chart isn't just a whole bunch of pie wedges lined up. It is a set of pie wedges arranged in a whole, so you don't have to judge area, but simply judge the size of the angle of each pie wedge. That is a very quick judgement, faster than any area judgement.

Am I the only one that doesn't want a smartphone? I mean, the iphone is great and everything (and I have nothing against other people wanting them), but the fact that I would have to pay an additional $360 a year for data prevents me from even considering it. It's not that I can't afford it, I just don't want to spend that kind of money on data service for my phone.

I have an ipod touch that I use all the time, but obviously not to do anything requiring internet access away from home (or the occasional wifi hotspot). I'm still fine with my env2; as long as I can make calls, text, and not pay for data, I'm good. The sad thing is, I noticed a while back that Verizon now requires data plans of some sort on almost all of their phones. They have a "smartphone" category, "multimedia" category, and dumb phone category, for lack of a better term. Even the "multimedia" category requires a data plan, which includes the env3, which is just the next generation of my phone. That thing would be useless for doing just about anything involving the internet. I guess I better hope my phone doesn't die anytime soon.

On the other hand, maybe the popularity of smartphones will drive down data rates at some point, but it sure doesn't look that way now.

Sounds like you and I are in the same boat, so to speak. But watch out, *LTD* might jump down your throat for expressing a personal opinion....

 

[Benjamins]

that leaves Apple a lot of room to maneuver

 

[Benjamins]

Am I the only one that doesn't want a smartphone? I mean, the iphone is great and everything (and I have nothing against other people wanting them), but the fact that I would have to pay an additional $360 a year for data prevents me from even considering it. It's not that I can't afford it, I just don't want to spend that kind of money on data service for my phone.

yeah, I use a regular dumb phone. The camera, apps, games are nice to have, but really not something I am willing to pay an extra $15 - $30 extra monthly for.

 

[the8thark]

Oh, and here are a couple of pie charts for those who have trouble with the somewhat odd area charts used in the report...

Odd? I thought it innovative. Everyone uses the ol' circle for their charts. Someone using rectangle boxes is different. You all call it weird. I just call it different and unique.

 

[NoNothing]

Sorry. It was another pie chart.

I did not submit a pie chart here. If I had, you would have bowed to my greatness. I think your screen name says it all.

It lacked all the data in the Asymco. You presented the plot that indicated Horace was the only person in the world to use treemaps.

 

[wesgray1113]

I didn't know that they were taking accessory sales into consideration with these figures. But I thought that the carrier subsidized the iPhone and that Apple still got the $599 per unit.



Apple is getting the lions share of the profits on a very small percentage of the sales. Customer is paying a lot more than the product is worth. Apple is the king of marketing and every company dreams of having that kind of blind following where all rationality and sense is throw out the window.



I don't want Apple or any company that makes good products to fail. I just don't want them to make ten times the money that everyone else does and then listen to people who are happy to be bent over like Apple is doing them a favor.

What are you? 11 or twelve years old? These data are a strong indicator that the leader is turning out a quality product with the most efficiency, it is no more complicated than that.

 

[*LTD*]

No, NOT FAILURES... Why do I care how much PROFIT a company is making off of me. This is PURE Apple Fanboy Nonsense!!!!!

Now you guys sound downright silly ya really do...

Profit Margin. Yeah, I could of gotten a Ford that got better gas mileage, had more features, and was a better looking car, but Chevrolet makes an extra $1000 off of me if I buy their cars - and afterall, it's that what's important, a manufactures profit..

Pathetic

Why do you feel it necessary in your signature to announce to everyone that you're "not blindly fanatical about anything"?

Is it to convince us our convince yourself? Moreover, why would we need convincing?

 

[SandynJosh]

I want them (Apple) to be successful. At least then I know there will be at least one less thing to worry about the Mac disappearing (now of course there is the question of if Apple is moving away from the Mac).

Actually Apple is not moving away from the Mac at all. However, the market is moving toward mobile devices and softening on desktop devices. If you want a Mac, then look toward the MBA or MBP, that's where the industry growth is and Apple is doing very well with mobile Macs.

