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First: Apple's rank in mobile phone profitability and revenues

Apple retained its top rank in profitability and regained the top spot in mobile phone revenues.

The relative shares of revenues and profits are shown below:

Individually, Apple’s share of units, revenues and profits is chronicled below:

Apple reached 75% of profit share, nearly 40% of revenue share and 9% of units share.

Apple and Samsung combined for about 91% of profits with RIM third at 3.7%, HTC fourth at 3.0% and Nokia last at 1.8% of a $15 billion total for the quarter.

In terms of revenues, Apple had 39% to Samsung’s 25%. Third was Nokia with 12.6% and fourth RIM at 8%. HTC only managed 5.5%, Motorola 4%, LG 3.3% and Sony Ericsson 2.7%.

 

  • Anonymous

    Good stuff Horace. Your Charts clearly show

    A) Apple’s total dominance of the entire mobile phone market (not just smartphones)  in terms of profits 

    B) Just  how steadily and strongly Apple’s revenue and profits have grown

    C) Remarkably, this has been achieved with around only 8% market share of total mobile phone units. This shows just how much headroom remains for Apple to continue to grow revenue & profits as it continues to gain unit market share.

    Perhaps the most remarkable thing is that, in terms of profits, Apple is already almost as dominant in the mobile phone sector as the iPod is in the MP3 sector. Could the iPhone also achieve similar dominance in terms units in the mobile phone sector?

    It would be interesting if you were to do a similar exercise with the iPad, which probably enjoys an even more dominant position in terms of revenue and profits than the iPhone.

    • Anonymous

      I’m going to guess iPad units, revenue and profit of the large 8 would be around 70%, 90% and 99%.

      • Anonymous

        ChKen,

        I think you may well be right about the iPad. I wonder if there is a enough data for Horace to chart?

        It would be a really astonishing achievement if Apple achieves over 70% profit share for the whole market in three deferent classes of devices?

      • Anonymous

        Don’t worry, the market will discount the “astonishing achievement” by saying Apple is too concentrated in those markets, or lacks future growth potential. They will always see the glass as less than empty.

    • Anonymous

      Remember Apple’s unveiling of the OG iPhone?  Their goal was 1% of global phone market-share (10M units) by 2008.  Nice achievable numbers.

      Seems like a different era.

      • Anonymous

        I believe the iPhone will continue to gain market share, raising it  from around 8.7% perhaps to as much 30% or more of the entire mobile phone market.

        The iPhone 5 may stimulate another huge market share surge later this year. 

        Once Apple begins to get the Courts to enforce its patents, Android will become significantly degraded.

        Incidentally, I was amused at Samesung’s delusional negative advert in the big game, which is likely to be counterproductive! 

        Portraying Apple users in such a negative way is likely to backfire because they are trying to attract those same  “stupid” Apple users to Samsung’s product. 

        It is also delusional, because everybody knows that Apple took massive market share from Android with the 4S and Apple overtook Samesung in smartphone  unit sales. Their advert is trying to convince buyers of the opposite to the truth!

  • Anonymous

    The Apple profit percentage of the entire industry is crazy…mindboggling numbers when you consider how big and how important the global mobile handset industry actually is.

    Then again Apple’s last quarter was mindboggling so it all makes sense.

    The scary thing is that Apple is accelerating their profit share.

  • RobDK

    Great stuff Horace.

    I wonder how Apple’s economies of scale are playing in these results? 

    With such a dominating profit position on the background of a very small and focussed range of products (3 versions), one has to wonder why others firms do not follow the same approach.

    • Anonymous

      I saw an article recently that said some of the also-rans will reduce the number of models like Apple.

    • http://twitter.com/qka qka

      Last month I saw a piece somewhere that the carriers don’t want multiple plain Android phones as pushed by Google; there would be little to differentiate the models and drive sales. The carriers drive the manufacturers to make multiple models with multiple versions of software, including exclusive models for any given carrier. To the other manufacturers, the carriers are the customer, not the end user. And the customer is always right.

      Hence the confusing array of Android phones, none of which can make strong numbers.

      This also plays into Apple’s hands – too many Android phone models overwhelm end customers. They learn that an iPhone is an iPhone is an iPhone across all the carriers.

      • Anonymous

        Eventually, like the music industry, the carriers are going to have to face the music  (or ringtone if you prefer) – their extreme anti-consumer stance is going to give rise to their nemesis (and Apple is happy to play that role).

        What happens when distribution of your cartel is controlled by a dominant player?  The music industry is in Apple’s thrall.  All this because they’re nickel and diming their revenue stream.

      • Wesley Hsu

        I would love to see data analysis on the quantifiable influence of the carriers — as in, given the global market is divided between open markets and closed ones, what’s the trend? 

        Horace, perhaps your next piece could chart the growth of carrier-controlled markets against unlocked-phone markets in units and sales over time. That would reveal a possible indicator of the carrier-manufacturer relationship as we go forward. 

