Apple iPhone to Get 60% of Mobile Phone Industry Operating Profits in Q4 2011

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Apple has been so efficient with its hardware manufacturing business that it’s set to earn 60% of the world’s mobile phone operating profits even as it only has a very tiny share of this overall market. Analysts say that Apple has become so efficient that it will easily out-perform all other mobile manufacturers.

To date, the iPhone accounts for only 4.2% of the world’s market for mobile phones, which includes smartphones, feature phones and basic cellular telephones, according to analysts from Cannacord Genuity. However, because of efficiencies in manufacturing, Apple has received 52% of this industry’s operating profits in the third quarter of 2011. Analysts predict that Apple will get a 60% share of the worldwide handset industry operating margins by 4Q 2011.

Apple gets an average of 30% profit margin from iPhone sales. In contrast, other manufacturers aren’t so lucky. Nokia only gets a 4% operating margin. Samsung gets 17%, RIM 16% and HTC 15%. Some manufacturers are even operating at a loss. How does Apple manage to do this?

The answer lies in control over its supply chain. Apple has been able to have a tight rein on production from start to finish, and it can already command almost-monopsonistic prices. Apple’s new CEO Tim Cook was reportedly able to maximize production efficiency while he was COO, that Apple’s 30% profit margin extends to its other product lines, like the MacBook, iMac, iPod and iPad. As such, Apple can even afford to buy out an entire industry (say, touchscreen LCD panels) to prevent other device makers from reaching their production goals.

Perhaps this is one advantage Apple has over the fragmented approach that other mobile ecosystems have. Android smartphones might be outselling iPhones in terms of unit sales, but Apple trumps everyone else in terms of earning per handset.