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The mobile-phone market

iProfit

Feb 10th 2011, 12:35 by The Economist online

Apple is cashing in at Nokia's expense

UNTIL 2007 Europe appeared to have beaten Silicon Valley in mobile technology for good. Nokia, based in Finland, was the world's largest handset-maker—and raked in much of the profits. But everything changed when Apple introduced the iPhone in 2007, the first smartphone that deserved the name. Today Nokia still ships a third of all handsets, but Apple pulls in more than half of the profits—despite having a market share of barely 4%. Analysts doubt that this gap is sustainable: competitors will continue to go after Apple and squeeze its margin. What is more, fast-growing Chinese handset-makers, notably Huawei and ZTE, will make it into these charts soon. As for Nokia, all bets are off. Some say it will regain some of its old strength. Others predict that its market share will plunge as much as its profits. For our coverage of the firm's woes, click here.

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1-18 of 18
Feb 10th 2011 4:52 GMT

Being a complacent market share leader is a dangerous thing in an industry that changes so fast.

Christopher_M wrote:
Feb 10th 2011 5:14 GMT

While interesting, these charts only show % of the market.  I'd be curious to see how the market has grown.  I'd venture a guess and say that profits in the mobile phone market have increased substantially over the last four years, and I'd attribute a good portion of that, directly and indirectly, to the iPhone.  It’s one thing for a competitor to break into a market and steal market share – what Apple has done is CREATE market share.

ab0071 wrote:
Feb 10th 2011 5:49 GMT

These graphs are poor visualizations, for they don't give any good information on how much % by each company. Well done Economist! on copying and slapping a graphic to your readers. It does strengthens your brand.

TheGrimReaper wrote:
Feb 10th 2011 6:02 GMT

Since the release of its Iphone and the massive roll-out throught out the techno planet we live in, Apple took a decisive step over its competitors. Unsurprisingly, Steve Jobs' firm is swiftly catching up with Nokia, which influence tends to wind down since Apple's convenient and groundbreaking Iphone crept up brilliantly in 2007.
Apple's products are now milleniums away from a lacklustre competition that's at pains to outdo the market boss. The Ipad tablet is such a cutting-edge innovation -albeit Apple should lessen its price, because spending $700 for a slim and fragile digital tablet remains unaffordable for many- that Apple is the galloping stallion in a herd of fierce and rapacious horses.

The next momentous goal for Apple is now to re-invent itself as well as its world-known products.
I only hope that the pragmatic and charismatic CEO will come back soon to perk up his followers' sorrow mood. Steve Jobs singlehandedly embodies the brand and, if he eventually runs over his cancer, Apple's image would just seem as sheen and glamorous as before. Please Steve ! Recover rapidly and transport us farther towards unknown galaxies of technology !

Risen wrote:
Feb 10th 2011 6:08 GMT

Absolute numbers would an interesting side by side as well

Spectacularj1 wrote:
Feb 10th 2011 6:31 GMT

Nokia can still make great phones but they need to ditch Symbian and just focus on hardware. Leave the software to google, or even microsoft.

EyeOfTheTiger wrote:
Feb 10th 2011 7:22 GMT

The pie for the smart phones are shared by Apple and Samsung followed by RIM. Nokia's still the largest producer of mobile phones but in the bottom segment of the smart phone market.
If the chart had been on the smart phones, it would show Apple holding the biggest pie in the profit segment, followed by RIM and Samsung closing in the shares of the two..!!

filifunk wrote:
Feb 10th 2011 7:29 GMT

Are Apple products so profitable that they can sell 5% of the total market share and then make 50% of the profits? Does everyone agree with these percentages?

Ed (Brazil) wrote:
Feb 10th 2011 7:59 GMT

Well done Mr Jobs

I believe that the fact that your products are inovative is not the secret to your success. Have you even heard the saying: "In this life, nothing is invented, everything is copied". I can buy an LG or Sansung Iphone with more features and pay half an Iphone. Still people buy Iphones, because they are cool, and that's the secret of Apple: Social status. Who is gonna pay attention to your Nokia ? No one !