    • http://twitter.com/qka qka

      Last month I saw a piece somewhere that the carriers don’t want multiple plain Android phones as pushed by Google; there would be little to differentiate the models and drive sales. The carriers drive the manufacturers to make multiple models with multiple versions of software, including exclusive models for any given carrier. To the other manufacturers, the carriers are the customer, not the end user. And the customer is always right.

      Hence the confusing array of Android phones, none of which can make strong numbers.

      This also plays into Apple’s hands – too many Android phone models overwhelm end customers. They learn that an iPhone is an iPhone is an iPhone across all the carriers.

    • Anonymous

      Because other companies are like several mini-companies, each making some crappy product. They are not united behind every product the company sells like they are at Apple.

  • Adam

    Great charts. I think there’s a small error in the first one. HTC and RIM switch colors.

    • http://twitter.com/WaltFrench Walt French

      also in the Nit Dept, the second chart suffers the same flaw. 

      • http://www.asymco.com Horace Dediu

        Thanks. Fixed now. The pitfalls of manual labeling.

      • http://www.facebook.com/youngchristopher Christopher Young

        Also Motorola and LG in the second one I think. 

      • Tim F.

        On a related note, the interactive chart for Computer Shipments under Products frames an entire Google+ interface rather than just displaying the chart as the other interactive chart Products do.

      • http://www.asymco.com Horace Dediu

        The Google docs have not been updated.

      • Tim F.

        I understand you haven’t updated the data yet. What I am referring to is: I get an entire Google page framed into your blog, which constrains the display of the data, when looking at the Computer Shipment data when all of the other data pages just frame the charts/data.

        No worries if you only get around to fixing it when you are able to update all the data, but there does appear to be a glitch on that page.

  • Javbw

    It would be very interesting to have the effective launch quarter (<1 month availability) for the iPhone models on the graph(s).

    There are definite points where the profit growth accelerates, would be nice to see if they are always during launch quarters.

    Have you graphed individual iPhone model units and %growth from launch quarter as you have done for iPad/iPod/iPhone ? It would be interesting to see their unit/growth curves.

    • Anonymous

      I was noticing that pattern as well. It looks like the iPhone 3G was the big break in profit share and it may be the iPhone 5 for unit share (though it is still early going for data points on that).

      I’d like to see the graph with the relatively unchanging vendors on the bottom, to highlight the transfer of profit share from Nokia to Apple.

  • http://twitter.com/gerrymcgarry Gerry McGarry

    What about ZTE which IDC have at 5th place with 4% market share?

    • http://www.asymco.com Horace Dediu

      I don’t have profitability data for their phone division. If you have that information, I would be glad to add it to the database. Huawei is another which should be included but they are private.

      • http://twitter.com/gerrymcgarry Gerry McGarry

        I’m afraid I don’t. Good work nonetheless 

        What about Japanese phones or are they another planet?

      • http://www.asymco.com Horace Dediu

        Japanese vendors are part of “other”. There again we don’t have visibility. Many have been merged in the last year or two.

      • Frank

        What program do you use to create these graphs? 

      • Anonymous

        It’s “Numbers” from Apple’s iWork office suite.

      • http://www.asymco.com Horace Dediu

        Numbers.

    • Anonymous

      I wonder if ZTE is like Lenovo in the PC biz. Good marketshare, but terrible profitshare.

  • http://twitter.com/WaltFrench Walt French

    I don’t know the official definitions, if there are indeed such. But it looks to me as if Apple has transitioned from being a disruptor of the mobile phone business and into a sustainer of the new pocket computer-cum-phone. As much as consumer-friendly features like Siri and FaceTime give the iPhone a competitive edge, they have only barely redefined how people interact with their phones.

    It would seem that this perspective would help explain how Apple is able to be so hugely profitable: it now completely owns the high-function pocket marketplace and is adding nice features that distinguish it from others.

    Also this would help predict how Apple can continue as a serial disruptor. Apple’s next disruption might start from the iPhone but seems unlikely to actually BE an iPhone. I keep wondering whether Siri will be the basis for a product aimed at the low-cost prepaid market that Apple mentioned a few quarters back; it could have a minimal screen and hence much lower battery requirements plus rely more on the network for CPU. 

    As a final note: Sharp dropped its limit of ¥100 per share yesterday and the radio reports this AM are all about heavy losses by TV manufacturers. Ordinary supply/demand factors, it seems, as the global economy grows a bit more slowly and most everybody has a good enough set. I’d think that this kind of market requires a large re-definition, not just some smart remote control, for Apple or anybody else to thrive in.

    • Anonymous

       Walt, good points all.

      Apple’s success in the phone market has been due, in part, to their decision to sneak up on the rest of the industry and beat them half to death with the snotty end of the clue stick.  But how do you sneak up on an entire industry? A mature, sophisticated and technically competent one at that?

      I suppose it helped that Apple kept iPhone development under wraps for three years. There were rumors involving an iPod phone of course but the only people who paid attention to them were Mac fans. And Mac fans, at least in those days, were regarded in much the same way as talking dogs–clever little gits, but not worth listening to.

