RIM and Apple take 35% of mobile profits

While Nokia, still the world's number-one mobile manufacturer, and Sony-Ericsson are both struggling, RIM and Apple are both making excellent progress in the mobile phone market.  With just 3% of the market share between them, the makers of the Blackberry and the iPhone are making 35% of the profit in this sector.


The Wall Street Journal has released a report into the way market share and profits are divided up in the mobile industry prepared by Deutsche Bank.  According to the study, by the end of the year, Apple and RIM will take 58% of the profit by selling just 5% of the phones.  Why?  Because both companies backed a winning formula, smartphones.  These high-end products have enjoyed a rapid success, despite the fact that, in a mobile phone market that's shrinking overall, they cost a lot more than average.

Operator Subsidies

So, while smartphones represent just 13% of the market, Apple and RIM are responsible for 32% of this segment.

The reason they can make so much money despite being such small players is because they produce very expensive phones that lead to higher subsidies from operators.  In the US, a standard phone might cost a carrier $100, but the fees for a Blackberry are $200 and $400 for an iPhone (whose estimated manufacturing costs are in the region of $180).  So, while some manufacturers go for quantity, Apple and RIM have chosen quality.

Mobile networks don't seem to have any qualms handing over such sums, despite the relatively modest sales of Apple and RIM products--mostly because the pricey contracts that go with them are worth their weight in gold.

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