iPhones Are Profitable, But Are They The Best?

Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

At 29 years of age, Alexander Graham Bell invented a device in 1876 that we are still improving today. In July of 1877 Bell Telephone Company was formed, and even to this day there are dozens of manufacturers - most of them cell phone manufacturers. What is more important to a cell phone company - its image, or its innovation?

Research In Motion (NASDAQ: BBRY) has performed very well in late 2012 and early 2013 as its stock has soared over 110% in the past six months. However, RIM suffered in the first half of 2012 and actually decreased approximately 15% over the course of the year. With more than a 7% decrease in revenues in 2012, they look to boost sales with the new BlackBerry 10. The idea behind this device is that it "Flows." This becomes apparent with many of its features such as the fading between screens. Each screen will hold sixteen applications, but while moving to a different screen, the old one becomes nearly see through while the new one become bold and bright. One other major development with the BlackBerry 10 is its voice control feature that is expected to challenge the iPhone’s Siri and the Google Voice on Android.

Apple (NASDAQ: AAPL) is widely considered the most innovative of companies. The iPhone seemingly revolutionized the way phones were used, and will be used in the future. Apple's stock has risen more than 18% in the past year, and more than 54% of its revenues are accounted for by iPhones. As a whole, Apple's revenues increased approximately 22% through 2012. Apple seems to always release new products with new features - some improved, and some entirely new. However, could Apple's image be challenged by other phone manufacturers and the new technologies of Leap Motion Technology?  2013 will prove to be a good test for the Goliath we know as Apple. While Apple's iOS and iPhones make up 20% of the market share, Samsung holds 32% of phones and Android holds 66% of all operating systems, respectively. 

Nokia (NYSE: NOK) also seems to want in on the innovation band wagon - and for good reason. With nearly a 23% decrease in revenues and more than an 18% drop in its stock in the past year, Nokia needs to do something that will set it apart or at least catch up to the rest. Nokia hopes that the Lumia 920 will accomplish that. The Lumia 920 will function on the new Windows 8 operating system, and Nokia hopes to change investor's view of the company with the unique look of the phone. With slightly more pixels than the iPhone's display, it also features a camera with 8.7 megapixels. No, it doesn't have the 41 megapixels that the 808 PureView has, but Nokia did develop a "floating lens" feature that actually makes it hard to take blurry pictures. Nokia currently holds approximately 5% of the market share.

Motorola was bought by Google (NASDAQ: GOOG) and recently dropped out of the top ten companies with market share. Google's revenues increased by 2% in 2012 and its stock has increased over 15%. Motorola hopes to increase revenues by releasing a new phone called the Atrix 3. This device is expected to boast a back camera with 10 megapixels - but that's not the biggest improvement. The Atrix 3 is expected to include a battery with twice the life of the iPhone 4S. Hopefully for Motorola, the battery life will be enough to keep it alive despite the next phone by Sony (NYSE: SNE).

Sony seems to have gone overboard with this next phone. Though revenues for Sony decreased more than 11% in 2012, they hope to change the way we view phones. The Sony Xperia Z boasts a fully HD 5-inch display, a 13 megapixel camera, and one more prized possession. The Xperia Z is water proof. Yes, you heard that right, no more water damage! The phone is capable of surviving water 1 meter deep for 30 minutes. Rumors have it that this phone will retail at only $650. Sony's stock has not performed well, decreasing 32% in 2012, but this phone may turn things around for them. 

The Bottom Line...

While iPhones are probably the most popular cell device in the world, there is serious competition knocking on the door. While Sony hopes to release the best phone of our time, it doesn't seem that any of these companies will surrender to anyone. All of these companies are releasing phones with their own upside, but watch for Sony when the Xperia Z is released - possibly in February. These companies have all worked hard and achieved innovation that Alexander Graham Bell never could have imagined. Who will step up to the plate and outperform the others?


tlwofford has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. The Motley Fool is short Sony (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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