Report: Apple's iPhone is most profitable smartphone

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Apple Inc. makes more money with the iPhone than any handset maker in the world, a new report shows.

Strategy Analytics released a report Tuesday showing Apple (NASDAQ:AAPL) passed Nokia in the third quarter for the amount of operating profits generated by its handsets.

The research firm showed operating profits from the iPhone handset division stood at $1.6 billion in the quarter of 2009 while No. 1 world handset seller Nokia recorded a lower $1.1 billion operating profit.

"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 Strategy Analytics analyst Alex Spektor.

Apple's lead over Nokia in operating profit is particularly remarkable in light of an IDC report on third quarter sales showing that the Cupertino company's 17.1 percent global market share of smartphone sales is is about half of No. 1 Nokia's 37.9 percent.

Gartner said that Apple sold only 7.4 million iPhones around the world in the quarter, compared to Nokia's 16.4 million.

Together the reports show that Apple is making far more money on the iPhones it sells than any other smartphone maker.