The latest blog post from VisionMobile includes what is possibly the scariest image in the mobile industry, unless you work for Apple:
The most impressive achievement of Apple in the mobile space is not the number of devices it has sold, but the amount of profit it has managed to generate on those devices. Apple’s makes the sort of money on hardware (60% on iPhone 3GS according to this article) that was one thought impossible even for software businesses, where the cost of “hardware” is essentially zero. To put things in perspective, when Nokia was on top of the mobile world in the early 2000’s, their hardware margins of 15-20% (and overall margins above 10%) were considered extremely impressive for the industry.
Of course, the chart above shows percentages, not absolute numbers. Apple’s impressive position is due both to its own success and the inability of its competitors to keep up. If those competitors (or new ones) get their acts together, then Apple’s dominance of the mobile profit pie will be challenged.
According to Business Insider, this may already be happening, as competition from lower-priced products is forcing Apple to ship more lower-price (and hence lower-margin) products itself. Samsung, the profit number two, is producing impressive devices, and one can never count out Amazon, which is willing to sell products at cost in order to attract more customers to its ecosystem.
After all, nothing lasts forever…