Wednesday, February 02, 2011, 05:00 pm PT (08:00 pm ET)
Apple's iPhone extends lead in mobile profitsA graphic depiction of Apple's increasing share of the top eight mobile vendors' operating profits validates the company's smartphone-centric strategy with iPhone.
As reported by Horace Dediu of Asymco, Apple's profit share of the top mobile vendors is widening dramatically, thanks to the company's solitary focus on smartphones.
Since the iPhone appeared in 2007, Nokia has taken the most brutal beating, with its once-leading profits of up to $3.5 billion per quarter being hammered down to just $1.3 billion or less this year.
Apple surpassed Nokia in mobile profits in Q4 of 2008, just a year and a half after bringing iPhone to market. Nokia continues to sell vast numbers of phones, but makes very little profit on these mostly non-smart devices. That has allowed Apple to claim well over 3 times the mobile profits on far fewer sales of iPhones worldwide.
RIM, HTC & Motorola
The most similar smartphone maker to Apple, Canadian BlackBerry maker Research in Motion, has steadily increased its quarterly earnings but not nearly as quickly nor as dramatically as Apple, despite making smartphones running its own operating system like Apple.
HTC, which has relied on both Windows Mobile and Android to power its smartphones, has achieved the third highest profits per phone with a similar focus on smartphones, but its overall profits are in fifth place out of the top eight mobile makers.
Motorola finally climbed out of quarterly losses last year as it shed phone volume for smartphone profits, benefitting greatly from Verizon Wireless' push to drive Android smartphones over the last year.
With just a sliver of the mobile industry's profits, Motorola has a long way to go in its smartphone strategy, but is also facing the reality of Verizon now backing the iPhone rather than promoting its Droid products. Motorola now has neither very profitable phone sales nor large sales volumes.
Samsung, LG, and Sony Ericcson
Samsung, the most profitable Android maker, continues to make a large number of non-smart phones and therefore makes very little per phone. However, like Nokia it sells a large number of phones. Samsung has worked hard to leverage both its own Bada platform and Android to sell more smartphones, and also hopes to follow Apple in making tablets and a media player like the iPod touch.
LG is in a similar position, with higher volumes of mobiles; however, the company has shifted from being profitable to posting mounting quarterly losses over the past year as it struggled to deliver Android, Windows Mobile, and then Windows Phone 7 devices that customers might want.
Sony Ericsson, following the decline of Motorola, shifted from profitable prior to the iPhone to posting regular quarterly losses, but managed this year to achieve minor profits based on relatively small volumes similar to Motorola and with similarly meager profits per phone sold.
All signs point toward greater adoption of smartphones going forward. That bolsters the opinions of Apple executives, who have noted that despite posting industry leading profits, the company still has a relatively small share of the world's mobile market, giving the company vast opportunities for expansion as mobile users shift toward more sophisticated phones.
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