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Analyst: iPhone claims 32% of handset industry profits, but only 8% of revenue

Estimates predict the fifth-largest handset vendor has taken lion's share of profit in 2009

While Apple is only the fifth-largest vendor of handsets, after Nokia, Samsung, RIMM and LG, it could have claimed nearly a third of the industry's profits during the first half of 2009, according to Bernstein Research analyst Toni Sacconaghi.

"Our analysis indicates that Apple’s iPhone accounted for only eight per cent of handset industry revenues but 32 per cent of industry operating profits in the first half 2009," Sacconaghi wrote in a note to clients. "Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25 per cent of industry profits.

"iPhone’s success is akin to Apple’s position in the PC industry - where the company enjoys an estimated 25 per cent of industry profits, despite capturing only six per cent of industry revenues."

This achievement, Digital Daily reports, can be attributed to Apple's first-mover advantage in an expanding high-end market, as Sacconaghi explained.

"With the iPhone and its Apps Store, Apple has established a formidable smartphone ecosystem, which history suggests is very difficult to overcome," he said. "In fact, Apple has the potential to become a de-facto standard of sorts in the consumer smartphone market, much like it became in the portable media player market with iPods, due in large part to its first mover advantage and tight software and hardware integration.

"We believe that over time, single function standalone handheld devices (portable music players, digital cameras, navigation systems, etc.) will become increasingly converged. Apple's estimated installed base of 75+ million individual iPod and iTunes users provides customers with a seamless migration path to a fuller featured, higher-end integrated device."

And while the analyst believes Apple should be able to grow faster than the market as a while without lowering prices, he suggests a lower price point will eventually be needed, concluding: "We believe Apple will ultimately need to lower price (and margin over time) to expand its addressable market opportunity, including offering a lower-cost, non-data plan iPhone."