With the recent announcements of 2nd quarter earnings, some incredible data has been released. The cell phone handset industry has sold over $65B in the last 6 months. Of that, 9.7% was pocketed by the companies. It was recently announced that Apple received 32% of the total handset market's profits, equivalent to a whopping $2,038,000,000, all from selling the iPhone. Prior to paying expenses, the net revenue Apple earned from the iPhone is over 5 billion dollars. These figures astounded us, so we did a little more research. The graphic below visualizes what these numbers actually mean by comparing operating profits, operating margins, and net revenues.
The biggest handset manufacturers are (in no specific order):
And just in case you didn't know…
Operating Profit: The money earned from a company's core business operations before earning interest or paying tax. It's simply the revenue minus the expenses.
Operating Margin: A ratio of the operating profit to the net revenue. It shows how efficient a company is in turning revenue into profit, and is measured before interest is earned or taxes are paid. If a company's operating margin is 41%, it means they profit $0.41 on every $1.00 of sales.
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note: image below has been updated to fix some minor issues
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As you can see, Apple does not have the highest revenue. It is trumped by LG, Samsung, Nokia, and RIMM. However, Apple has the highest profit margin – 40%. The second highest operating margin is RIMM with 20.7%…almost half. It's pretty impressive on Apple's part to be showing these kind of numbers, considering the fact that all the other companies in the race have been in the business for much longer.