Apple's Strategy Pays Off

Scott Francis
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Apple’s net profit from iPhone’s exceeded Nokia’s by approximately 50% ($1.6B in net for Apple, $1.1B in net for Nokia). Its the first time Apple’s net profit in phones exceeded Nokia’s, and it is a dramatic reversal. Just 7.4 million phones generated this profit for Apple. Nokia sold 108 million phones to generate its $1.1B. The way things are headed, Nokia and others may have more volume, but Apple and RIM will have substantially all the profit.  This is similar to what’s happening in the PC world, where Apple has a stunning 90% share of computers that cost over $1000, according to NPD reports.  Meanwhile the profit is getting sucked out of the rest of the PC business by netbooks and lower cost laptops. Meanwhile, the AppleInsider has a really interesting comparison of the business models of Apple’s iPhone and Google’s Android phone.  It points out that while Google’s model has some advantages, there are also some disadvantages – no control over the Android brand, for one, and lack of clear accountability to fix customer issues once they have an Android phone.  AppleInsider points out that one bad Android phone can tarnish the brand – which is true of the iPhone as well, but the difference is that Apple has control over what gets released with the iPhone brand, but Google can’t exercise the same kind of control over Android derivatives.  I can’t help but think that the fragmented market of Android phones will only be an advantage if collectively the phones can evolve faster and take advantage of new technology faster than Apple’s iPhones… but so far technology adoption hasn’t been the problem – user experience has been the problem.  And it seems like Apple still has the edge there.

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