      Which was also abetted by the phone industry’s well-earned complacency. Colligan’s famous remark about “PC makers aren’t just going to walk in” was no doubt typical of the handset manufacturer’s mineset (that was a mistype for mindset, but I think I’ll leave it…) Ya gotta admit, they had a pretty cushy situation going. The Handset Manufacturers Gentlemens Club had exclusive access to the carriers, patent agreements that kept a huge barrier to entry for anybody trying to make a phone and a user base that had been drugged into accepting the status quo of phone technology by massive levels of manufacturing mediocrity and a lack of design creativity that must have looked to Steve Jobs like a red cape looks to a bull.

      But what really blew the handset makers out of the water was the point you mentioned first. Apple didn’t make a phone! They made the first powerful, practical and affordable handheld computer, that happened to make phone calls. They were able to hide this fact from the rest of the industry by the clever subterfuge of calling it a phone instead of a mac. Crafty, those guys.

      Nobody saw through this until Apple began stealing huge numbers of customers but then what? These guys were not computer makers and flailed around like a Three Stooges Skit. They first tried to market their way out: “See we got touchscreens!” But they slowly realized that there was a big difference between a fancy feature phone and a truly smart one. Left on their own they would have been unable to really do anything about it and would by now all be tits-up.

      Fortunately two would-be saviors came along. Google and ARM. The latter enabled these handset guys to build actual  handheld computers by buying chips from Nvidia and TI and elsewhere while Android gave them a free OS that looked enough like iOS to fool…well, to fool them anyway.

      But the phone makers STILL didn’t get that they were leaving the PhoneZone and entering ComputerWorld. If they had, they might have glanced back at the history of personal computing to see what happens to hardware makers when an entire industry chooses a single OS as a platform.  It’s called commodification and it means that you can sell a whole lot of stuff for almost no profit.

      The only way out of the commodification morass, is to own your own platform; something that is so incredibly difficult that in the entire history of personal computing only two companies have managed to pull off a commercially viable, lasting example. Microsoft and Apple; and only Apple made any money off of hardware. Samsung is trying to build a platform with Bada and this new LiMo/MeeGo mashup proposal. I predict failure simply because it so much harder than it looks.

      Prediction: The handset makers will continue to charge forthrightly in all direction at once. They will rely on outside sources (Microsoft and Google) for their platform–ensuring commodity pricing and low margins forever. They will try to copy Apple–a losers game because Apple can move faster than any of them. They will continue to bow obsequiously to the carriers because that is the only real market for phones if you don’t own your own platform–and take a huge profit hit for that. And finally, they will each try to build a platform–and like James Fenimore Cooper’s Indians, they will one-by-one leap from the tree and miss the boat, each falling farther behind.

      • http://profiles.google.com/bc2009.poster BC 2009

        Commoditization or Commodification?

        Seriously though, I predict that if one of these phone manufacturers gets enough market share (e.g.: Samsung) they will take open-source Android and make it their own (much like Amazon did) and rebrand it as their own operating system.  The only trick for Samsung would be to change the customers from being “loyal Android users” to “loyal Samsung users”.  Many of the new Samsung commercials targeting Apple (poking fun at the long lines outside Apple stores) oddly don’t mention Android.  They mention the Samsung Galaxy SII.  In the next round of commercials we will probably see the Samsung Galaxy S III, but Samsung will have to hire more actors to stand in line at the Apple store to make it look more realistic.  Look for “Touch Wiz” to be grow in scope if this is the way Samsung is planning to go.

        Keep in mind that Samsung recently launched their own mobile advertising effort which also directly competes with Google.  I’m pretty sure that Google can see this coming (one manufacturer with too much control is why they parted ways with Apple).   This is one of the reasons Google acquired Motorola.  Also, Samsung is looking at the Motorola acquisition with a great deal of suspicion.

        In the end, I predict that Android will end up as follows:

        Google will produce true Android handsets via Motorola and bank on the “Android” name drawing the customers from Samsung.

        Samsung will produce handsets and tablets based on the open-source Android, but it will be heavily modified and essentially be Samsung’s OS (they will have their own marketplace)

        Amazon will continue with their own Android variants, but fragmentation will seriously hurt them here.

        Nokia will produce Windows Phone handsets.

        HTC will be a bit lost about what to do, they will probably look to Microsoft again, but Nokia will eat their lunch there…. They will likely go out of business.

        LG & Sony will likely get out of the smartphone game, with Sony becoming a supplier to Apple and others for cameras.

      • Anonymous

        Commodification? Where in the hell did I come up with that? Oh well…

        I think your predictions will prove pretty accurate, though things change rapidly in these here parts. For a similar take in a far different style try:

        http://www.delomatic.com/2012/02/cellphone-hustle.html

      • Wesley Hsu

        I dunno about HTC dying — they have a reasonably loyal following for a non-Apple manufacturer. They’re kind of like Blackberry that way–

        –ok, I just refuted my own point. Carry on. 

        As a Google shareholder, competing head on with Samsung on hardware is one of my nightmare scenarios. But I can see it coming too. 

