Apple and RIM continue quest for cell phone domination, earn 35% of industry's profits

applrimAlthough they only ship 3% of cell phones worldwide, Apple and Research-In-Motion are cleaning up in the profits department. According to a recent report by Deutsche Bank analyst Brian Modoff (via WSJ), Apple and RIM account for 35% of the global cell phone industry’s profits. This comes on the heels of tremendous year-over-year growth for the smart phone market, which doesn’t look like it’s slowing down anytime soon. Modoff agrees, and contends that the pair of smart phone heavyweights will take 5% of the market (in terms of cell phones shipped), but account for a whopping 58% of market share.

According to IDC estimates (via WSJ), smartphones account for 13% of the global mobile phone market, and Apple and RIM owned 32% of the market for smartphones in Q1 2009. According to Modoff, their biggest advantage is the hefty subsidies that wireless companies offer on RIM and Apple smartphones. He calculates that iPhones get a $400 subsidy (might help explain why AT&T is so damn stingy), and Blackberries average a $200 per phone subsidy. Consequently, though Nokia sold 46% of all cellphones shipped last year, they only earned 55% of the industry’s profits. As that balance of power continues to shift, Nokia’s stronghold on the industry will continue to loosen, as the Finnish handset maker struggles to compete in the high-margin smartphone business (read more about their latest failed venture into the smartphone business: the N97).

Of course, this isn’t a new trend; we first noted this back in early June.