Here’s a good article from the Guardian’s Business section, on the launch of Windows Phone 7: Microsoft takes a billion-dollar gamble on ‘glance and glare’ phone. When Apple launched the iPhone just over three years ago, Microsoft’s Steve Ballmer sneered that he would rather have Windows on 80% of the phones sold than control a “single-digit” sector of the market. In saying that, he made the (typical Microsoft) mistake of seeing market share as the most important aspect of business; whereas Apple always go for profit.
Apple do indeed only have a single digit share of the desktop computer market, but the bit they own is the high end – the profitable bit – which they control almost entirely. In the phone market, it’s a similar picture. Apple’s slice of the market looks small when compared to Nokia’s, but Apple’s share of total profits is close to 40%. Snip:
Yet even if it can drive its market share of handset sales higher, Microsoft may still not profit as handsomely as Nokia, RIM and Apple, all of which create both the software and the hardware in their products – and for which the physical product is the most profitable part. While Google makes money from its Android platform by driving searches via its own platform and selling mobile ads, Microsoft is both charging handset makers a fee to license Windows Phone 7 and seeking search and ad revenues. The profits from those activities, though, may not be as impressive as those seen by Apple, in particular, which is estimated to have taken 39% of the mobile phone industry’s total profits in the first half of 2010 by selling only 17m iPhones.