Here’s a good riddle: What has just four percent of the market, yet pockets more than half of the profits? The answer is Apple, the tech giant known for squeezing every ounce of profit from its iconic products. According to one analyst, Apple took 4.2 percent of the mobile handset market and transformed it into 52 percent of industry profits. Neat trick, huh?
For Apple, the note by Canaccord Genuity’s T. Michael Walkley also is a bit ironic. When the iPhone launched in 2007, Apple had 4 percent of the market, but Nokia had 67 percent of the industry’s profits. Now, Nokia has just 4 percent of the market and Apple rakes in more than half of the profits. Walkley calls it an “epic reversal of fortunes.”
Just how strong is Apple’s revenue machine? Even after Samsung trimmed Apple’s marketshare from 5.4 percent to 4.2 percent, the Cupertino, Calif. company still had the lion’s share of mobile profits. Apple even beat its previous profit share of 50 percent, Friday reports say.
Speaking of Samsung, the South Korean firm and Apple took in 81 percent of mobile phone industry profits during the previous quarter.
Walkley projects Apple will sell 29 million iPhones during the December quarter, up from his previously forecasted 27 million units. In light of that, Canaccord Genuity raised its price target on Apple shares to $560.