With Lion coming out this summer, you will see Macs acting more like mobile devices to allow for more data interchange and familiarity between Macs and phones and tablets...specifically iPhones and iPads and iPod Touches. What I see this doing is to make Macs a more desirable computer to own with your iDevices, further building up Mac sales.

 

[vvswarup]

People on this forum are calling those who feel happy about Apple taking the majority of smartphone industry profits idiots. According to them, as consumers, they ought to feel angry that Apple is making so much profit.

Here's what I have to say to those people. Tell that to Android users. Post those same remarks on an Android forum. They're no better. They trot out market share numbers and trash talk. They put out stupid, baseless remarks about Apple stock, saying that it will drop like a rock tomorrow. These remarks are made in response to news stories discussing the market share of smartphone platforms make outlandish claims that the iOS platform is dead. The way I see it, people who celebrate Apple lead in profits are merely responding to those "predictions." This report is proof that Apple holds the lead in categories that matter.

I'm an Apple shareholder. I can't count how many times I have heard people say that Apple is overvalued and that it's going to drop tomorrow. Friends of mine who have read reports about Android's market share have told me to sell my stock in Apple. Quite frankly, it feels good to have the last laugh.

 

[KingCrimson]

Minus the fact that they are making tons of profit off of them. Just look at HTC. Android put them on the map and their profit amount as jumped a lot.

Sure, but while sells 18 million iPhones in a quarter, HTC sells maybe 2-3 million of their equivalent high-end smartphones.

 

[SandynJosh]

Apple is getting the lions share of the profits on a very small percentage of the sales. Customer is paying a lot more than the product is worth.

"Worth" is a very nebulous thing to measure. People will pay a certain price for "perceived value." Apple has found the sweet spot for perceived value for the iDevices. However, the cost to produce a product is never taken into account when setting the market price, unless the product cannot be manufactured for a low enough cost to make it worth entering the market.

Apple crunched their numbers and lined up their ducks before entering the phone market at a price that everyone felt was too high to be marketable. Everyone was wrong and the iPhone made history. Now all the smart phone companies are selling their products for about the same prices as Apple (within about $50 over the two year contract).

The fact that Apple's competitors are barely making money, or even losing money is not Apple fault. Nor should Apple lower their asking price to be a miserable as the competition. In fact, were Apple to lower their asking price to make as little as the competition, Apple would drive many of them out of the smart phone market. Imagine the rending of garments that would cause!

Apple is able to make more money per phone due to several factors. First, they have first mover advantage. (For example, Red Bull tastes no better then much of their competitors, yet they remain the highest selling brand)

Secondly, Apple essentially created the market category (yes I know about Palm's abortive earlier attempts).

Finally, to Apple the market is more mature while the other companies are feeling their way, throwing phone designs against the wall and hoping one of them will stick, and generally being far less efficient.

Apple owns the market and it is their's to lose. The other manufacturers are needing to do expensive things to buy a bigger part of the market. Again, that's no reason for Apple to cut their profits, but were Apple to do so, they could kill a good portion of their competition and would be accused of all sorts of terrible things.

Instead, Apple is sticking to their knitting and enhancing the perceived value of their products. For example, the 3GS phone today does more then it did when it was first put on the market. It sells for half the price as well. If "worth" is any measure of a product, then the 3GS beats all the competition hands down. No wonder it is the number two selling smart phone behind the 4G.

Apple is the king of marketing and every company dreams of having that kind of blind following where all rationality and sense is throw out the window.

Since no one, excluding only a thin lunatic fringe, will spend money senselessly, your above statement is irrational in itself. For example, if I prefer to buy McDonald's food it may be because it is a known quality standard -- Not the best, but a known quality. If I continue to re-buy the same brands of auto, computer or phone, it is because there is something "safe" for me in that purchase. I don't buy Apple products because they have the highest rated customer service. However, knowing that I'm rarely not totally happy buying Apple products makes it an easy purchase for me.

I don't want Apple or any company that makes good products to fail. I just don't want them to make ten times the money that everyone else does and then listen to people who are happy to be bent over like Apple is doing them a favor.

