Smartphone wars: why Apple doesn’t fear Android

My first iPhone: goodbye Nokia, goodbye Sony…

If you believe the stories, the battle for dominance in the smartphone market is between Apple’s iPhone and Android phones, based on Google’s mobile operating system.

Android phones still outnumber iPhones, but a fascinating post by BBC technology reporter Rory Cellan-Jones today suggests that’s the wrong way of looking at it. Instead, we should be looking at how much money mobile phone brands are making. The answer is that only Apple and Samsung are making any money. (See also Lance Whitney’s CNET post.)

Rory links to analyst Horace Dediu‘s infographic that shows smartphone makers’ profit share over recent years. In 2007 – the year Apple launched the original iPhoneNokia enjoyed over 50% of the market’s profits. Nokia no longer turns a profit. Sony [Ericsson], Blackberry maker RIM and LG used to share some 20% of the market by profit. Again, they’ve all seen profitability disappearing. In return, Apple has gone from nothing to 73% of market profits. (Samsung has the remaining share aside from a consolation 1% for HTC.)

Back to Android. Samsung has that part of the market sewn up. Cheap Android phones are unlikely to make money for their makers anytime soon. Apple’s focus on the high end of the market, combined with its brand appeal and consumer-friendly approach, have created a revolution in a market long dominated by Nokia.  Nokia has bet its future on offering Windows Phone handsets, yet killed sales of its Symbian-based phones by declaring its plans way ahead of the switch.

It will be fascinating to see whether anyone can break the Apple and Samsung duopoly.

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