The above chart, so-called “tree view”, renders the primary mobile phone brands in terms of operating profits, excluding loss-making vendors. Yeah, the large orange rectangle is Apple. You can also see that Apple, Research In Motion and HTC combined generated three quarters of total profits during the first quarter of 2011. Yup, just three vendors controlling 75 percent of handset profits. Even more astounding, the achievement is based on just 16 percent of the volumes for the smartphone vendors. Asymco’s Horace Dediu explains that all phones will eventually become smartphones:
I don’t see non-smart devices being interesting to vendors in the near term. Each additional dumb phone added to a portfolio will decrease a company’s operating margin. The market dynamics are such that I think non-smart phones will disappear entirely from branded portfolios in 3 to 5 years.
Apple is, of course, the most profitable handset vendor of the three. The Cupertino team has managed to capture a whooping 55 percent of total profits and one fifth of total revenues during the first quarter based on shipments of just five percent of all of the handsets that had been sold during the quarter.