      • http://wmilliken.livejournal.com/ Walter Milliken

        I think the other key thing here is that Apple found a carrier that was desperate enough to try anything to avoid being killed off by the bigger gangs: Cingular (which merged into the now-AT&T). Breaking ranks and letting Apple have its way gave them a tremendous edge and brought them back from near-death. But then they were riding the tiger, and couldn’t get off.

        Once the customers started bolting from the other carriers to AT&T, it was only a matter of time before the other telcos had to either defuse the bomb Apple had tossed into their market (which failed miserably), or fade into irrelvance. Even Verizon, whose control over suppliers is nothing short of a dictatorship, had to climb on the tiger. I suspect the top executives at the other carriers would like to lynch the Cingular execs who gave Apple the power to dethrone them. The poor, poor carriers discovered that one of the downsides to being an oligopoly is that you pretty much *have* to copy the other players when they come up with a successful move, or you get your lunch eaten.

        The carrier mob following in Cingular’s track is probably the most telling indicator that Android is *not* likely to be successful in the long term — otherwise Verizon wouldn’t be carrying the iPhone today.

        It’s possible Apple might have been able to get into the market without Cingular, but they would probably have had to go in through one of the smaller and hungrier MVNOs, or possibly try to become an MVNO themselves (which was a rumor running around at the time). The other option might have been to start in Europe’s somewhat less-controlled market as leverage against the US carriers.

        Even now, it’s possible that Android could really get somewhere *if* the carriers would relinquish their death-grip on the customer. But they saw what happened before (in the long-distance market), and I think they’d rather die than let the other vendors get the upper hand like Apple did. They can’t undo what Apple did to them unless somehow most of the customers can be persuaded back into the carrier’s corral… and the irony is that that may only be possible if the carriers let go. It’s a terrible thing when your customers discover that they can get the bit into their teeth and go where they want….

      • http://wmilliken.livejournal.com/ Walter Milliken

        One other thing I realized from my own post above — while the other phone manufacturers see Apple as their competition, the carriers’ competition is also actually Apple, who is competing with them for control of the customer.

        Apple is actually fighting a two-front war with both the traditional manufacturers and the carriers, who are natural allies (with the carriers dominating the alliance). And Apple is *winning*.

        This is actually quite similar to what happened in music.

        I wonder if this suggests that Apple can only be disruptive in markets dominated by either an oligopoly of producers or distributors where Apple can exploit potential end-customer dissatisfaction with the status quo being maintained against the customers’ own interests.

      • Anonymous

        You mean like the Cable TV business?

      • http://wmilliken.livejournal.com/ Walter Milliken

        Yes, but that may be a market infeasible to enter, and there’s not a clear end-run around it, at least on the distributor side. It does seem like Apple is attempting to break the content provider lock, but there’s still an issue with delivering per-user high-bandwidth data streams which isn’t currently available, as I’ve mentioned here before.
        It’s possible Apple could become a disruptive distributor using a new cost-effective last-mile technology, but I can’t see where they’d get it, and they don’t generally roll out totally novel tech, but rather do systems engineering to piece together existing advanced technology capabilities in well-integrated ways that are better than just the sum of the parts.

        The only other way I can see Apple disrupting this situation would be to buy out a big cable provider, or Verizon’s FiOS, and I can’t see that happening for both business and regulatory reasons. Or they could go where Google seemed to be going and build out their own infrastructure, but that’s full of massive expenses and all kinds of regulatory hurdles. I suppose they could team with the electric utilities, which had some ambitions of going into the last-mile business a while back, and certainly own the necessary rights of way.

      • Anonymous

        Yes, taking control of the last mile would be awfully ambitious of Apple. It might take a hundred billion dollars or so…..

        In Isaacson’s book, he said that Steve Jobs spent two years trying to figure out how to end-around the carriers and finally had to give up and jump in bed with them. This validates the difficulty that you speak of.

        The electric utility route you mentioned is a very intriguing one and might actually work, but it wouldn’t be easy or cheap either. The world of electric utilities is so balkanized and byzantine (forgive the mixed geographical and historical metaphor there) that it makes telcos look like corner stores. Besides, the approach wouldn’t necessarily scale internationally and I doubt Apple would do anything that wouldn’t work overseas as well.

        If  I had to guess on Apple’s strategy here, assuming they have one, I would say it is an extension of the way they are taking market share in the enterprise. If they get the consumers demanding Apple, then the powers that be will eventually have to give it to them. Ultimately, consumer demand for Apple products would force cable companies to provide it or else force them to improve their offerings.

        Do you think that might work?

      • Iano

        Just imagine what would happen if the politicians actually had voters on their side in the way Apple excites customers. Now thats a market ripe for disruption!

        Buy SpaceX. Deploy network of satellites. Sell entertainment appliances. Profit.

      • Anonymous

        Fair enough.

        But name one mature industry which isn’t dominated by few a producers that push their own interests ahead of their customer’s. I can’t think of any.

        As correct as you may be, I don’t see this as much of a limit on Apple’s ability to disrupt. Its a target rich environment.

