Report: Apple passes Nokia in handset profitability

Not only can Apple make a compelling smartphone, it also can make a profitable one. According to research firm Strategy Analytics, Apple surpassed Nokia for the first time in the third quarter to become the most profitable handset maker.

Apple had $1.6 billion in operating profit in the quarter from its iPhone handset division, while Nokia had $1.1 billion in operating profit from its handset division, according to the firm. The results are not entirely surprising given the disparate performances of the two companies in the quarter. Apple sold 7.4 million iPhones in the quarter and had its most profitable quarter ever, while Nokia shipped fewer handsets on a year-over-year basis, and saw its global smartphone marketshare decline from 41 percent to 35 percent.

The changing dynamics of the handset market underscore the way smartphones have come to dominate growth in the industry. It was a little more than two years ago that Apple first broke into the handset market with the original iPhone, and yet the company has quickly become a major player.

Alex Spektor, an analyst at Strategy Analytics, said that strong volumes, high wholesale prices and tight cost controls have helped Apple break into the market. Meanwhile, Nokia is still the world's leader in smartphone marketshare, but, according to the research firm, the company must make further inroads in the U.S. market.

"Strategy Analytics believes that the United States, where Nokia now trails Apple in marketshare, is the key to Nokia's recovery in 2010," Strategy Analytics analyst Neil Mawston said in a release. "A successful fight on Apple's high-profit home turf can simultaneously help to revitalize Nokia's margins and to put a check on Apple's surging growth."

For more:
- see this release [1]
- see this Bloomberg article [2]
- see this All Things D blog post [3]

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Report: Apple accounts for 32% of handset industry profits [6]
Apple sells 7.4M iPhones in best quarter ever [7]