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February 09, 2011

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Baudrillard

Finally the truth is revealed.

Lets watch the US blogs ignore the final numbers.

Arun

While I am happy, as a samsung-ite, with the praise that you are showering on bada, don't you think that the comparison of bada with iOS and android is inappropriate, as they all launched in different market conditions - with bada being launched in a high flying smartphone market, while the other two in relatively far quieter times?

Manu

Near perfect ratings/grade to me.
Almost nothing to differ. However, apart from figures & actual market shares, mindshare as we may call it has a role to play in Smartphone Bloodbath 2. ;)
I foresee RIM losing it's share further & since HP has nothing to lose from "zero" mark, it may well gain both market & mind share.

Jouko Ahvenainen

What could I know about mobile without Tomi???

Bill

One point that you do not make. Apple has said repeatedly that they cannot make iphones fast enough. So they grew market share modestly while selling iPhones as fast as they can make them, in market that overall grew massively. What happens in 2011? With CDMA phone on Verizon? CDMA phones for Japan, Korea, China, others (though maybe China CDMA will be 2012)? Doubling their GSM iphone production run as they have essentially did in 2010 versus 2009? Maybe they could have 20% market share if they could produce enough GSM iphones? Maybe 25% if they have CDMA iphones? Of course maybe you should give them a demerit because they failed on execution.

Darwin

Please qualify your praise of Ovi. I'd like to see the numbers for the competition as well, but can't find neither Apple's or Android's numbers. Thanks.

Michael Scharf

Near perfect predictions...
I believe that you have to split the OS analysis into two sections. The vertically integrated OS developer/hardware manufacturer and the OS developer/licenser. I believe that your analysis of the vertically integrated group is dead on, Symbian, iOS, BlackBerry, Bada, etc.
But there is one question that I don't have an answer for, and I have not seen anyone discuss. That question is, "What have these folks learned?"

Microsoft has killed off more mobile OS's this year than I can count (WinMo, KIN, Danger, WinCE, etc.). And they are still promoting a full Win7 OS for tablets. Have they learned anything this year, if so what?

Google seems to have learned that they cannot sell handsets (at least they never tried to build hardware). They are back to growing revenue via ad revenue.

OEMs
I guess the same question can be asked about the OEMs, the Samsungs, HTCs, Moto's that build hardware with the OS of others. They all seem to be doing okay or better. What will they do in 2011?

Other "players"
HP is announcing new WebOS products this morning, I don't believe that they will license the WebOS, so they will join the ranks of the vertically integrated players.

My prediction for 2011... The bloodbath continues, but it's more on the OS side than the hardware side.

Bill

Verizon iphone now has a 9 day delay for shipping. CDMA iphones could have a big impact on market share.

 Tomi T Ahonen

(will do replies in sets)

Hi Baudrillard, Arun, Manu, Jouko, Bill and Darwin

Baudrillard - haha, yeah.. Thats the life in the world of facts. They overhype the nonsense, ignore the truth.. :-)

Arun - haha, ok, valid point, but we could then also go and change the Olympic records (when they ran with lesser shoes and other such equipment) etc.. But yeah, sure, bada gained from the fast growth - but equally, we could say that it has been the most fiercely contested time in smartphones - making it worse to get any sales haha..

Manu - Mindshare, yes! Apple gets A+++ Android and Google get A, Nokia gets D although today this Elop memo rumor has spiced it up a lot for Nokia and their share price is up on the wild speculation he'll announce Android or Phone 7 on Friday..

Jouko - cheers :-)

Bill - fine, but also, I have seen many times last year the people at Foxconn (ie who manufacture iPhones) saying they'd like to do make more of them, its up to Apple to specify how many units are manufactured (at what price point with Foxconn) so at times at least last year there seems to have been ample extra capacity at Foxconn but yeah, right now several sources report shortages in parts, not just for iPhone though.. But that is also typical of the handset industry and we don't get bonus points for complaining about shortages haha, they happen to all makers (even Nokia haha)..

But Bill, your assumption on CDMA makes sense in a general level, it breaks down when you analyze those individual countries and their market situations. Japan for example - KDDI (on CDMA) is barely bigger than the current iPhone supplier, Softbank, but NTT DoCoMo is as big as both combined and is on WCDMA ie the GSM standard of 3G so the current 'AT&T' versions of iPhone 4 would work just fine on their network. And NTT DoCoMo has said repeatedly and repeatedly, that they want the iPhone. Why is Apple not offering it to the biggest carrier in Japan? Must be the same reason as they couldn't give it to Verizon before this year - contractual obligations to their current provider ie Softbank. The Japanese option at KDDI will be prohibited (I am guessing, I do not know) so you can't count Japan doubling. Similar reasons in many markets. You might enjoy my blog article that examined the CDMA iPhone opportunitities, please google for it on this blog you'll find it, was I recall in early January (or late December) related to Verizon iPhone

Darwin - I report on all the stats on this blog that I find and have links to them when I find them. Please google on the site you'll find them.

