The Mobile Internet Report Key Themes*

Highest Handset Vendor Operating Margins at High End of Market –
20%+ for Smartphones vs. 8% for Low-End Vendors
40%
Operating Margins for Handset Manufacturers, CQ1:05-CQ2:09
Handset Business Operating Margin (%)
30%
20%
10%
0%
-10%
-20%
-30%
Motorola Nokia Samsung
Sony Ericsson LG Electronics Research In Motion
Apple iPhone*
CQ1:05 CQ3:05 CQ1:06 CQ3:06 CQ1:07 CQ3:07 CQ1:08 CQ3:08 CQ1:09
Note: *Apple does not disclose iPhone gross / operating margins, company overall EBIDTA margin was ~22% in CQ2:09, which
includes lower-margin businesses such as iPod / iTunes / Mac and higher margin businesses such as iPhone, software and 168
services. Source: Company reports, James Dawson, Morgan Stanley Research.