Ronnie05's Blog

Global Smartphone markets: Of disruptive competition and wealth redistribution

Posted in Industry updates by Manas Ganguly on August 20, 2010

The 2Q,2010 Global smart-phone mobile market earnings (EBIT) report compilation by industry analysis firm Asymco has come out with a stark and clear disruptive profit shift in the industry in favour of Apple (and Android). This is mainly because of a lack of viable response from the incumbent handset makers three years ago (Read Nokia, LG, Moto, Sony Ericsson).

RIM (Blackberry) and Apple which were the last of the top 7 smartphone manufacturers in the world contributed 7% of the EBIT share which in three years has risen upto 65%. It was Apple’s iPhone introduction, which was the point at which this re-distribution of wealth started taking shape.Overall handset sales in the second quarter of 2007 accounted for $28 billion, says Asymco, while sales in the same quarter of this year were only up 12 percent to $32 billion. But far more of those recent sales dollars went into Apple’s coffers at the expense of Nokia, Motorola, LG and others. Such revenue erosion can’t continue in the long-term for a company to remain a key player in the industry.

Apple in particular is capturing about half of the available profits with three percent of the units. It dwarfs all the other vendors, more than double the nearest (Nokia). All that in three years and with the added burdens of only four models, a recession and limited distribution.

Nokia being the seller of the most handsets overall is an excellent example, as the bulk of its devices don’t bring large amounts of profits relative to the number of sales. To illustrate, Apple enjoys six times the revenue when compared to the average Nokia device due to the average selling price.But the big picture isn’t just Apple taking on Nokia. Handset makers embracing Google Android are earning money, while Research In Motion is also faltering. The turnaround of Motorola and Sony Ericsson and the increases in Samsung shares have been Android powered.

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  1. […] an earlier post, i had blogged about Global smartphone markets: The effect of disruptive competition on wealth and profit. distribution. This post attempts to take the analysis of the global smart-phone wealth distribution to the next […]

  2. […] an earlier post,i had posted about how the wealth distribution in the smartphone markets is increasingly getting skewed towards Apple with its iPhone.Apple Takes 48% of the Earnings from Smartphone sales globally with only a 3% […]

  3. […] as Verizon will only increase momentum of its iPhone sales. Already the iPhone is eating into a disproportionate share of the global smartphone profits. 2. Apple is building huge economies of scale across its iPhone, iPad and iPod and this helps […]

  4. […] adoption of the iPhone and iPad has grown and will continue powering iPhone sales into 2011. With 48% of the smartphone profits, Apple isnt in a any eagerness for […]

  5. […] than expected. Also, while Apple may lost a few percentage points in the smartphone rankings, the iPhone retains the No.1 spot in making margins and money. The unsaid part of the story is the rapid scale that iPad is building up for Apple in the Tablet […]

  6. […] I had first blogged about the wealth, margins and profit distribution between smartphone makers 9 months back. Read Global Smartphone markets: Of disruptive competition and wealth distribution. […]

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