iPhone News

iPhone Is The 5% Runt Dominating Global Profits

Apple turns in whale-sized iPhone profits in first quarter.
Although owning guppy-like market share of smartphone sales , Apple is landing whale-sized profits, one analyst said Tuesday. Indeed, within 3-5 years, expect non-smart handsets to vanish from the mobile landscape.

Image: Asymco.com

Asymco analyst Horace Dediu produced two charts showing that although the iPhone-maker has just 5 percent of the global smartphone market, Apple raked in 55 percent of the global profits in the first quarter. In terms of profitability, cell phone makers such as LG, Sony Ericsson and Motorola nearly vanish in terms of profitability. Most telling is when the analyst illustrates the profitability differences in “diversified” companies making both smart and feature phones and those firms producing only smartphones.

“I don’t see non-smart devices being interesting to vendors in the near term,” Dediu writes. “Each additional dumb phone added to a portfolio will decrease a company’s operating margin.”
The analyst then predicts so-called feature phones are on the endangered list. “I think non-smart phones will disappear entirely from branded portfolios in 3 to 5 years.”