How Apple is sucking the profit out of the mobile phone market

Apple purposefully chose to operate in an adversarial relationship with the telcos. They got concessions on app revenue streams (before apps existed), stopped iPhones from being peddled by fly by night phone resellers, and stressed out the phone companies networks.

An out of the box iPhone contains no carrier-branded crap. Period.

Apple is pushing the Apple user experience without the price premium. Everyone else is selling a commodity with minimal desirability. The Droids/BlackBerries/WebOS devices look and feel like knockoffs.

What's with the financially illiterate assumption that profit is a zero-sum game? It's not. I'm sure that chart would look very different (and more meaningful) if it wasn't mashed into percentages.

Even if you used this faulty logic, the chart to me says "Apple stealing Nokia's share of profits", not the entire phone market. Were Nokia and Apple placed together in the chart, this would be clearer.

Another problem with market share percentages without having totals.

If the market has grown 200% (in dollars) and apple is taking 50% of those dollars, than the competitors are also growing, although not at the rate of apple.

Somebody with better math skills than I probably was able to work out the actual numbers without much thought.

You'd think an article from a financial brand would do better than this.

Very strange title; it implies that Apple is actively making it difficult for other companies to make a profit. Of course, what's really happening is that (a) Motorola, Nokia and Samsung in particular have big shares of the declining dumb phone market, and (b) Samsung in particular makes lots of zero-margin ultra-cheap (<100euro unsubsidised) Android and Bada smartphones for the prepaid market.

That is the most bizarre article I have ever read.

If Apple is taking a huge amount of profit off a relatively small percentage of the market, that would actually imply the opposite of what the article says, there is still the potential for large profits in the industry.

I'm really dumbfounded that that article could make it on cnn.com.

Perhaps the market will change to be more like the console market, where the hardware is sold at a loss in exchange for future revenue from other sources. I would look for phone manufacturers to start asking for a percentage of app sales.