      • http://wmilliken.livejournal.com/ Walter Milliken

        Point taken, though the other requirement is the ability to enter the market with a significantly superior offering. This requires the ability to (a) actually enter the market and (b) actually improve visibly on what’s available now. In some markets, entry may be prohibitively difficult (e.g. Apple becoming a cell carrier). In others, it may be hard to make a substantial difference, like many indistinguishable commoditized products, e.g. dish soap, gasoline, electricity or network bandwidth.

      • Anonymous

        Ok, I see what you mean, and that certainly does make a difference.

        I wish I was smart enough to predict what such a target market would look like a priori. I would never have predicted that Apple would have made an impact on the music industry so I should probably approach proclamations like this with humility.

      • Anonymous

        It’s funny how these alliances of convenience can become such traps. Now Google, the Android handset makers and the Carriers are in this three-way standoff where anybody fires and they’re all dead.

        Each of the players think they hold the cards but the game is changing so fast that nobody is really sure. The main reason the carriers need Android is to keep Apple from gouging them–otherwise the really don’t care. I mean it’s easier to sell iPhones than Android phones and Apple does the customer service and software maintenance.

        The handset manufacturers think (or at least they did think) that they would just pit carriers and OS providers against each other and they would have it made. But Apple turned out to be the preferred source for both.

        Strange bedfellows. 

      • http://twitter.com/Geekboydotca Geek Life 3.0

        I’d beg to differ here – the carriers DO care about Android, and desperately want it to win, for the simple reason that it is the one and only platform where they control the phone.  They can sell space on it for crapware, they can jig the browsers to hit their “portals” first (no, I just didn’t fall out of the DeLorean, the carriers still think that the “portal” is a viable strategy) and they can hold back upgrades to force new purchases.  

        Android has money written all over it from the carriers’ POV.  If you want proof, try this fun-n-easy experiment:  Walk into any carrier’s store and ask for a smartphone, but don’t specify which.  They will take you by the arm and lead you to the Android selection and tell you literally ANYTHING to get you to take one.  Or, if you don’t want to go out and get your hands dirty, sit home and either watch your snailmailbox or gaze at the tube for a while until a carriers’ pitch comes down the pipe. Guaranteed the phones they feature are Android.

        The carriers tolerate the iPhone because it sells as fast as they can stock.  But they ADORE Android and wish all of these nasty little customers would just do what they are told and buy one.  Android is both a way back to the status quo AND a quick-grab cash cow on the way there.  If only consumers would play along …

      • Anonymous

        I’m not sure we disagree very much here.

        I said, “The main reason the carriers need Android is to keep Apple from gouging them–otherwise they really don’t care. I mean it’s easier to sell iPhones than Android phones and Apple does the customer service and software maintenance.”

        I should have expanded on the “gouging” part, because it really means the whole issue of Apple taking control away from the carriers. And yes, they hate that. So I agree that the carriers want Android to succeed for that reason alone.

        Those ads that you mentioned? The ones with Android all over them? Think how much money they would save if they didn’t have to pitch Android phones when iPhones sell themselves. But, they do it because they don’t want Apple taking control–like you said.

        If I ran the store and had two products; one that sold itself and one that I had to spend money, time and effort to move, I would definitely go for the easy sale. Unless of course I was scared of being dependent on or marginalized by my own supplier. If the carriers weren’t scared of Apple (moot point, I admit, since they are scared) they would probably be perfectly ok with Android withering away.

        And as a side note, there are a number of reasons why that carrier’s salesman might drag you to the Android shelf. Sales spiffs not being the least of them.

        But the point I was really trying to make in the post above was that the carriers business model was not designed for a situation like this. They were used to dictating what the handset makers delivered and using competition between them to control them.

        I said, “The handset manufacturers think (or at least they did think) that they would just pit carriers and OS providers against each other and they would have it made. But Apple turned out to be the preferred source for both.”

        By “preferred source” I meant preferred by the customers. And this is what really binds the carrier’s hands and pisses them off so much. The mere existence of Apple interferes with their plan because the customers demand iPhones and they can’t play their power games.

        So I don’t think we really disagree so much. You are saying that the Carriers want Android to succeed because they get control. I was saying they want Android to succeed because Apple threatens their control. I think that’s what we’re saying.

        Am I right?
         

      • Anonymous

        Apple was very fortunate to have struck their deal with Cingular as you note, I mean, they could have struck a deal with Sprint instead, and ended up like Palm!

      • http://www.asymco.com Horace Dediu

        Apple was going to launch a GSM phone or they were not going to launch any phone.

      • http://twitter.com/fivetonsflax fivetonsflax

        Why?

      • http://twitter.com/PaulMaxime Paul Franceus

        Because GSM is the world standard and they could sell it in many more markets without having to redesign it.

      • Anonymous

        Everyone in electronics other than Apple is completely incompetent. I respect what Apple has done, but a big part of it is the lack of competition. They are the only one who establishes the goal of making a great product first and foremost, therefore they are the only one making a good product. Nobody else shows up at the race dressed in athletic gear and well-trained and ready to run. They are culturally, endemically failures. Microsoft is still trying to prove hardware and software are different things when they are not. Google is trying to prove that data nerds can conquer all. Apple is trying to make great products. So Apple will continue to eat te industry alive until the industry itself changes and starts meeting the needs of consumers.