Thank you all for the comments, I'll come back with more

Tomi Ahonen :-)

Bill

Tomi - Thanks for the thoughtful reply. However, Apple did unequivocally state on their last earnings call that there are NO exclusive contracts left. They cannot lie on these calls or the SEC send people to jail.

Now that may have been a new thing for 2011, and there may be other issues (carriers wanting branding, to run their own app stores, music download services, cost etc). I suspect that though NTT DoCoMo 'wants' the iphone, they probably also want their own services preinstalled (i.e. permanently) on it, which Apple will never allow. Or they want the right to sell it for substantially more than the 'standard' subsidized or unsubsidized price for the iphone in their market (which I think Apple will also forbid).

If there is no contractual exclusivity then it is just a waiting game for Apple or the carriers to surrender. I'm betting on the carriers, especially if Symbian goes down.

Brian S Hall

Considering how rapidly the Android "ecosystem" and the incremental Android ad revenue it has generated for Google, I think your Google grade is much too harsh (even considering the Android grade).

Considering the terrible osition Nokia has put itself in, anything more than a fail is hard to comprehend.

That said, this is a very good post with lots of useful data. Thanks.

 Tomi T Ahonen

Hi Michael, Bill and Brian

Michael - haha, yeah maybe should split it that way. But GREAT question about what has anyone learned. I did say at the start of last year that it will be bloody and explained, that there would be deaths in the industry. I warned that many PC giants would stumble coming in. So at least perhaps, Google, Microsoft, Lenovo, Dell have learned that the smartphone market in the handset/hardware side is a very nasty business, if you're not in the Top 10, its very rough to try to make any money in it. But what else? I think Google didn't learn to stay away from handsets with the relaunch of Nexus, and meanwhile Microsoft didn't seem to 'unlearn' their lesson, when they far too rapidly exited from Kin (I would so hope they try again haha)

Good call on the 2011 focus, yea, very likely ever more on the OS, software and apps/services sides of the battle haha.

Bill - yeah, could certainly. I said CDMA phones would boost iPhone sales by about 10M to 15M for the year but while that seems much, remember iPhone sold 47 million units last year and nearly doubled from the year before. This year Apple should land in the 75 million to 90 million range if they grow a bit faster than the industry. If that is with a CDMA phone, I don't see a big boost. But what if they had offered us a Nano iPhone (repackaged 3GS model) and with Moore's law they could make it a bit smaller and half price. Thus their profit margin for the Nano would be identical to the main iPhone but would offer a full Apple experience in a slightly smaller handset and probably double their sales over what they'd do in the above. Could hit 150 million sales haha. Why on earth not. Why is Apple not giving us an iPhone Nano? I explained here on this blog earlier how to do it so it wouldn't cannibalize new 'big' iPhone sales but would be an entry level model to bring new users to the Apple family.. Anyway, what do I know haha..

Bill - thanks, I didn't know that. I try to monitor the calls but didn't catch that. Yes, if Apple says that, I believe it is totally true. Then yes, there are no limitations to NTT DoCoMo or several other rivals and it would be down to the commercial terms of the deal.

Brian - you did read the article? I said clearly that I had the OS separately, so Google's Android is separate from Google's Nexus handset. And Android got an A, you can't do better than that haha.

Tomi Ahonen :-)

HCE


Long time since I have posted but I have been checking your blog regularly. It's just that pretty much every point I wished to make had been made by someone else.

1. I think a C- for Motorola is a little unfair. They did produce compelling products and the new Atrix that was just announced seems to be extremely impressive. So too does their Xoom tablet. This seems like a company that has the right strategy but isn't yet clicking on all cylinders.

2. On the other hand, your grade of C+ for Nokia is a bit inflated. This is a company on the way down. I used to think they had the right strategy but now I have my doubts. Yeah the whole Meego/Symbian/Qt thing sounded good but we still do not know how far this whole infrastructure is from being ready for prime-time.

3. I think failing HP was premature. Their announcement today was impressive - to say the least. Overall, in terms of polish and usability, WebOS is the only operating system that rivals Apple's iOS. They have a long way to go but I am really rooting for them. Assuming they are able to get a good app ecosystem going, they are currently the only phone/tablet manufacturer that I would consider leaving Apple for.

