Apple 2.0

Covering the business that Steve Jobs built

How Apple is sucking the profit out of the mobile phone business

September 24, 2010: 5:45 AM ET

The iPhone's growing share of the spoils could spell bad news for Google's partners

Source: Asymco

On Tuesday we posted a pair of pie charts that showed Apple (AAPL) selling 3% of the world's mobile phones in the first half of 2010 and taking 39% of the industry's profits. (See Apple's outrageous share of the mobile industry's profits.)

Asymco's Horace Dediu, however, did us one better. He published the graph above charting Apple's share of the available profit in mobile phones as compared with its 7 biggest competitors over the past three years.

As he notes, Apple's growing share has come largely at Nokia's (NOK) expense, although Sony Ericcson (SNE) and LG are also getting squeezed and Motorola (MOT), as he puts it, "has not had anything to lose."

"Will Android change this picture?" he asks rhetorically. "As I've argued before, Android is most attractive to the unprofitable and the strategically constrained. Can having undifferentiated new products change this? As Nokia is unlikely to license Android, and RIM seems very unlikely and Apple is out of the picture, the only possible contenders are Samsung, LG, HTC, Motorola and Sony Ericsson.

"Motorola and Sony Ericsson have both returned to profitability but with a very small volume Android strategy. However the incumbents fielding Android are really facing a far more sinister threat: the smaller local brands in China (e.g. ZTE) and emerging markets."

Some assume, as Dediu puts it, that the future belongs to the Korean cell phone manufacturers (i.e. Samsung and LG). But if they are hoping to turn a big profit, using Google's (GOOG) Android to bet against Apple could be a risky play.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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