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Summary:

Apple’s gross profits on the iPhone add up to more than double those of Motorola and RIM combined, according to a new report by stock market analysis firm Trefis. The report’s estimates put Apple’s total iPhone-based gross profit at $14.8 billion for 2010.

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Apple’s gross profits on the iPhone add up to more than double those of Motorola and RIM combined, according to a new report by stock market analysis firm Trefis. The report’s estimates put Apple’s total iPhone-based gross profit at $14.8 billion for 2010. RIM’s mobile phone gross profit across all its models of BlackBerry devices was $5.1 billion, and Motorola took in only $2.2 billion.

The estimates made by Trefis are based on the gross profit margins for the mobile phone divisions of each company. They don’t take into account research and development or promotional costs that went into developing the handsets sold by each company. It’s entirely possible that Apple spends more on iPhone R&D than the other two phone makers spend on their devices, but it’s unlikely the discrepancy would be considerable enough to make much difference to the final picture.

How does Apple manage to stay so far ahead of the competition in terms of profit margins? According to the report, it hinges on how much more Apple can charge for its products, compared to the competition. Trefis estimates the average price paid for an iPhone to be around $606, while Motorola handsets only command around $214 on average, and BlackBerry devices take in roughly $305 per unit.

While market share gets a lot of attention when it comes to the smartphone industry, Apple’s commanding lead in terms of gross profits is a much better indicator of success from an investment perspective. Apple’s growth over the past few years is impressive, but what’s even more impressive is that even as it reaches a broader audience, it’s still able to ask consumers to pay more for its products than they would for the competition.

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  1. What many of these reports fail to show is the amount of profits are realized due to how FEW models Apple offers vs. Motorola, RIM etc.
    Fewer part to develop, order, and replacement parts to inventory, fewer diagnostic permutations, less customer service training time, etc etc.
    Not unlike Southwest Airlines (and JetBlue for a while) to only fly one type of jet. It simply costs less to operate in the long run.

  2. All this proves is that Apple is ripping off the faithful once again.

    1. Given how large and how fast Apple is growing its customer base, isn’t the Apple faithful/fanboy argument getting a little tired?

    2. Very tired indeed. We’re each entitled to our own opinion, but not our own facts. In terms of profitable: Microsoft is #2 and Apple #26.
      http://money.cnn.com/magazines/fortune/fortune500/2010/performers/companies/profits/

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