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mocoNews - iPhone, BlackBerry On Pace To Account For 58 Percent Of The Industry's Profits

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Tricia Duryee
mocoNews.net
Monday, July 20, 2009; 1:00 PM

BlackBerry-maker Research In Motion and Apple's iPhone are on pace to make more than their fair share of the cellphone industry's profits this year.

Deutsche Bank analyst Brian Modoff has estimated that the two companies accounted for only 3 percent of all cellphones sold in the world last year, but 35 percent of operating profits, according to the WSJ. If they remain on the same trajectory, this year the two will take 5 percent of the market in handsets sold, but will devour more than half, or 58 percent, of total operating profits. (These figures are pretty amazing when you realize smartphones only accounting for 13 percent of total cellphone sales globally, and of those sales, Apple (NSDQ: AAPL) and RIM (NSDQ: RIMM) have about 32 percent of the pie, in Q1, according to IDC).

Subsidizes: Driving growth for both Apple and RIM are carrier subsidies, which can make otherwise expensive phones at attractive consumer prices. Modoff estimates that AT&T (NYSE: T) subsidizes the iPhone by $400, while Blackberry gets an average discount of about $200. However, it also has popular deals through companies, like Verizon (NYSE: VZ), which has had an ongoing buy one get another BlackBerry free.

Feature phone profits unfavorable: Meanwhile, manufacturers that make basic, feature phones, earn virtually nothing, Modoff estimates...that is, unless they have enormous scale. Nokia (NYSE: NOK), which manufactured 46 percent of the units sold last year, earned 55 percent of the profits.


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