Apple 2.0

Covering the business that Steve Jobs built

iPhone: 4% of market, 50% of profit

October 30, 2010: 1:33 PM ET

Source: Asymco

When it comes to helping investors visualize the effect of Apple's (AAPL) entry on the mobile phone market, nobody does it better than Asymco's Horace Dediu.

It's not just that every new phone that arrives looks like an iPhone and comes with an app store.

Or that Apple has helped shift the industry from so-called "feature" phones, dominated by Nokia (NOK), to "smartphones," a market that was dominated by Research in Motion's (RIMM) BlackBerry until Apple came along.

It's that Apple is selling iPhones as fast as it can make them and raking in huge profits in the process.

Everybody else is playing catch-up while trying to match Apple's manufacturing efficiency and cost structure. To hold on to market share they either have to sell at razor-thin margins or give their product away in two-for-one deals.

The proof: These two pie charts. One shows Apple's share of the worldwide cell phone market in terms of unit sales (4%). The other shows Apple's share of the profits (50%).

As Dediu puts it: "The disruption continues."

Dediu has created a set of six pie charts that compare the mobile phone market in 2007 and 2010 in terms of unit share, sales share and profits. See here.

NOTE: In the last chart, he is using EBIT (earnings before interest and taxes) for the mobile phone division of each company as a proxy for profits.

See also:

[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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