John Paczkowski

Recent Posts by John Paczkowski

Apple Headed for 60 Percent of Handset Industry Operating Profits

With the iPhone, Apple is doing to the smartphone business what it has done to the PC business with the Mac: Generating a disproportionate share of profits relative to revenue.

In its third quarter, Apple captured more than half of the handset industry’s overall operating profits — 52 percent, according to Canaccord Genuity analyst T. Michael Walkley. And it managed it with only a 4.2 percent global handset unit market share.

With iPhone sales trending the way they are, and some of Apple’s larger rivals losing traction as they are, Cupertino is poised to claim an even larger share of those profits in the December quarter.

Says Walkley: “With Nokia in the midst of a challenging smartphone strategy transition and our checks indicating RIM and Motorola Mobility continue to struggle in North America given the increasingly competitive Android smartphone market, we believe Apple will gain further value share in the December quarter and could capture over 60 percent of industry profits.”

Sixty percent of an industry’s operating profits to a company with little more than 4 percent of its market share? Sounds crazy, but it’s no more so than the 52 percent Apple holds now. And with the iPhone 4S the top-selling smartphone at AT&T, Sprint and Verizon, and its international rollout in full swing, it seems pretty clear Apple has a very good chance of hitting that big number — and soon.

Walkley’s newest estimates for iPhone sales: 29 million in the December quarter, 104.4 million in fiscal 2012, and 140.8 million in fiscal 2013.


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