      • Anonymous

         I suppose so… But I don’t recall the giants of consumer electronics being thoroughly incompetent until Apple came along and showed them how to do it.

        I mean pre-iPod nobody was complaining that SanDisk and Creative and etc. were making shoddy interfaces and didn’t know how to create an ecosystem and didn’t know how to do great hardware design. In fact they were all pretty much considered cutting edge leaders in technology. They had fan clubs.

        Same with phones: People were quite proud of their flip phones and candybars. Sanyo and Motorola and Samsung and the rest were all considered the leaders in the industry and nobody complained about the labyrinthine interfaces, the inscrutable settings modes, the simplistic voice commands. These companies were considered extremely competent.

        Same with tablets. And electronic retailing. And music distribution. And voice recognition and…well, just about everything that Apple does.

        There’s a tree-falls-in-the-forest question here. If a company has no better competition is it still incompetent? Does having a better company come along make it suddenly incompentent?

        Perhaps calling them incompetent is too harsh. Just because Apple makes it look so easy doesn’t mean that what these companies do isn’t ridiculously difficult. Creating the iEcosystem seems like the most natural strategy in the world and one wonders how the incumbents could be bumbling as to not replicate it. But it took incredible vision, resources and execution to do it. So incredible that there may be just one company in the world that could manage it. Does that make everybody else incompetent?

        I don’t really know.

      • Ian Ollmann

        Really? I though my Motofone was a piece of dung. There was a reason why the iPhone was hailed as the Jesus phone. It was your personal savior from death by interface.

        I experience similar frustration with the interface of my television and car today. I also think the breaker box in my house is pathetic. (I care how much electricity I use and that darn thing gives me zero information as to the how and why we waste power.) I’d pay $2000 to get one that interfaced nicely with my phone or computer, with full time tracking of power utilization by circuit. But no, mine is a cheap rats nest of plastic and copper. And rats. Trapped 4 in the breaker box last week.

      • Anonymous

         I understand how you feel. I too think the world is full of crappy products produced by people who don’t necessarily care a whit about what makes a good, usable thing. I had railed about the stupid interface on my flip phone long before the iPhone came out.

        But I remember being in Kansas City with a (wonderful woman) friend when the original iPhone was introduced. I took her to the Apple Store to see it but she wasn’t all that jazzed at the prospect. The reason: she liked her flip phone just fine. Thirty seconds with the iPhone and she whipped out her credit card and bought it. She may have fallen instantly in love with the iPhone but it wasn’t because she was unhappy with the old one.

        Now she’s a smart lady (smarter than me it turns out, but that’s another story) so her satisfaction with her old phone wasn’t because of lack of gumption. Her mind just didn’t work like mine–what with my constant, internal critiquing of everyday design.

        Most consumers, I believe, are quite accepting of inadequate design until someone comes along and shows them something better. As Henry Ford said: “If I’d asked my customers what they wanted, they would have said ‘a faster horse’.”

      • http://twitter.com/juancho Juan Jose

        i think this woman hated her phone, it just that she did not know better and she assumed it as “the best i can own”, the moment something (considerable, allright) better was upon her sight, her mind’s mechanism began to work again and she realized that, yes, she hated her phone, and, no, that phone wasn’t the best she could own.

        That is happening in a worldwide scale now

    • Anonymous

       Walt, good points all.

      Apple’s success in the phone market has been due, in part, to their decision to sneak up on the rest of the industry and beat them half to death with the snotty end of the clue stick.  But how do you sneak up on an entire industry? A mature, sophisticated and technically competent one at that?

      I suppose it helped that Apple kept iPhone development under wraps for three years. There were rumors involving an iPod phone of course but the only people who paid attention to them were Mac fans. And Mac fans, at least in those days, were regarded in much the same way as talking dogs–clever little gits, but not worth listening to.

      Which was also abetted by the phone industry’s well-earned complacency. Colligan’s famous remark about “PC makers aren’t just going to walk in” was no doubt typical of the handset manufacturer’s mineset (that was a mistype for mindset, but I think I’ll leave it…) Ya gotta admit, they had a pretty cushy situation going. The Handset Manufacturers Gentlemens Club had exclusive access to the carriers, patent agreements that kept a huge barrier to entry for anybody trying to make a phone and a user base that had been drugged into accepting the status quo of phone technology by massive levels of manufacturing mediocrity and a lack of design creativity that must have looked to Steve Jobs like a red cape looks to a bull.

      But what really blew the handset makers out of the water was the point you mentioned first. Apple didn’t make a phone! They made the first powerful, practical and affordable handheld computer, that happened to make phone calls. They were able to hide this fact from the rest of the industry by the clever subterfuge of calling it a phone instead of a mac. Crafty, those guys.

      Nobody saw through this until Apple began stealing huge numbers of customers but then what? These guys were not computer makers and flailed around like a Three Stooges Skit. They first tried to market their way out: “See we got touchscreens!” But they slowly realized that there was a big difference between a fancy feature phone and a truly smart one. Left on their own they would have been unable to really do anything about it and would by now all be tits-up.

