Apple iPhone More Profitable Than Nokia

iphone_business_model-400x400

We've said it before and we'll say it again, market share and profit share aren't the same thing, and just to prove that point, it looks like Apple's iPhone has shot passed Nokia to become the most profitable handset on the market. Says Telephony Online:

The firm estimates that Apple’s iPhone operating profit came in at $1.6 billion in Q3, while Nokia recorded only $1.1 billion in operating profit. “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,” said analyst Alex Spektor in the research note.

That's based on 1.6 billion in Q3 iPhone profits for Apple vs. 1.1 billion for Nokia and their handsets.

Why does this matter to us? High profit margins for Apple means more cash they can re-invest into the iPhone and its technology, and like the MacBook and iMac line (and the boilerplate they keep feeding us on their conference calls) it means they can decide to amp up the innovation, even if costs them a little in the short term. No margin, no room for that kind of competition.

So, Apple, we hope you take a lot of that 1.1 billion, check out your competition, and invest heavily in wowing us again in 2010, b'okay?

[Strategy Analyst via Telephony Online via MacRumors]

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, ZEN and TECH, MacBreak Weekly. Cook, grappler, photon wrangler. Follow him on Twitter, App.net, Google+.

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There are 18 comments. Add yours.

plt says:

do you mean "So, Apple, we hope you take a lot of that 1.6 billion..." instead of "So, Apple, we hope you take a lot of that 1.1 billion"?

Rene Ritchie says:

Yes. Bad day for numbers. Thanks!

OmariJames says:

Or they can give everyone a raise ^_^.

Rjd says:

It's because the iPhone over priced just like all Apple products.

Gregory Foster says:

@RJD, ya get what cha pay for. Pre-iPhone I went through a new phone EVERY year (or few months depending on the phone). I've had the iPhone since first launch, I upgraded to 3G but not becasue there was anything wrong with my 1st Gen.
I had an apple PowerBook for 5 years and it ran better than my dads POS brand new Toshiba and my brothers brand new Quosimo (spelling). It took a very bad fall but still runs, not like new but she's still kicking. I dropped a $2000 Sony vaio a few years back and she was down for the count.
I now have a brand new MacBook Pro which I intend on enjoying until 2014 or beyond.
BUT, to each his own. I'm willing to spend an extra few bucks on a computer not an extra few thousand on a better car. Does that make sense? Lol.

Tom says:

@ Gregory. The idea is not to drop the laptop.

ThisBrian says:

@Rjd it's the same price as the competition and still the better phone, so if Apple is overpriced for the phone, so is the competition.

icebike says:

@Rene:

Why does this matter to us? High profit margins for Apple means more cash they can re-invest into the iPhone and its technology,

So where is it?
There is precious little to indicate that much of any of this money is going back into iPhone redesign. Instead iPhone funds the iTablet and pointless upgrades to Apple TV.
Since the first version, we got a drop-in-replacement for the processor (which uses the EXACT same instruction set so no big investment there.
We got a new compass (10 cents per chip in bulk), new Camera, and two new radio revisions. Of these, the only one that took significant engineering was the Camera. The radio's are largely self contained chips, and you know that Infineon bent over backward to make sure the package size and pin-outs, and power requirements were identical.
So where is this huge profit going? Aren't we due for a total hardware make-over? Isn't it time for a new User Interface?
Or are we about due for a price decrease?
We can't recognize 1.6 billion in operating profit on the tiny amount of iPhones sold compared to the Juggernaut sales of Nokia and STILL insist this phone is fairly priced. You can't leap from a nobody in the cell industry to the profit leader on minuscule sales and claim you are only recouping development costs.

NetMage says:

Because software is free, right? And it didn't cost anything to make firmware 3.0 run on the first phone, or build the App Store infrastructure, or modify iTunes to sync apps (but Palm didn't do it), right?

Macboy74 says:

@icebike said .......We can’t recognize 1.6 billion in operating profit on the tiny amount of iPhones sold compared to the Juggernaut sales of Nokia and STILL insist this phone is fairly priced.
Your kinda comparing apples to raw fish there sport. Apple has ONE phone to nokia's FIFTEEN. And that's just in the U.S. They go from $200-$700.

Macboy74 says:

@icebike said .......We can’t recognize 1.6 billion in operating profit on the tiny amount of iPhones sold compared to the Juggernaut sales of Nokia and STILL insist this phone is fairly priced.
Your kinda comparing apples to raw fish there sport. Apple has ONE phone to nokia's FIFTEEN. And that's just in the U.S. They go from $200-$700.
http://store.nokia.com/webapp/wcs/stores/servlet/shophome1050010101_-1

Therealtruth says:

@icebike
why do you want anew hardware design and user interface? Just for the sake of having it? I'm pretty happy with it the way it is as I suspect many users are.

Michael says:

...shot passed? Can I get a proofreader please? Try ...shot past.

icebike says:

@TheRealTruth

why do you want anew hardware design and user interface? Just for the sake of having it? I’m pretty happy with it the way it is as I suspect many users are.

I want it way faster, way more storage, and way easier to find stuff.
Remember there was a time we were all happy and satisfied with THIS:http://img205.imageshack.us/img205/4855/win31kg1.jpg
Point being, the iPhone has a Windows 3.1 interface, and its time for Apple to start showing us some of that design wizardry that they keep talking about.
Both the hardware and the software need a fresh coat of bulldozer.
The form factor is pretty good. It could be a half inch bigger in height and width, but that's just a quibble.
You are only happy with it because you don't know what else is possible. When Apple lives up to its reputation you will look back on the 3G phone as antiquated.

therealtruth says:

@icebike
Of course the 3g will one day look antiquated. And i think i can at least imagine what's possible.....I just don't think apple is dragging their asses or anything. And how exactly is it diffucult to find things? I don't know.......I just don't know that there needs to be that much change .......What there doing seems to be working

Tariq javaid says:

Sir,
Sir what is the price of Nokia Apple.?
Regards,
Tariq

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