updated 03:20 pm EDT, Tue September 21, 2010
Apple reaps high margins off each device
Apple's share of cellphone industry profits is vastly disproportionate to the number of iPhones it actually sells, notes Canaccord Genuity analyst T. Michael Walkley. Apple sold approximately 17 million iPhones in the first half of 2010, as compared to the 400 million or so devices sold by Nokia, Samsung and LG combined. In spite of this, Apple took in 39 percent of industry profits, next to the 32 percent claimed by its three rivals. A mere 29 percent was claimed by remaining companies.
The situation exists because of the high margins Apple pulls in from every iPhone, notes Walkley. Whereas most cellphone makers "struggle to post a profit or even 10 percent operating margins," the analyst remarks, "we [Canaccord] estimate Apple boasts roughly 50 percent gross margin and 30+ percent operating margin for its iPhone products." Other notable exceptions to low margins include BlackBerry maker RIM, and HTC, which has been thriving on Android smartphones.