iPhone: 3% market share vs. 39% profit share

iPhone: market share vs profit share

iPhone has tiny market shall, monumental profit share according to Canaccord Genuity and IDC, and pretty much everyone else who's ever mentioned it. TiPb's been pointing this out for a long time of course, but boy does the above graphic make it visually apparent just what the difference is.

Why do we, as users, care if Apple's making more money than everyone else (most of them combined)? Because it means Apple can keep making the iPhone they want to make, not the iPhone carriers dictate they make. Apple doesn't have to add big logos on the front of their phones, add carrier bloatware or let carriers make exclusive deals to lock out apps, lock out search engines, or replace Apple's own app store with a carrier store that won't let you take your apps with you to other devices and providers.

Sure, Apple will make mistakes and get things wrong, but ultimately Apple is a company that believes we, the end users, are their customers -- not the carriers.

So, yes, Nokia has a bigger market share and Android likely will as well soon enough. Apple's laughing all the way to the bank, though, and providing a phone that may not be as "open" as we like to us, but certainly isn't as tragically "open" to the manufacturers and carriers as the competition.

We'll see what, if anything, that means to a potential Verizon iPhone deal...

[Fortune]

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Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

iPhone: 3% market share vs. 39% profit share

17 Comments

This is a perfect example of an Apple fanboy's response to the declining iPhone prevalence worldwide. Rene is worse than Kevin from CrackBerry lol. By 3.0, Android will be wiping its butt with iToys.

It's just all about preference. There is nothing major that the iPhone can do better or worse than Android can and vice versa. They are both phones and in the end do the basic same functions that we all use in the end. I'm all for Android growing to keep Apple on it's towes

@VeeTeePee you are looking at it wrong. Nokia, Samsung, and LG move a few dozen million each of low end, cheap, low margin phones. You aren't going make a net gain on those even if your volume is grossly higher than the other guy. If they were moving that same volume of high end N-series, Galaxy S, etc I'm sure the profit's would be more in line. I wonder how sales of those companie's high end phones compare to the iPhone.

But ive played with all the high end Android phones and the iPhone STILL has the best, more responsive touch screen. HTC is getting better but they can't beat it. And iPhone still has the best screen as well. HTC releases how many different phones a year and Apple just releases one a year, on one carrier and still does great in a market they entered only 4 years ago.

Ah yes, and I recall the "55 or bust" (referring to Mac profit margins) around Cupertino in the mid-to-late 1980s. That worked out well.

My phone doesn't have a carrier logo on it and the closest thing to bloatware it has is VZ Navigator...
All I got out this article is reaffirmation of what we already knew about the Apple tax.

So they don't have carriers restricting and locking the phones.. but they do it themselves.. so what's the difference..
I'll stick with my EVO ... no lockdowns... perfectly open.. I don't need to root it.. I can customize the hell out of it..

So this profit share is counting only phones? Not everything else apple does? And same thing with Sammy... only counting phones? Not TV's, Disc Players, Media, etc...
I find it hard to believe that Apple is making that much more profit from just phones. They release one phone per year that sells in the millions. Every other company has a larger share and they make less?
They sell more and they make less? I don't really understand. I guess Apple isn't letting anyone else make any money? Maybe Apple is charging a lot more for their products than what they are worth? So, what does this profit share count? The entire Apple company? Or just iPhone?

@estebancam
This is just a shot in the dark but I believe AT&T doesn't give a rip about making money off Apple's hardware as long as Apple delivers a product "everybody" wants. AT&T (and the rest of the carriers) are the people making money hand over fist with high ETF fees, 2 year contracts, and charging for every little service under the sun. Heck, I'd sell Apple's phone for zero profit if I could con the masses into a two year contract which I would reap all the profits.

And speaking of “open” does anyone know of a case small adaptor that can translate that giant 1990's era 30-pin port to a standardized mini or micro USB?

Carriers are not that great at being carriers. They should not delve into being phone developers. They should try learning from others experiences with bloatware. Bloatware has ALWAYS, in my eyes, lacked in foresight, effective functionality, or otherwise overall quality. Leave the creativity to those that are halfway good at it. "Stepping down from SoapBox."

Well I think from 'end user' perspective iPhone is a cool device that just do stuff. If you have issues you just type in apple.com/iPhone or go to any Apple store. It is a smarphine that works. Then from a development point of view it is the most flexible and very transparent platform.
So who cares what others does... As long as you as a developer make millions or at leafs dream about it - it is just another platform.
Rene is right. Apple does it different. Not entirely as we would all expect though at least they have a loyal group of customers. This is their success and us as developers too, because that way we have a credibility, platform etc. Let's give them couple of more yesrs and see how far they can get..
Just my personal opinion guys..

The high profit margin doesn't surprise me as Apple charges higher prices: that's just economics (the Apple tax). Apple is never going to see higher market penetration unless they lower prices, and I can't see Apple doing that anytime soon.
Apple has their strategy (which is work) and Google has theirs (which seems to be working too). So there really isn't anything anyone needs to get upset over. Ergo... who cares? :)

Here's the deal, though. Control over what goes on on the web comes from market share, not profit share. As an example: Steve can proclaim Flash dead, but those pronunciations only have power if Steve brings some significant number of users along with him. If something like 3% of users are Flash-incapable, Adobe (& every web developer on earth) are going to yawn and continue with business as usual. So profit share matters, but mostly to Apple shareholders. Market share matters to everyone else.

@Fernando. They're ripping off ATT. No other carrier pays a maker what ATT pays Apple for an iPhone. Apple needs ATT a lot more than ATT needs Apple. ATT already has a large customer base locked into a two year agreement. If ATT were to tomorrow say no more subsidy for the iPhone, the price of one would jump from $199 to $700. Do you really think Apple could sustain that 40% profit margin at those prices? I think not.