Analyst: Apple takes 50% of handset industry profits ahead of 100 million iPhone year

“In less than four years, Apple went from not making a dime on handset sales to commanding approximately half of the industry’s profits, and is now poised to set the bar even higher by shipping 100 million iPhones over a 12-month span,” Slash Lane reports for AppleInsider. “Although smartphones running Google’s Android OS continue to gain share of total smartphone units sold, when it comes to profits, Apple remains the undisputed king, raking in roughy 50% of the entire handset industry’s net earnings during the first quarter of 2011, according to Canaccord Genuity analyst T. Michael Walkley.”

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“At Verizon Wireless in particular, Walkley said his checks indicated the iPhone 4 was the #1 selling smartphone during June,” Lane reports. “Apple’s iOS installed base is believed to be the key differentiator for Apple, as it runs on the iPad and iPod touch in addition to iPhones. As such, Walkley is modeling the iOS base to rise rapidly from 250 million devices in 2011 to 415 million by the end of 2012, easily outmatching Android to remain the industry’s leading mobile operating system.”

Read more in the full article here.

15 Comments

  1. Anyone who has bought an Android powered phone knows damn well that it is a geek’s wet dream.

    The 95% that aren’t geeks will buy an iPhone next time.

    1. Android is for posers who don’t really know anything about technology. They’re the kind of guys who buy stock muscle cars and think they are great. They’re not the kind of guys who get themselves greasy boosting their own car.

      Anyone with any engineering sense recognizes the superiority of the iPhone, and greatly appreciates not having to deal with poorly designed crap.

      Just like when there were stupid self-described “geeks” who thought they were superior because they were using the command line while we used a GUI (and by the way, I still use the command line every day, I am an engineer)… the poser BSers who are ignorant of technology are the biggest fans of android.

      Regular people use it and get tired of being frustrated then switch to iPhone. Geeks and Engineers and Nerds never mess with it in the first place.

  2. Yes, people need to be reminded of these numbers when they start bloviating about Android’s domination of iOS.

    1. Apple 50% of the cell phone profit–ALL cell phones, not just the “smart” ones.
    2. Apple app store $1.7 billion vs. Google app store $103 million
    3. Apple iPhone revenue q1/2011 $12 billion vs. Google entire revenue of $8 billion.
    4. Apple iTunes TV and movie sales/rentals 500K PER DAY, vs. GoogleTV who knows or cares.

  3. Market share is important, but actual profit is more important. And Apple is ONE company making HALF of the available profit in the entire industry.

    Pretty soon, the rest of the industry will not be able to afford to compete directly with Apple, and will begin mostly going after the smartphone niches that Apple intentionally ignores. For example, phones with physical keyboards. Extra large mini-tablet phones. Cheap pseudo- “smart” phones. Etc. It’s already happening.

    My guess is that there is one currently ignored segment that Apple will soon exploit. Apple will release an “iPhone” that is not really an iPhone; it will be Apple’s take on a “feature phone.” Apple is not going to keep iPhone 3gs around for another year as the $49 special. And Apple is not going to sell iPhone 4 for $49 after the next iPhone is released. This new phone will be the “low-end” Apple phone going forward, and it will be low-cost in BOTH upfront price tag AND ongoing monthly fees. The current $49 iPhone 3gs carries a $400 subsidy; it’s NOT really “low-cost.”

    When the current iPod nano was released, I wondered why Apple had developed a fancy iOS-like interface for just that one product; it seemed like a waste. I think “Version 2” of this OS will be greatly expanded and used for this new phone. The phone will have a set of key built-in apps that act like iOS apps; they will be supplied by Apple. The phone will access the Internet with these apps, but there will be no general web browser. And there will be no way to add new apps (unless Apple supplies them in a firmware update); it will be the world’s best feature phone.

