iPhone Now Accounts for 50% of Industry Profits

Just over a month ago, Fortune reported that Apple’s iPhone accounted for just 3% of the total handsets sold, but a whopping 39% of the total profits. Today, they have updated these numbers to show the effect of the iPhone 4.

The new report shows that although only 4% of handsets sold are iPhones, Apple is taking home half of the industry profits. For comparison, if Nokia had the same profit margins, they would account for 400% of the profits.

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.

According to Walkley, Apple’s operating margins are at around 30%, which is easily three times greater than most other vendors. This is probably due to the fact that Apple specializes (and unifies) their hardware, so they don’t have to juggle many different phone models and designs. This obviously keeps manufacturing costs down, and quality up.

Apple is quickly climbing their way to the top, and if this trend continues, they will soon overtake LG as the number 3 manufacturer.


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