At the end of the day, it's the "perceived high value" of Apple products that bring customers back over and over. Saab might make a good car, but knowing that they are struggling to even stay alive as a company makes me think that their product decision are more about "how can we make it cheaper to stay in business" and less about "how can we make it better so it is more enjoyable to own".

I am confident that Apple's product decision are more of the latter sort, and that gives me a safer feeling about my purchases. There's nothing "blind" or "irrational" nor "senseless" about that... quite the contrary.


“There is nothing in the world that some man cannot make a little worse and sell a little cheaper, and he who considers price only is that man's lawful prey.”

 

[AppleScruff1]

"Worth" is a very nebulous thing to measure. People will pay a certain price for "perceived value." Apple has found the sweet spot for perceived value for the iDevices. However, the cost to produce a product is never taken into account when setting the market price, unless the product cannot be manufactured for a low enough cost to make it worth entering the market.

Apple crunched their numbers and lined up their ducks before entering the phone market at a price that everyone felt was too high to be marketable. Everyone was wrong and the iPhone made history. Now all the smart phone companies are selling their products for about the same prices as Apple (within about $50 over the two year contract).

The fact that Apple's competitors are barely making money, or even losing money is not Apple fault. Nor should Apple lower their asking price to be a miserable as the competition. In fact, were Apple to lower their asking price to make as little as the competition, Apple would drive many of them out of the smart phone market. Imagine the rending of garments that would cause!

Apple is able to make more money per phone due to several factors. First, they have first mover advantage. (For example, Red Bull tastes no better then much of their competitors, yet they remain the highest selling brand)

Secondly, Apple essentially created the market category (yes I know about Palm's abortive earlier attempts).

Finally, to Apple the market is more mature while the other companies are feeling their way, throwing phone designs against the wall and hoping one of them will stick, and generally being far less efficient.

Apple owns the market and it is their's to lose. The other manufacturers are needing to do expensive things to buy a bigger part of the market. Again, that's no reason for Apple to cut their profits, but were Apple to do so, they could kill a good portion of their competition and would be accused of all sorts of terrible things.

Instead, Apple is sticking to their knitting and enhancing the perceived value of their products. For example, the 3GS phone today does more then it did when it was first put on the market. It sells for half the price as well. If "worth" is any measure of a product, then the 3GS beats all the competition hands down. No wonder it is the number two selling smart phone behind the 4G.



Since no one, excluding only a thin lunatic fringe, will spend money senselessly, your above statement is irrational in itself. For example, if I prefer to buy McDonald's food it may be because it is a known quality standard -- Not the best, but a known quality. If I continue to re-buy the same brands of auto, computer or phone, it is because there is something "safe" for me in that purchase. I don't buy Apple products because they have the highest rated customer service. However, knowing that I'm rarely not totally happy buying Apple products makes it an easy purchase for me.



At the end of the day, it's the "perceived high value" of Apple products that bring customers back over and over. Saab might make a good car, but knowing that they are struggling to even stay alive as a company makes me think that their product decision are more about "how can we make it cheaper to stay in business" and less about "how can we make it better so it is more enjoyable to own".

I am confident that Apple's product decision are more of the latter sort, and that gives me a safer feeling about my purchases. There's nothing "blind" or "irrational" nor "senseless" about that... quite the contrary.


“There is nothing in the world that some man cannot make a little worse and sell a little cheaper, and he who considers price only is that man's lawful prey.”

Excellent post. Your points are well taken.

 

[unlinked]

Sure, but while sells 18 million iPhones in a quarter, HTC sells maybe 2-3 million of their equivalent high-end smartphones.

Do you really think the Apple area in the first graph is 6-9 times bigger than the HTC one? Looks more like 2-3 times to me.

 

[MrWinters]

Why do you feel it necessary in your signature to announce to everyone that you're "not blindly fanatical about anything"?

Is it to convince us our convince yourself? Moreover, why would we need convincing?

Your question is off topic, but since you asked, I'll answer. And since you're one of the more extreme fanatics out there, it is appropriate.

