A Taste of the Apple Pie

Fortune has reported Apple’s latest quarterly profits, and the numbers are staggering. While the iPhone accounts for just under 3% of the total number of handsets sold, it brings in 39% of the industry profits. Apple sold “just” 17 million iPhones from January 2010 to June, while 590 million units were sold by competitors in the same time period. Despite the iPhone’s selling just a fraction of the total number of units, it still manages to rake in more profits than LG, Nokia, and Samsung combined. Incredible. Yesterday, Apple stock reached an all time high of $281.76. Go figure.

We are also impressed with Apple’s ability to monetize its innovative products through selling high-margin consumer products that drive strong earnings results and growth trends for Apple shareholders. A case in point is the mobile phone market, where most handset OEMs struggle to post a profit or even 10% operating margins (except RIM and recently HTC), while we estimate Apple boasts roughly 50% gross margin and 30%+ operating margin for its iPhone products.
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