Sony Ericsson Mobile Communications Looking to Mirror Apple Profit Model

Hiroaki Kobayashi, marketing director of Sony Ericsson Mobile Communications AB is looking to generate revenue by mirroring Apple’s profit model.

Hiroaki Kobayashi recently spoke at the 2010 Android Bazaar and Conference in Tokyo. Of the many things he discussed, was the Apple business model and how their profit ratio is at times as high as 23%. The reasoning for this is that Apple focuses their model on three core areas of revenue:the market for applications software, the iPhone itself, and third party accessories.

Apple Source of Income

He mentioned further that it is well known in the applications market, that developers are required to pay 30% of sales amounts to Apple as a commission. An example of this is the spaced repetition system application Anki. The developer charges $24.99 for the application, however Apple gives him $17.50 in revenue.

Kobayashi-san also pointed out something interesting surrounding the iPhone itself:

Considering that the iPhone is sold at US$199, mobile service providers are bearing a burden of about US$400

The third party application arena  as mentioned earlier is also generating revenue for Apple. He highlighted they are making tens of billion yens from the “Made for iPhone Program” . Apple licenses the use of their logo to said products, sells the third party accessories in their store, and thereby has a low-risk, high return item sitting on store shelves.

The goal now is for Sony Ericsson to try and replicate that model to generate additional revenue by capitalizing on those three areas according to Kobyayshi-san.

Sony Ericsson’s New Model

The plan to do so was outlined briefly in his statement:

We will build good relations with application developers, mobile service providers and accessory manufacturers to expand our business related to the Xperia as we’ve done with retailers for our home appliances such as TVs

Images Courtesy Tech On!