iPhone takes third of smartphone profits

August 6, 2009 | 11:47

Tags: #iphone #smartphone

Companies: #apple

If you thought that the iPhone was a licence for Apple to print money, you'd be right: recent figures have shown that the Cupertino company's foray into the world of smartphones in punching well above its weight. We're big fans of Apple's wonderphone here at bit-tech, and it seems like we're far from being the only ones.

As reported by CNet, analyst Toni Sacconaghi of research firm Bernstein Research is claiming that the iPhone has lead Apple to take a whopping 32 percent of overall profits in the smartphone sector - certainly nothing to be sneezed at for a first attempt at a handset.

While the profit figures are impressive, it's not until Sacconaghi compares it to revenue that things get mind-boggling: the company's 32 percent share of overall sector profits comes despite being responsible for a mere 8 percent of overall revenue.

Sacconaghi's report, quoted in an article on the AllThingsD site, states that Apple's soaring profit margins come as a direct result of the integration between the handset and the company's digital download App Store service which has "established a formidable smartphone ecosystem, which history suggests is very difficult [for rivals] to overcome."

Sacconaghi ends the report with a bit of advice for Apple: while its 'formidable ecosystem' might help it to grow turnover faster than the industry average, a drop in price - and in those clearly impressive profit margins - would "expand its addressable market opportunity." The analyst certainly has a point: the report shows that Apple's average margins on the iPhone are a whopping 40 percent - double that of companies including Research in Motion (20.7 percent) and Motorola (21 percent), and almost four times that of Nokia (11.3 percent).

Do you believe that the iPhone could enjoy total ubiquity if only Apple's margins weren't so high, or would a drop in price hurt the company's plans and high-end image? Share your thoughts over in the forums.

If you want more iPhone coverage, check out our regular round-ups of iPhone/iPod touch games.
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