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Apple overtakes Nokia as most profitable phone maker

updated 05:15 pm EST, Tue November 10, 2009

iPhone pushes Nokia down to No. 2

Apple is now the single most profitable phone maker in the US, Strategy Analytics said today. Although it has just 2.5 percent share and makes just two similar iPhone models, Apple is estimated to have generated about $1.6 billion in operating profit from its cellphones in the summer where market leader Nokia said it had only generated $1.1 billion. Nokia's second-place finish comes despite it being one of the most experienced phone builders and Apple having only entered the category in 2007.

"With strong volumes, high wholesale prices and tight cost controls, the PC vendor has successfully broken into the mobile phone market in just two years," analyst Alex Spektor says.

The discrepancy stems from Nokia's flat smartphone market share being compounded by an increasing bias in its lineup towards low- or mid-range regular phones that sell in larger numbers but with much smaller profit margins. Finland-based Nokia has also historically underserved the US market that Apple calls home, often selling its best phones there either months after they ship to Europe or only as full-price, carrier-independent devices that sell very poorly in the American market.

Spektor believes that Nokia can recover if it focuses on the US. He highlights Motorola's recent turnaround as an example and estimates that phones like the Cliq and Droid create four times as much gross profit as one of Motorola's regular devices, giving the copmany every reason to focus on smartphones instead. It would take just 10 million Android phones sold in one year to match half of the profit of its entire Mobile Devices group, the analyst says.



By Electronista Staff
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Comments

  1. iphonerulez

    Fresh-Faced Recruit

    Joined: Nov 2008

    +1

    It ain't how many you sell that makes

    the difference. You can be a leader in market share, but it's profit that really counts. I sure hope Apple can keep pulling in that profit. That's why I don't understand why analysts are so focused on gaining market share. If a company has plenty of money coming in, what does it matter if it's only coming from a limited amount of market share.

  1. rytc

    Senior User

    Joined: Jan 2001

    -2

    USA

    I don't see why Nokia will regain its lead by focusing on the US. Apple has only reached its current status by not just focusing on the US but rather by focusing on Europe, Asia and the rest of the world. Nokia is merely trailing in the smartphone area and needs to regain ground there. Europe is a huge market and hardly one that you'd give up on to focus on the US as suggested in the article.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    0

    execution

    That Apple has done so well in the cellular phone market in just two years, shows how good they are at executing their plans. Perhaps not perfect, but you'd have to give them at least 9 out of 10. I'd give them 9.5 - no major stumbles at all.

    I think Apple is proving they can be a major player in any market they choose. Even retail, they've done very successfully and that doesn't have much to do with high tech expertise.

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