Apple becomes top phone maker by profits

Apple overtook Nokia in the third quarter as the cellphone maker generating the highest total operating profit in the industry, research firm Strategy Analytics said on Tuesday.

Apple, which entered the cellphone market only in mid-2007 with its iPhones, sold a record 7.4 million of them in the third quarter.

"With strong volumes, high wholesale prices and tight cost controls, the PC vendor has successfully broken into the mobile phone market in just two years," said Alex Spektor, analyst at Strategy Analytics.

Apple does not unveil profits per business line, but Strategy Analytics estimated Apple's operating profit for its iPhone handset unit stood at USD 1.6 billion in the third quarter, compared with Nokia's USD 1.1 billion.

Apple has said sales value of iPhones sold during the July-September quarter was USD 4.5 billion.

Nokia sold 108.5 million phones in total in the same quarter, generating sales of 6.9 billion euros (USD 10.36 billion) but its profits were hit by the economic downturn and a stagnant presence in the United States.

Nokia's global market share is still close to 40%, but in the United States its market share is well below 10%.

"We believe the United States, where Nokia now trails Apple in marketshare, is the key to Nokia's recovery in 2010," said analyst Neil Mawston.

"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," Mawston said. To challenge Apple and RIM, maker of the Blackberry, Nokia started deliveries of its new top-end smartphone N900 this week.

The N900 model is Nokia's first phone to run on the Linux Maemo operating system, which analysts see as key for Nokia to regain ground in the coming years.

In October, Nokia charged Apple with infringing ten of its patents, accusing the iPhone maker of trying to hitch a free ride on Nokia's technology investments.