Now from this point to making profits, it is a different story. And that's where I think Mr Jobs has credit. He launches its products with 1/5 of designed features, so that people will buy another one wehnever there is an upgrade. So intead of buying one Iphone, you buy 2 or 3. Almost everybody accepts this. even though I think Apple products are great, I'm not willing to summit myself to that, to buying a products that the manufacturer will make obsolete in 3 months. If you look at it carefully, it is an insult to customers, but people accept it. I don't, sorry...

the.ronin wrote:
Feb 10th 2011 8:27 GMT

Don't worry Nokia, et al., after Steve Jobs exits, it will be ¡iCaramba! for Apple.

kid dingo wrote:
Feb 10th 2011 9:56 GMT

Just goes to show how overpriced Apple products really are...

... or how little they pay Chinese sweatshop workers to build their products.

F1scalHawk wrote:
Feb 10th 2011 10:38 GMT

A very weak point of Apple is the “Google effect”: make it simple.

It was focus and simplicity what gave Google the winning side, when the yahoos of internet pretended to serve any user need, and cluttered his search pages with lots of confusing links.

A phone is a communication device. As computer, is challenged by lots of alternatives, and as phone is too complex and expensive.

Another weak point is the totalitarianism of Apple. They try to deprive the user of his liberty. Cut choices, and try to dictate what the user can do, what him cannot do, what can buy or not, where to buy and the price.

It’s just too much for such a personal device as a phone.

Sav Szymura wrote:
Feb 10th 2011 11:38 GMT

In my opinion it's more useful to look at the mobile market in terms of operating systems, rather than handset manufactures. Two devices running the same OS, but made by a different company may have more in common than two of the same brand, but with a different OS.

Phones with Symbian OS (mainly non-smartphones made by Nokia and SE) are very rapidly loosing market share to Android based devices, and this is a more interesting perspective.

KAMiKZ wrote:
Feb 11th 2011 12:58 GMT

Didn't know that Apple pay the Chinese workers directly. Do they use Western Union or MoneyGram? Or is it the scenario like one company is looking for some parts made, so it goes around the globe and asks: hey who makes screens? After hearing a lot of "I do's", it decides on the cheapest offer and send the specification of the screen to this company and receives the screens after some time and pay the company the agreed sum.

Or did Apple actually include the clause "make the LCD X by Y with this much reflectivity and that, Oh yeah, no bathroom breaks and lunch for your workers okay?"

I am surprised no 50 centers are ranting about Foxconn here. Come on houses are expensive where you are, work harder!

Feb 11th 2011 1:18 GMT

It's misleading to compare the Market shares of EXISTING stock phones against the market share of annual profits from sale of NEW phones; the former compares the 'static' position of each handset maker (in number of phone units) while the latter is the 'growth' of each handset maker (in profits).
One wouldn't have been able to draw the conclusions you just have by looking at these graphs without information on % change in phone units.

Curate's Egg wrote:
Feb 11th 2011 3:09 GMT

This is obviously happening because Apple is a smartphone maker, and therefore rakes in a lot more money per unit, than Nokia, which is still predominantly a phone maker.

You see the same thing happening with Canada's RIM, which produces Blackberrys. They take up to 15% of market profit while having a minute market share.

The graph is a good illustration that all phone makers who have trouble transitioning to the smartphone era are absolutely toast. Of all the previously large firms, I only see Samsung making adequately good inroads into the future.

jmanghnani wrote:
Feb 11th 2011 9:34 GMT

the graphs do not show the true picture... what would have been useful is market size in absolute numbers and value share of the market! also, volume share with profits is a rather weird analysis considering that phone prices range from $15 to $1,500!

Ed (Brazil) wrote:
Feb 11th 2011 1:13 GMT

Christopher_M

Apple did not create a market. Mobile phones are around since the 90s, and computers too. They create social status, and that resulted in market share gains, and a demand that is proven not very sensitive to the huge prices he charges on Iphones.

Now with the Ipod and Ipad, yes they created a whole new market, which they are already losing cause an Ipod has no social status anymore. Ipod's market share has hammered. Ipad still has social status, but not for long giving they insult customers by launcging an upgrade version every 3 months.

1-18 of 18

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