      Fortunately two would-be saviors came along. Google and ARM. The latter enabled these handset guys to build actual  handheld computers by buying chips from Nvidia and TI and elsewhere while Android gave them a free OS that looked enough like iOS to fool…well, to fool them anyway.

      But the phone makers STILL didn’t get that they were leaving the PhoneZone and entering ComputerWorld. If they had, they might have glanced back at the history of personal computing to see what happens to hardware makers when an entire industry chooses a single OS as a platform.  It’s called commodification and it means that you can sell a whole lot of stuff for almost no profit.

      The only way out of the commodification morass, is to own your own platform; something that is so incredibly difficult that in the entire history of personal computing only two companies have managed to pull off a commercially viable, lasting example. Microsoft and Apple; and only Apple made any money off of hardware. Samsung is trying to build a platform with Bada and this new LiMo/MeeGo mashup proposal. I predict failure simply because it so much harder than it looks.

      Prediction: The handset makers will continue to charge forthrightly in all direction at once. They will rely on outside sources (Microsoft and Google) for their platform–ensuring commodity pricing and low margins forever. They will try to copy Apple–a losers game because Apple can move faster than any of them. They will continue to bow obsequiously to the carriers because that is the only real market for phones if you don’t own your own platform–and take a huge profit hit for that. And finally, they will each try to build a platform–and like James Fenimore Cooper’s Indians, they will one-by-one leap from the tree and miss the boat, each falling farther behind.

    • http://www.swift2.blogspot.com Swift2

      I myself see the modular computer in Apple’s future. Take your small screen out to write some music in the park. Come home and play it on the bigger screen and the nice, small speakers around the room. Link to the TV screen and play the composition over that silent footage. Edit to make it match well. 

      You’ll need a variety of screens, graphic cards, processor units, and so forth. iMac Pro with Thunderbolt one and two. The difference in bandwidth between parts of the main processor and the 4K screen in the mixing room? Trivial. A modular computer can be infinitely upgraded, in pieces. Buy a black box and swap graphics cards around. Input options. Touch with the iPad. Magic thises and thats. Gestures, Siri, whatever. 

      Gigabit WiFi as the default networking? optical links? 

      I just look at the Mac Pro and see a huge old PC that looks stylish. iMac Pro is the way to go.

  • Gerry Croce

    Horace, thanks for this.  I’m trying to draw some conclusions.

    An incorrect conclusion, I think, which will be drawn from this data is that Apple already has 75% profit share and therefore their growth is nearly finished.

    I think the correct conclusion is that Apple now has only 40% of the revenue share, and that if they could capture another 40% of the revenue they would double their iPhone profits (assuming equivalent margins).  The additional 40% revenue may come from a “nano” model or similar, which will satisfy the low end market.

    This looks like a repeat of the iPod strategy.  A misinterpretation of the potential for Apple profit growth on the part of some analysts, perhaps intentionally on their part, will continue to give us a compelling opportunity to buy the stock.

  • Anonymous

    Love the graphs but I have a question.

    Does it seem to anybody else that the area ones seem to understate the first and final quarters’ importance?

    Let me try and explain what I mean.  If you look at the profit share graph at Q3/2011 and examine Sam you see a yellow area spike centered at this point.  The area (and visibility) of this spike is large because the very positive results for Samsung get “pushed” both forward and backward.  What I mean is that while the full extent of the Q3 results is only represented at the Q3 point, that point causes the line (and area) at times between Q2/2011 and Q4/2011 to be greater than the Q2 *and* the Q4 results.  Put another way, you can envision the x axis size for the Q3 info as 3 months centered on Q3.

    Now compare that to the profit share at Q4/2011.  There is a big spike in Apple’s profit share but because this graph only captures the actual full extent of the Q4 results at the very,very end of the graph, you get those results pushed in only one direction, back.  Or, to put that the other way, the x axis size of this result is only 1 1/2 months going back from Q4.

    As such, the Q4 results are less obvious and seem less important–like a smaller phenomenon.

    I guess what I am saying is that this troubles me because, in essence, a line/area graph like this for intermediate quarters reflects the results for three months *centered* on that quarter while the end quarters reflect the results for only 1 1/2 months prior to or just after this quarter.

    I wonder if, rather than using lines to connect one quarter to another, it wouldn’t be better to have each quarter’s results as a rectangle, centered on the quarter.  That way the first and last quarter have the same 3 month x axis size as the intermediate quarters.

    • Anonymous

      Essentially you’re saying that, visually, the first and last data points seem to show only half as much area as the other data points.

      • Anonymous

        Yes.  (see, I can be succinct).

      • Ian Ollmann

        This will fix itself next quarter.

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  • http://www.appleoutsider.de/ AppleOutsider.de – Sebastian P

    Hi there,

    in the second graph you got the Labels for LG and Motorola wrong (either on the right hand side or the left, you pick. The green line comes from Motorola and ends at LG)

    Edit: just saw that Christopher commented while I was looking at the graphs so it’s his find :-)

    • twilightmoon

      I’m not sure if the graph label has been fixed since your post, but they are correct now. Motorola and LG switch places, and are similar colors.

