Despite the fact that Apple only sells smartphones, its sales make up 9 percent of all phones sold on the market that demonstrates how rapidly the smartphone is taking over the basic phone market.
According to by Asymco writer Horace Dediu, a former Nokia analyst, although that relatively low share of all unit sales however, Apple takes in the most revenues and earns by far the most profits.
As Apple Insider noted, the analyst has previously demonstrated how Apple rapidly became the most profitable phone maker by the end of 2008, when the company’s iPhone franchise was bare a year and a half old.
Apple achieved the top spot in mobile revenues last year, although Samsung briefly surpassed Apple in revenues the third calendar quarter.
The only smartphone maker which can compete with Apple is Samsung, which got 16 percent of the industry’s profits, or combined with Apple to earn 91 percent. RIM holds the third place with its 3.7 percent profit share, followed by HTC at 3 percent and Nokia at 1.8 percent.
However, the takes a nasty toll on wireless carriers’ bottom line. All the three wireless carriers found themselves answering to Wall Street in recent weeks for posting depressed quarterly earnings, and analysts pointed to the heavy cost of offering the iPhone as a culprit.
Sprint revealed quarterly earnings: 1.8 million iPhones was sold. That report shows that iPhone is killing profits at Sprint. Sprint reported that 40% of iPhone sales in the fourth quarter were to new customers, says Forbes.
According to the Los Angeles Times, AT&T was the first carrier to offer the iPhone and has been trying to make it profitable for years.
The iPhone accounted for 82% of the smartphones AT&T sold to its customers during last quater, so the company had to pay the hefty subsidy on each of the 7.6 million iPhones.
All that money paid to Apple tugged down the company’s profits. AT&T’s operating margins – a common measure of how much a firm makes – dropped to 15.2% from 22.9% a year earlier.
“The AT&T wireless model is broken,” said Kevin Smithen, a wireless analyst at Macquarie Securities. “AT&T is basically subsidizing Apple’s revenues and profit growth.”
“A logical conclusion is that the iPhone is not good for wireless carriers,” says Mike McCormack, an analyst at Nomura Securities. “When we look at the direct and indirect economics that Apple has managed to extract from the carriers, the carrier-level value destruction is quite evident.”
What is more, competition is forcing carriers to give customers “early upgrades” and sell iPhones at reduced rates after only one year. Android phones such the Droid Razr and Samsung Galaxy S 4G have sold better after recent ad blitzes.
“It depends what you like,” says a Verizon clerk in LA. “Do you like the Androids’ faster download times, bigger screens, longer battery life and better cameras? Or do you like Apple?”