I have been a computer geek since 1979 - from the time of my 1st TRS-80 Model 1 (4k), through the Pets, Vic-20's, C64s, Atari 800s, Amigas, ST's, PC's, and after several false starts (I had a Mac SE, Mac Classic and later a Color Classic back in the day) my first modern Mac in 2006 (a mini). Today, I am on a Mac 90% of my day, be it my Mini (my second one, the 1st with Nvidia graphics), my iMac (G5 20" isight), a Hackintoish or my Macbook 13". I still use a PC that I built for work related stuff, but I am a 90% Mac user. I hold a bachelors degree in "computer science" which quite honestly is about worthless since few are programming COBOL using punchcards today.

I enjoy the Mac. But the reason I enjoy it is OS X. I don't find anything "magical" about the hardware. It's generally a generation behind any current PC hardware out there and priced 30% more. You can buy the same hardware for a PC that is cheaper - my Hackintoish closely matches a new Mac Pro yet cost $900 less than the cheapest MacPro.

Over the years I've graduated to the iPhone (I've had all 4 models), an iPod Touch (I bought my wife one and after she realized how simple it was to use, I was able to add her to my AT&T plan and get her a 3GS), and an iPad. I've also added my son to my iPhone plan (who graduated from Penn State LAST YEAR and really needs his own plan ) .. My parents have my 1st Mini still going strong today!

I spend a lot of time trying to convert PC users over to Macs (Not easy because of the Price) and HAVE converted my oldest son (an Union Craftworker), my niece, and my Daughter (who graduated this year from Kennesaw University THIS YEAR). My younger son (who I mentioned earlier) has a Macbook, but uses a PC as his primary machine since he is a gamer.

I think my passion and experience towards technology makes me worthly of engaging in serious conversation and debate regarding computing, technology, and the digital lifestyle.

Yet I never can seem to carry on an intelligent conversation on ANY Mac forum - Why???? Because they are infested with people like you LTD, fanatics who instead of addressing any comment critical of Apple goes off an a mindless, flaming, fanboy rant. Examples:

* Hey, you must be a troll or on Ballmer's payroll!
* Go play with your Clunky PC with it's Crappy Windows
* Compared to your crappy PC, Macs are just Delicious
* I can't help it you're poor and can't afford a Mac.

This along with using the word "elegant" in ever sentence and quoting "Steve" (I skate to where the puck is going to be), and my very favorite from MDN (Nutcase Central) "What's everyone going to buy "Steve" for his birthday this year"????

No LTD, Mac's aren't "magical, elegant, delicious, sexy, nor do they have "the sex". All Windows computers are NOT "crappy, clunky, or junky". And because you use a Mac, it doesn't make you any better, smarter, or "cooler" than the "Windows Sufferers". If you want to be taken seriously outside the fanboy community, learn why you think a Mac is a better platform (not, Oh God, it's just so delicious and elegant)...

Now, I apologize for the long, off topic post - but I hope I answered your question.

 

[Belly-laughs]

Here's my chart on how many use a pie chart to show this kind of data and how many use an unnecessary, weird set of boxes...

Image

Think self-serve rectangular shaped chocolate apple cream cake combo. Better than pie.

 

[tinman0]

Am I the only one that doesn't want a smartphone? I mean, the iphone is great and everything (and I have nothing against other people wanting them), but the fact that I would have to pay an additional $360 a year for data prevents me from even considering it. It's not that I can't afford it, I just don't want to spend that kind of money on data service for my phone.

Me either. Did smartphones for a number of years in the mid 2000s (Nokia 9300).

Since then I've been on paygo tariffs and dumb phones and saved an absolute fortune.

If there was a $99 iPhone on a paygo tariff I'd buy one, but until then, I'm happy with my dumb phone.

 

[AppleScruff1]

Your question is off topic, but since you asked, I'll answer. And since you're one of the more extreme fanatics out there, it is appropriate.

I have been a computer geek since 1979 - from the time of my 1st TRS-80 Model 1 (4k), through the Pets, Vic-20's, C64s, Atari 800s, Amigas, ST's, PC's, and after several false starts (I had a Mac SE, Mac Classic and later a Color Classic back in the day) my first modern Mac in 2006 (a mini). Today, I am on a Mac 90% of my day, be it my Mini (my second one, the 1st with Nvidia graphics), my iMac (G5 20" isight), a Hackintoish or my Macbook 13". I still use a PC that I built for work related stuff, but I am a 90% Mac user. I hold a bachelors degree in "computer science" which quite honestly is about worthless since few are programming COBOL using punchcards today.

