Apple 2.0

Covering the business that Steve Jobs built

The iPhone's vector of growth

May 26, 2011: 7:19 AM ET

If Apple's share of global profits is going up, others' must be going down

Source: Asymco

Last fall, Asymco's Horace Dediu introduced a new way of visualizing the dynamics of the worldwide mobile phone market.

He started with two sets of data -- market share and dollar share in 2007 and 2010 -- for the eight largest vendors in the mobile phone space, from Apple (AAPL), the smallest in 2007, to Nokia (NOK), the largest. When he plotted the results in two dimensions at the same time, you could see at a glance who was up, who was down and who was moving sideways.

He revisited his "vector space" model Wednesday in a series of charts that show where the market is moving in three time frames: long (15 quarters), medium (four quarters) and short (one quarter, see chart at right).

By tracking the changes over time, he writes, a persistent pattern of winners and losers emerges. According to Dediu, the data show: (I quote)

  • Smartphone vendors grow consistently
  • Apple in particular has consistent growth with profit growth faster than share growth
  • Nokia in particular has consistent decline with profit decline faster than share decline
  • RIM (RIMM) shows profitability concern in the near term. In particular vs. HTC
  • Samsung shows some near term share loss, probably due to unbranded vendors
  • It's very rare to have a company lose market share while gaining profit share or to gain market share and lose profit share. This implies that in this market one does not trade off volume for profit.

" This analysis," he concludes, "demonstrates the shift in the industry is not a short term phenomenon but a disruptive changing of the guard."

For more of Dediu's thoughts, and his other two charts, click here.

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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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