Apple has 2.8% market share, 39% profit share of mobile handset market
Market share is irrelevant if you can’t turn it into a dominant profit share. Who gives a damn if Nokia, Samsung, and LG can sell 400 million phones vs Apple’s 17 million, if Apple still beats all three combined on profits.
Designslave
on 22 Sep 10awesome.
Aaron M
on 22 Sep 10I know apple has a smaller marketshare in the PC world, but is it only 2.8 in mobile phones? I would of thought much higher.
Matthew Higgins
on 22 Sep 10Don’t let Tufte see those pie charts.
Jon Pynn
on 22 Sep 10Honestly I don’t buy that chart, my feeling is that the dividing line is not set properly in terms of profit. If the phones are roughly the same price and they cost roughly the same amount to manufacture, it would be impossible to have a profit differential that large. It strikes me that the appstore profit might be mixed in there which would skew the numbers pretty heavily.
David Andersen
on 22 Sep 10@Jon, you might be correct, but it wouldn’t surprise me if you aren’t. Apple doesn’t discount its products to make sales, the others do. That would explain it.
Andrei
on 22 Sep 10Who can tell if this statistics is worldwide, or only for US market?
nr
on 22 Sep 10“Who gives a damn”? Everyone gives a damn except for the small number of people who are stockholders in these companies.
Don’t we talk about this stuff because we care about how things are made, how they work, how they change our lives? Are all these posts about design and process really reducible to ways to increase profits?
Wikipedia is a non-profit, does that mean that Encyclopedia Britannica is automatically more relevant and important to our world?
Jon Pynn
on 22 Sep 10Even with the lack of discounts… the article quotes a 10% operating margin for market share leaders. This would imply a $50 profit on a $500 phone, under this scenario apple would need to make nearly $1000 profit per phone to get 39% profit share.
I agree with the point of the article, but the analyst has compared apples to oranges somehow.
Eric
on 22 Sep 10The 2.8% number is of all phones (not just smartphones) so it includes alot of product with much smaller margin.
I would assume that other smartphone focused companies such as RIM and Palm are also outperforming their market share. (although not to the same extent as apple.)
Lang
on 22 Sep 10Well it’s obvious that Apple gives a damn about market share judging by every move they’ve made in the last 24 months, so ask them I guess.
Daryl
on 22 Sep 10Market share and profit come after satisfying customers, not before.
Jeff Putz
on 22 Sep 10This gets to the heart of what I’ve been saying for years: Don’t be another commodity schmuck. Make something awesome that people want, and don’t be afraid to charge for it. The Mac story is very much the same, in that they’ll make a machine and score hundreds of dollars of margin on each unit, while Dell or HP are lucky to make $25 on it.
And if you’re wondering, that’s why Apple has never bothered to sell the OS by itself. The argument that they could “have greater market share” is irrelevant. They make their money in the hardware, and could care less about how many machines run OS X (unless they’re high-margin Macs).
Philipp Sackl
on 23 Sep 10Who gives a damn? How about me as a designer. Even though Apple gets the most money out of this market, that chart means that there are millions of people walking around with Nokia and LG Handset – using them every day and being influenced by their user experience. nr is right when he says that revenue share is only important for stockholders and the companies themselves.
Anonymous Coward
on 23 Sep 10@Jon Pynn, The price of an iPhone is, on average, $600. The ASP, average selling price, of Nokia in the latest financial report is €61, or $82. On smartphones Nokia has an ASP of €143, or $192. That’s the simple reason. Apple has one of the highest ASP:s in the industry. It’s easy to have high margins on high prices.
But Apple has chosen to be profitable in the phone industry by only targeting the premium segment. It’s a free choice. Trading market share for profit share. One that few other companies in the phone industry dares to take.
GadgetsAndGizmos
on 23 Sep 10Nokia’s only up there anyway because they sell cheap phones in emerging markets – although they’re trying to rectify that by the looks of the announced smartphones.
The world might take a pop at Jobs and Apple for their relentless self promotion and the fact that their prices are hardly ever dropped but a 39% profit share on a 3% market share is some going and, I imagine, more than enough justification for them.
Scott
on 23 Sep 10But why do few others dare to take this choice? Trading market share for profit share should be an obvious choice – the whole point of being in business is, guess what, PROFIT. To imagine that companies are purposefully picking a market share strategy over a profit-share strategy is just mind-boggling.
Scott
on 23 Sep 10@Philipp says “revenue share is only important for stockholders and the companies themselves.”
No one’s disputing that the information about market share is useful. No one’s saying that this information is irrelevant. Yes, I understand that it’s useful for you as a designer to know how many of the various types of handset are out there. David’s not talking about the market share data – he’s talking about the market share itself.
These companies show that owning market share is not necessarily useful in turning profit. The raison d’être of a company is to serve the interest of stockholders. So when you assert that revenue share is, in fact, “important for stockholders” then you are validating the fact that companies should be concerned with profit-share more than market-share.
Tachyon Feathertail
on 24 Sep 10I note that they mention RIM and HTC as exceptions, in the original article! I’m not sure about RIM’s long-term prospects, but HTC seems to have done well historically and adapted well to the new smartphone world. Plus they’re starting to establish themselves as a brand in their own right, instead of just manufacturing phones for the carriers.
Motorola may be another exception. Android seems to have turned things around for them.
Tathagata
on 24 Sep 10For the larger good, someone has to own the rest of the market share, if fact, they have to create a market by making cheaper cell phones, else what would the people in the third-world do? Imagine what would happen if Rolls Royce were the only car manufacturer in the world.
That said, premium players with small market share and large profits are necessary because they are the ones with the money to innovate, and create a progressive market.
Påhl Melin
on 24 Sep 10It’s a very tough choice, I guess. It takes a lot of courage and determination to say no to easy money (selling to the low end). And to sell to the premium end you absolutely need to be leading the market to succeed. Do you dare to bet your company (and probably your future career) on this? Steve Jobs does, but do you?
And maybe more importantly, I think you need to make this decision from the start. It’s even harder to change course and dump half or more of your current customers on a belief that you will make up the loss of revenue and profit by going heads on with Steve Jobs or any other market leader. That takes guts and a very “friendly” board of directors.
Pau
on 24 Sep 10Do you really know how much Facebook clients make with profile information? I’m sure it’s a lot. Facebook adapts to technology as it evolves. RoR instead has no evolution: it hasn’t got any RIA library such as Java have with ZK or Vaadin. In fact it’s ridiculous how RoR developers make noise with RoR Ajax capabilities. It’s like if database vedor was proud of using SQL RIA >>> Ajax
Anonymous Coward
on 24 Sep 10sounds like you guys are pissed that a classic .com strategy of “get a million users and we’ll figure out how to monetize it later” is actually working!
Eric
on 24 Sep 10@Anonymous Coward
I’m pretty sure the point is that Apple has been making money on this from the start. And that others more focused on marketshare (Nokia & LG) are not doing as good of a job turning a profit.
larry albany
on 28 Sep 10If this is true “Newark spends about $22,000 a year on each of its 40,000 pupils…”, then why do they need more money?
This discussion is closed.