4. Finally, I still fail to see why you place such importance in creating your own OS - particularly since you think apps are of little importance. As far as I am concerned, the control of the app ecosystem is the ONLY advantage of doing your own OS. If the control of the app ecosystem is unimportant and the only important things are web services and SMS, you might as well use Android. You automatically become part of an existing app ecosystem and you can free up your resources to customize the OS and innovate on the hardware side.

- HCE

Leebase

@HCE - I agree with you regarding Nokia and Android (or Win Ph 7). If Samsung can come out with Bada and still make Android and Windows phones (but no more Symbian phones) then why not Nokia?

Nokia doesn't have to dump Symbian or stop developing Meego in order to support Android.

For that matter, Nokia could make a pure Android phone -- no Nokianess about it (other then hardware). That would be a competitive advantage all of it's own. Just Android with the ability to update over the air just like the Nexus phones. Don't put much if ANY resources into Android other than making the pure phone.

Then keep on working on Qt/Symbian/Meego. Heck, just put Qt on Android (Android is a linux OS just like Meego).

Thing is, they needed to have been working on this for over a year. If they are truly JUST NOW coming to this conviction, the will STILL be a day late and a dollar short.

Lee

DS

You're too lenient on Maemo.
First Nokia as much as MS left its developers (and worse - device owners who have hoped for a migration path for their pricey gadgets lured by OSS story) out in the cold.
The N900 launch was too early with an unfinished software on underpowered HW and earned the platform bad reputation for being badly put together. The 2010 lack of progress and announcements added too the failing hopes for ever making meego relevant. 2011 with HP returning to game with 3rd Linux based will make it achieving that goal even harder.

pekkat

RE: Feb 11th & "Canada-connection".
Smartphones: Nokia + RIM = 50% & access to US market. Would this make any sense as an ecosystem?

Bill

http://www.telegraph.co.uk/technology/8313243/Apples-iOS-most-popular-for-mobile-in-Europe..html

Tomi - I just saw this report that iOS has 46% of the smartphone market in Europe. Makes me wonder if your prediction that Apple has reached it's maximum worldwide market share at 15% is correct. After all you and others keep telling us Americans that Europe is the most advanced smartphone market in the world. :)

However, it does point out that iOS share has fallen from 52% a year ago. And android is advancing fast, Nokia plummeting, RIMM plummeting. So maybe the US and EU represent extremes of iOS share (US abnormally low at around 25% and EU abnirmally high at 45%). What's the true level? I would be pretty sure it's not 15% if the most advanced and the least advanced developed markets are both well above that. Maybe 35-40% (or more if supply shortages and no CDMA phone held apple back in 2010.

KDT

@HCE

--------
1. I think a C- for Motorola is a little unfair. They did produce compelling products and the new Atrix that was just announced seems to be extremely impressive. So too does their Xoom tablet. This seems like a company that has the right strategy but isn't yet clicking on all cylinders.
-------

Even Tomi "Mr. market-share-is-all-that-matters" says that a company at least needs to make a profit. Motorola Mobility was not profitable last year and the CEO said he expects a loss this quarter because of the iPhone on Verizon.

Even the most avid Android fans are saying the Xoom is overpriced. Besides, you can't grade someone on non-shipping products. Motorola is stuck trying to sell a commodity product (Android phones) that it can only compete on price.

-------
3. I think failing HP was premature. Their announcement today was impressive - to say the least......
------

You don't grade based on expectations. You grade based on performance.

-----
4. Finally, I still fail to see why you place such importance in creating your own OS - particularly since you think apps are of little importance.
-----

http://www.asymco.com/2010/08/17/androids-pursuit-of-the-biggest-losers/

87% of the industries profits are made by manufacturers who have their own OS -- Apple, RIM. and Nokia. If you don't own your own OS, you have no customer loyalty. If a consumer buys an Android device by Motorola, in 18 months when he gets ready to buy another phone, if the HTC is $10 cheaper, he will buy that. But it will take a lot more for someone to switch from an iPhone or even a BlackBerry.


----
As far as I am concerned, the control of the app ecosystem is the ONLY advantage of doing your own OS. If the control of the app ecosystem is unimportant and the only important things are web services and SMS, you might as well use Android. You automatically become part of an existing app ecosystem and you can free up your resources to customize the OS and innovate on the hardware side.
-----

You can't build a sustainable competitive advantage on hardware innovation. Anything that you can "innovate", the competition can copy in 3 months. Commoditization *always* leads to a race to the bottom.

HCE

@KDT

> Even Tomi "Mr. market-share-is-all-that-matters" says that a company at least
> needs to make a profit. Motorola Mobility was not profitable last year and the
> CEO said he expects a loss this quarter because of the iPhone on Verizon.

I'm not exactly trying to give them an A here - I'm just saying that C- is a bit low.

And, as regards HP you said.

