Wednesday, January 19, 2011, 02:40 pm PT (05:40 pm ET)
Apple now the largest mobile phone vendor in the world by revenueWith sales of its iPhone handset and accessories hitting $10.47 billion in the winter 2010 quarter, Apple has now surpassed Nokia to become the world's largest mobile phone maker in terms of revenue.
Nokia's most recently reported quarter saw its Devices & Services division bringing in 7.17 billion Euros ($9.7 billion), and the company projects Q4 sales of 8.2 to 8.7 billion Euros ($11.4 to $11.7 billion), but this includes more than just its smartphone sales.
Nokia's Devices & Services folds in the company's line of handheld mobile computers, tablets and other devices falling within its Mobile Solutions group, as well as its global sales of non-smart feature phones in its Mobile Phones unit, as well as a Markets unit that manages the company's Ovi-branded services ranging from email to its music and app stores.
Adding Apple's own $1.4 billion in iTunes Store revenues to its iPhone revenues tilts it ahead of Nokia's Devices & Services in the winter quarter, even before threatening to bust the scale with its multibillion dollar iPod and iPad ($4.61 billion itself) sales.
Apple began bragging last year
A year ago, Apple's chief executive Steve Jobs pointed out that Apple's then record $15.6 billion winter quarter had turned it into the "largest mobile device company" in the world, ahead of Nokia, Sony and Samsung.
"I just didn't want to let this moment pass without recognizing it," Jobs said. "It's pretty amazing."
Nokia was quick to dispute the claim, with its own chief executive Olli-Pekka Kallasvuo insisting that at the time that Nokia was still the worlds biggest mobile device manufacturer, when using a generally accepted and stable definition of mobile devices, which excluded notebook computers (which Nokia doesn't make in significant quantity).
This year, Apple doesn't have to include MacBook sales in a disputed definition of what a "mobile device vendor" is, and can instead simply snatch the crown of "world's largest mobile phone vendor" from Nokia. The Finnish phone giant has since replaced its former CEO with Stephen Elop, who joined Nokia last September after leaving his previous position as head of Microsoft's Business Division in charge of delivering Office.
Apple's mobile business growing fast
Apple's chief financial officer Peter Oppenheimer also pointed out Apple's mobile business is growing at a faster pace than even the fastest growing smartphone segment of overall market.
"We were thrilled to have sold 16.2 million iPhones compared to 8.7 million in the previous December quarter," Oppenheimer said in his prepared remarks. "This represents 86% year-over-year growth compared to IDC's latest published estimate of 70% growth for the global smartphone market overall in the December quarter."
Most painful for Nokia is that Apple didn't beat it by flooding the market with cheap low end phones, but rather took away its mobile bragging rights with the kind of high end, Enterprise-savvy smartphone the Finnish phone company has found hard to deliver.
Apple's American invasion of Nokia's backyard
Oppenheimer noted that "Enterprise customers continue to embrace iPhone, with 88 of the Fortune 100 companies and almost 60% of the Financial Times Europe 100 companies now testing or deploying iPhones."
That's more than just an embarrassment to Nokia, which has long owned the European market while struggling to make inroads into North America. It's a direct invasion of its home field, once unquestioning dominated by Nokia's Symbian.
"Enterprise CIOs continue to add iPhone to their approved device list worldwide," Oppenheimer said. "Most recently, Fortune 500, like Wells Fargo, Archer Daniels Midland, DuPont, Staples, Starbucks and Genworth Financial, and Global 500 accounts such as Nissan Motor, BBVA [Banco Bilbao Vizcaya Argentaria], Standard Chartered Group and Danone, have made iPhone available to their employees."
Lots of room to expand
Most troubling for Nokia, however, is that Apple is just getting started. Nokia has sat on top of a dominant position in mobile phones for years, much as Microsoft has enjoyed high market share in the PC world. Apple has outpaced both, not by seeking to just capture market share, but by capturing profit share with a limited number of high end devices that are visible and attractive to customers and easier to support.
That gives Apple vast opportunity to continue to expand its share, eating into the mobile and PC markets even as Nokia and Microsoft scramble to hold on to their existing share of those markets through a wide range of low end devices that all blur together for consumers even as they become increasingly difficult and expensive for Nokia and Microsoft to support.
In his Q&A session, Apple's chief operations officer Tim Cook explained, "We've had 19 quarters straight of growing faster than the market [with the Mac], but we still have a relatively low share of a very large PC market despite having great momentum there. And so it would seem like there's enormous opportunity still there.
"We have a relatively low share in the handset market. The handset market is well over 1 billion units a year, and the smartphone market is growing faster than a weed. And so there's enormous opportunity here, and we have incredible momentum in that space."
At the same time, Apple has also introduced iPad as a new product category in a space that neither Microsoft nor Nokia has been able to successfully target, despite years of trying with their Tablet PC and Internet Tablet initiatives.
"iPad just got started, it's a new category," Cook noted. "We sold almost 15 million through the first three quarters, and we believe the market is huge. IDC, I saw this morning, is predicting it to quadruple in two years. I don't know what to predict in terms of specific numbers. However, we believe it's a huge market, as we've said before. And so we're in some great markets, some fast-moving markets, we have the best products we've ever done and an incredible product pipeline. We feel very, very confident."
On Topic: Microsoft
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- Apple opts out of latest patent acquisition fund from Intellectual Ventures
- Microsoft hopes to counter Apple with AI-driven 'invisible user interfaces' on future devices
- Microsoft shows off new 'Windows in the car' concept to take on Apple's CarPlay
- Microsoft Office for iPad hits 12M downloads one week after debut