Edward Kirk
July 20th, 2009, 12:29 PM
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We knew the iPhone was exceptionally profitable for Apple, but a report from Deutsche Bank analyst Brian Modoff finds it to be on a much larger scale than we expected. According to his findings, the iPhone has only 1% of the unit market share in the cellphone industry, but is responsible for a colossal 20% of revenue.<!--break-->
<blockquote>The two companies' outsize share of profits underlines the shift in the wireless industry toward feature-rich devices accenting easy-to-use software and away from an emphasis on hardware. Smart phones account for only about 13% of total cellphone sales globally, but the segment is growing, despite a drop in the broader cellphone market. Apple and RIM had about 32% of the smart-phone market between them in the first quarter, estimates IDC.</blockquote>
Currently Apple and RIM make up 38% of the cellphone industry's total operating profit and just 3% of sales. Modoff claims that by the end of 2009, this will have grown to 5% of unit sales and 58% of the total industry profit.
Not surprisingly, the driving force behind these numbers is carrier subsidies. Apple is believed to get $400 from AT&T for every iPhone sold, while BlackBerry gets around $200 and a basic phone gets $100.
[<a href="http://www.macrumors.com/2009/07/20/apple-estimated-to-account-for-20-of-cellphone-industry-profit/" target="_blank">Wall Street Journal</a> (subscription required) via <a href="http://www.macrumors.com/2009/07/20/apple-estimated-to-account-for-20-of-cellphone-industry-profit/" target="_blank">MacRumors</a>]</div>
We knew the iPhone was exceptionally profitable for Apple, but a report from Deutsche Bank analyst Brian Modoff finds it to be on a much larger scale than we expected. According to his findings, the iPhone has only 1% of the unit market share in the cellphone industry, but is responsible for a colossal 20% of revenue.<!--break-->
<blockquote>The two companies' outsize share of profits underlines the shift in the wireless industry toward feature-rich devices accenting easy-to-use software and away from an emphasis on hardware. Smart phones account for only about 13% of total cellphone sales globally, but the segment is growing, despite a drop in the broader cellphone market. Apple and RIM had about 32% of the smart-phone market between them in the first quarter, estimates IDC.</blockquote>
Currently Apple and RIM make up 38% of the cellphone industry's total operating profit and just 3% of sales. Modoff claims that by the end of 2009, this will have grown to 5% of unit sales and 58% of the total industry profit.
Not surprisingly, the driving force behind these numbers is carrier subsidies. Apple is believed to get $400 from AT&T for every iPhone sold, while BlackBerry gets around $200 and a basic phone gets $100.
[<a href="http://www.macrumors.com/2009/07/20/apple-estimated-to-account-for-20-of-cellphone-industry-profit/" target="_blank">Wall Street Journal</a> (subscription required) via <a href="http://www.macrumors.com/2009/07/20/apple-estimated-to-account-for-20-of-cellphone-industry-profit/" target="_blank">MacRumors</a>]</div>