I enjoy the Mac. But the reason I enjoy it is OS X. I don't find anything "magical" about the hardware. It's generally a generation behind any current PC hardware out there and priced 30% more. You can buy the same hardware for a PC that is cheaper - my Hackintoish closely matches a new Mac Pro yet cost $900 less than the cheapest MacPro.

Over the years I've graduated to the iPhone (I've had all 4 models), an iPod Touch (I bought my wife one and after she realized how simple it was to use, I was able to add her to my AT&T plan and get her a 3GS), and an iPad. I've also added my son to my iPhone plan (who graduated from Penn State LAST YEAR and really needs his own plan ) .. My parents have my 1st Mini still going strong today!

I spend a lot of time trying to convert PC users over to Macs (Not easy because of the Price) and HAVE converted my oldest son (an Union Craftworker), my niece, and my Daughter (who graduated this year from Kennesaw University THIS YEAR). My younger son (who I mentioned earlier) has a Macbook, but uses a PC as his primary machine since he is a gamer.

I think my passion and experience towards technology makes me worthly of engaging in serious conversation and debate regarding computing, technology, and the digital lifestyle.

Yet I never can seem to carry on an intelligent conversation on ANY Mac forum - Why???? Because they are infested with people like you LTD, fanatics who instead of addressing any comment critical of Apple goes off an a mindless, flaming, fanboy rant. Examples:

* Hey, you must be a troll or on Ballmer's payroll!
* Go play with your Clunky PC with it's Crappy Windows
* Compared to your crappy PC, Macs are just Delicious
* I can't help it you're poor and can't afford a Mac.

This along with using the word "elegant" in ever sentence and quoting "Steve" (I skate to where the puck is going to be), and my very favorite from MDN (Nutcase Central) "What's everyone going to buy "Steve" for his birthday this year"????

No LTD, Mac's aren't "magical, elegant, delicious, sexy, nor do they have "the sex". All Windows computers are NOT "crappy, clunky, or junky". And because you use a Mac, it doesn't make you any better, smarter, or "cooler" than the "Windows Sufferers". If you want to be taken seriously outside the fanboy community, learn why you think a Mac is a better platform (not, Oh God, it's just so delicious and elegant)...

Now, I apologize for the long, off topic post - but I hope I answered your question.

Outstanding post. If more Mac forum posters were like this, they wouldn't have the reputation that they do now.

 

[tigress666]

No, NOT FAILURES... Why do I care how much PROFIT a company is making off of me. This is PURE Apple Fanboy Nonsense!!!!!

I don't care how much profit a company is making off of me (long as I find the prices fair and I like the products).

I do care if I like their products and want to continue enjoying them that they are doing well. Especially products that to be useful need third party support (like software) which means the more successful they are being, the more enticing it is for third parties to make stuff for it.

I think some one pointed it out well. Some of us remember when Apple was doing horrible and were looking at the possibility of the Mac not existing. As well as no software being made for it. So it's nice to see them being successful and not worrying about that and actually seeing more software supporting Mac!

Also, as for your assertation about getting sick of hearing Mac fanboys throw it in people's faces, all throughout college I had to hear about how inferior my computer was, how Apple was going under, how only people who didn't know how to use a computer used Macs cause obviously the reason we didn't use a PC was cause it confused us.

So yeah, it's not just Mac fans who are guilty of that.

 

[mack pro]

People are still locked into contracts on Verizon. After a year or two, iPhone will attain about the same market share on Verizon that it enjoys on AT&T. That would be 60%. (And in a year or two Android will either be extinct or Google will be paying big bucks to Oracle for every Android phone ever shipped.)



There you go again. Looking back to the '90s for a warning from history.

This is more like the iPod era all over again. Especially in the pad computing market, but that's off topic.

You guys with the same tired excuses.

 

[roadbloc]

Welcome to the Post-PC era, folks. Seriously.

Mobile phones have been about for years and have nothing to do with PC's. What on earth are you on about?

I think this shows more than anything, the profit margins Apple achieve.