    Apple started out with iPod as a high-end product, then went after the low end with iPod shuffle, which was called “iPod” but was clearly not a “real” iPod. This new phone will be called “iPhone (something),” but it will be clearly distinguished (through design and marketing) from a “real” iPhone. And the millions of customers who current avoid iPhone due to high up front and/or monthly cost will love it. They will probably “upgrade” to a real iPhone the next time.

    1. I’ve always hoped for an iPhone shuffle. Shake it, it will call someone, you just won’t know who ahead of time. Kind of a riff on ChatRoulette.

    2. Thanks for sharing your idea for an apple feature phone. I hope you’re wrong, though. I think the value of iOS is the apps and by definition the fact that they are “smartphones.”

      However, the original iPhone was designed in 2006 or earlier, meaning that it is already 5 years old. Apple has been pushing performance on each generation, and I think they’ve been doing this to get to the point where they can make a smartphone at a feature phone price.

      The iPod touch has been their experimental platform. It sells without subsidies, yet people want it to have a camera, et. al. as well.

      I think the rumors of the iPod touch with a 3G chip might be true and this is the new feature phone– a low end iPhone with a cheaper camera, etc, that they can sell in quantity for iPod touch prices unlocked, direct, and which will go for free with cheaper plan when sold under contract.

      1. The “low-end” Apple phone (whatever it is called) that runs a full iOS only serves to hold back advancement of the “real” iPhone. The iPhone 3GS is going to be a drag on what Apple can do with iOS for the next two years, because Apple is obligated to support it (at least partially) with iOS during its two-year contact period. They are still being sold “as new” right now…

        You are right that Apple has been “pushing performance on each generation.” So, Apple wants to abandon support for the old ARM processor and non-Retina Display as soon as possible. At some point, there needs to be a technical separation between Apple’s low-cost phone and its flagship product. Does Apple try to make a low-end iPod that run iOS? NO. iPod touch runs iOS, and iPod nano and shuffle are devices that have limited functionality. No one buys an iPod nano instead of an iPod touch, because Apple has carefully designed (and marketed) the two products to be distinct.

        Also, iPod touch is hardly a “low-end” device. It costs over $200 retail (without any 3G parts). BUT, it only makes a fraction of the profit of a subsidized iPhone. The iPhone subsidy ALONE is double the TOTAL price tag of an iPod touch. Does Apple want to sell an iPod touch instead of an iPhone? NO way. If Apple made iPod touch (any full iOS device) into its low-end phone product, it will steal sales away from the “real” iPhone, with its ridiculous profit per unit. That’s NOT going to happen because Apple is not dumb.

        Logically, the only way Apple should go after the current “feature phone” segment (with hundreds of millions of potential customers who currently do not consider iPhone) is to design a highly desirable phone that is clearly NOT a “real” iPhone. It can still access the Internet with a maps app, email app, Twitter app, Facebook app, weather app, messaging app, and whatever other types of app Apple wants to put on it as built-in features. It will be “smart,” but not expandable. And Apple will not be obligated to release major software updates for these phone; what the phone comes with when you buy it is what it will have for its lifetime, just like with iPod’s that are not called “touch.”

  4. Dear MDN,
    I don’t know about you, but I’m about sick of everybody comparing iPhone to Android, even if iPhone IS winning now, it’s an invalid match-up.

    Pick the best selling Android phone and compare it to most advanced shipping model of the iPhone. I’ll bet iPhone wins.

    If we’re going to compare OS performance in the market – iOS against Android – make sure you include tablets.

    Is there anyone who’ll do fair research?

    1. “fair research” would also take into account that there are a bunch of incompatible operating systems that happen to have come from the same parent. To count them altogether as “Android” having whatever market share is stupid — no more relevant than counting OS X, iOS, Linux, BSD and many versions of Unix as having ___ marketshare.

  5. Slap a 2G phone into an iPod Touch, that’s the cheap phone and it can only access the net by Wifi, hence, no expensive 3G data plan.

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