  • http://www.noisetech-software.com/Home.html Steven Noyes

    Boy the data looks biased toward Apple:-)  If you were an exec at any of these other companies, would you be looking at these graphs and scratching your head?  Wondering what to do.

    • Anonymous

      All they have to do is make a phone that people want. It is not rocket surgery.

  • Anonymous

    Great charts!
    Why should Apple consider increasing its units’ share? Sure, the market grows and Apple can grow with it and sustain its PROFIT share while moving to disrupt other markert (Itv) where competition is lesser

    • http://www.swift2.blogspot.com Swift2

      Indeed, because the premise of their business is to keep making stuff people want — by being the first to synthesize a device that creates a market and then leads it. They’re the ones people copy to catch up. 

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  • Dimiter “malkia” Stanev

    Minor error: In the second chart LG and Motorola’s graphs ends up with the names swapped. Assuming the names on the left are correct, then the names on the right are incorrectly swapped for Motorola and LG. Please, feel free to delete this comment if you find it useful and fix it.

  • http://wmilliken.livejournal.com/ Walter Milliken

    Horace, I think it might be interesting to make a composite of the ranking graphs with the share graphs, where the line thickness in the rank graphs was proportional to market share. (Yeah, that probably can’t be done easily in Numbers, I’d suggest scripting OmniGraffle to do it, maybe.)

    That would give a better feel to how easy it is to change rank places.

  • surfer1

    These graphs only illustrate Google’s failed business plan by giving Android away. Their mobile revenue’s don’t even begin to come close to the kind of money Apple is making.

    I really think this is the first real case study that shows Google got the mobile market strategy completely wrong.

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  • mysterio

    It’d be amazing to see the nominal operating profit numbers as well to show that Apple hasn’t just transferred wealth from the other mobile phone players but also the carriers, retailers, software platforms, component suppliers, etc.  It’s not just the phone guys who have been out-foxed by Apple.

    Apple is playing a fundamentally different game than these other companies (excl. RIM and Nokia), so it’s almost unfair to compare them. It’s like comparing the money the average rapper makes to how much Jay Z makes – Jay Z raps, produces, sells clothes, and has all kinds of investments, while most rappers just rap.

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  • http://www.facebook.com/james.scariati James Scariati

    So if Apple is gaining, on average, 25% profit share per year, theoretically they’ll hit 100% profit share by the end of 2012…hahaha.

    • http://wmilliken.livejournal.com/ Walter Milliken

      It’s more an asymptotic approach to 100%, but as long as the total smartphone market is growing substantially, Apple can still grow actual profits at a high rate, it’s just the market fraction growth that will slow down. The actual growth will also hit an asymptote when the penetration of smartphones climbs near 100%, but that’s still a ways out.

    • Anonymous

      They could also exceed 100% considering some of the losses other vendors have been making…

  • Anonymous

    It looks like both AppleInsider and Daring Fireball are getting their news from reading asymco.com! This shows good taste on  their part.

    Horace, it occurred to me that you would enjoy playing with the Mac exploratory data analaysis tool, Data Desk. (http://datadesk.com/products/data_analysis/datadesk/). The deal is that Data Desk is designed from the ground up to support direct manipulation of hyperdimensional data. It uses a tools palette that superficially resembles Photoshop’s tools, but the tools are for direct manipulation of plots and tables. A signature demo of their’s is to show an interactive 3D scatterplot. You can “grab” the 3D space with the Grabber tool and rotate it as if it were a weightless ball floating in hyperspace. The animation is not a movie or canned program; you just do it.

    A good way of exploring hyperdimensional data is via their linked plots. You can create several 2D and 3D plots of hyperdimensional data on the screen. They are all dynamically linked. Using the tools, you can manipulate one plot (e.g., selecting, subsetting, slicing) and the linked plots on the screen update in real time.

    You are already the anchor point on the Insight scale, so you probably won’t see anything that you haven’t already thought of. But I am thinking of commuinicating your ideas in a live presentation. We need to learn to characterize a mobile device company in terms of its profile in a hyperspace. (e.g, units shipped, revenue, profit, revenue/profit share, time) rather than assuming that the abstract concept of “success” is a simple function of market share. Most everyone has not seen direct manipulation of plots in real time so it would make for a more interesting presentation. 

    I haven’t used Data Desk in years, as my work led in the direction of conventional inferential analyses, but I think it is perfect for the set of variables that you are tracking here and your understanding how the mobile device industry works.

     

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  • Foo

    wtf does that last graph mean? There are six time series per data point (three bars and three lines) but only three things labeled on the right. I’m guessing the bars are the percentage of revenue, profit, and units but what are the lines?

    • jawbroken

      Pretty clearly some kind of moving average, guessing of the 4 trailing quarters.

    • http://www.asymco.com Horace Dediu

      The lines are trailing four periods’ average representing a trend line.

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