> You don't grade based on expectations. You grade based on performance.

Well, if you read what Tomi wrote, part of his failing grade was based on some statement that Mark Hurd made. It was almost as if he graded HP by his own extrapolation of Hurd's statement. Well it now appears that Hurd's statement was a lot more innocuous that what he made it out to be and that HP didn't exactly "mess up their opportunity" as he put it. All there changes we are seeing now were, in all likelihood initiated under Hurd. It's just that the turmoil that Plam went through caused them to miss a cycle. It is clear now that HP has really thrown a lot of weight behind Palm.

> 87% of the industries profits are made by manufacturers who have their own
> OS -- Apple, RIM. and Nokia. If you don't own your own OS, you have no customer
> loyalty.

I'm not saying that owning your own OS is unimportant. I'm saying that control of a complete app ecosystem is the only reason for wanting to own your own OS. What I am complaining about is that Tomi says on the one hand that owning your own OS is important but on the other hand says that apps are not important. That would seem to be something of a contradiction. That's what I was trying to point out.

BTW - your 87 percent figure is a bit misleading. If I am not mistaken, Apple's profit share in the smartphone market is close to 50 percent while their market share is around 16 percent. If you look at the rest of the market, Nokia and RIM have around 60 percent market share and 70 or so percent of the profit. So - their profit is not significantly greater than their market share. I suspect that RIM generates the lion's share of those extra profits because they still have a good hold on the business market. That, however is fading. In the end owning your own OS does not seem to help unless you are Apple.

- HCE

 Tomi T Ahonen

Hi HCE, Leebase, DS, PekkaT, Bill, KDT

HCE - welcome back :-) About Motorola grade, remember its for full year 2010 so the current plans don't matter really. And last year they reported losses and didn't really take market share. Thus its not a good performance. And Nokia is better, even as they lost market share in the second half (they grew from Q1 to Q2) Nokia did deliver profits, even as razor-thin momentarily - they were profitable all year in handsets. Thus better grade but not good. HP now is doing all the right moves in February 2011. The failing grade was for 2010 when they didn't do anything..

Now on the ecosystem and your own OS (haha, how quaint this discussion seems now after the Nokisoft Microkia debacle..) - I completely see, I completely agree with the view that smartphones are way to future, that the platform is vital to control the future and the app ecosystem is the key. That is why it needs to be built now. It is not that I am 'against' apps or ecosystems. But while that future has to be built - I am also a realist and the truth is, that the money is all in SMS and MMS today, not in apps. That is why I keep reminding my readers - there is very little money in apps today, be careful. I never said 'do not do apps'. I only keep reminding that the fastest way to money today (in 2008, 2009, 2010 and now in 2011 still) is SMS and MMS..

Lee - haha, good comment to HCE, and obviously now its water under the bridge as Nokia announced Microsoft..

DS - good comments, also pretty much 'history' view now with Nokisoft Microkia..

Pekkat - good point. I honestly hadn't thought of that option because I felt RIM wouldn't be warm to it (my gut feeling) but when you posted it, I really liked that angle, yes would make sense because it would be only way I could see access to North American market, and Nokia handsets could be strong partner for RIM to expand its struggling ecosystem. But now we know Nokisoft Microkia and there are some news stories that report that Nokia had approached RIM who told them that RIM was not interested.

Bill - the study that is quoted in the Guardian is only about web use on smartphones, not actual smartphone unit market shares. It is consistent with the ad network measurements and both of them are clearly in conflict with all sales numbers which in turn are consistent with end-user surveys of what they own. I trust my numbers, which are based on unit sales, and checked against end-user surveys. The reason the 'web browsing' stats are so lopsided and over-count Apple and under-count RIM and Nokia for example - are well known in the analyst community.

KDT - thanks

Thank you all for writing

Tomi Ahonen :-)


Acekard 2i

Acekard 2i

Hmmm

Really nicely presented...

I do think your grading of Nokia is harsh..

World leader and 2nd best app store in the world and you give a C-

Maemo- A lot of people are running meego now? iphone 3 to 4 upgrade OK
maemo to meego not? so is it dead?(and you are inferring the device in this) No of course not!

I think you let your perception interfer with your analysis (you were basing it on performance-hard figures).

Anyway, as with most reviews/reviewers over the last year the nokia doom and gloom belief is not supported by
its figures.

Discount D&G Jeans Sale


Thanks for sharing your article. I really enjoyed it. I put a link to my site to here so other people can read it. My readers have about the same interets.

evden eve nakliyat

blog posting is now meaningless. I think this is a disasterous decision for Nokia, and a brillaint win for Microsoft

louboutin shoes

Fantastic document, I must say i watch for fresh news by you.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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