Apple Embarrasses Rest of Mobile Phone Industry with Profits

| News

A report out today from Goldman Sachs today shows that Apple, with only about 3 percent of the total, global handset market, is set to generate twice the profits as all the rest of the industry combined.

In the process of discussing the success and potential of the iPad, Goldman Sachs generated a sleeper graph that’s astounding. It shows, since the iPhone was launched, the Apple Earnings before Interest and Tax (EBIT) compared to the entire rest of the mobile phone industry (RIM, Nokia, HTC, and Sony Ericsson) combined.

Goldman Sachs Report

Recently, the market share and app growth has been a focus for the Android OS, but if manufacturers can’t achieve good profits in the long run, other OSes won’t remain sustainable. Apple, meanwhile, can roll its huge profits into R&D in order to stay ahead of the competition. It’s an interesting game of profits, R&D, innovation, and eventually stealing any price umbrella the competition might have, squeezing the other, weaker manufacturers out of the market.

Apple’s success is proving to be embarrassing to the other handset makers and is not lost on investors.

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Comments

davebarnes

EBIT

Interest, not Income.

Time to hire a proofreader.

daemon

Goldman Sachs, aren’t they the same guys who made huge investments in realestate and then went and sold the rights to the profits and kept all of the risk? Man, I wish we had let them fail.

jfbiii

Must be the new math. I thought if you doubled 8 you got 16.

computerbandgeek

I thought if you doubled 8 you got 16.

You forgot to subtract the tax exemptions. Duh. wink

nytesky

It’s not really a fair comparison because Apple makes iPods, Macs and iPads. How about comparing just the iPhone portion of their business?

Lancashire-Witch

@nytesky.  The graph does say - “Apple handset EBIT dollars”.  Whether the numbers are accurate; who can tell?  After all, they are Goldman numbers.  But the comparison, as described,  seems fair. And if the numbers are accurate, well, “the others” have to up their game or else.

exAppl088

Apple has been following the continuous refinement/improvement
development model, (borrowed from the Japanesse?) of a single product
with excellent user interface design for both Mac OS X and iOSx (nee iPhone
OS) and the iPhone, iTouch (and now the iPad no doubt).

The profitability of this development strategy is quite visible in Toyota,
Honda, Lexus and many of Sony’s products as well.  This is also on
display as the model used by Intel to sequester most of the profits from
CPU sales.

It stands in stark contrast to the “GM” approach with dozens of models and
“badges” on the same stuff (as if a Buick is different from a Chevy or a GMC)

Throwing as many different smartphone handsets as possible at the
market in the hope they are “good enough” to sell is the Samsung,
Amazon, Motorola, Palm, ... approach and obviously not a profitable one
long term, as Palm and moto’s decline has already clearly demonstrated.

I wonder why the tech media thinks it’s OK for Intel or Sony or Lexus to use
this strategy but not Apple?

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