We haven't looked at the Electric Boogaloo: Smartphones Bloodbath year 2, for some time, and last blogs have mostly centered around the Nokia implosion. Lets tour the Bloodbath scene and see what else is happenin' in the wild and wacky world of the phone-so-smart.
So Apple had taught us to expect the new iPhone at the end of June. Now we know that won't happen. Apple will give us the 'iPhone 5' (or iPhone 4G or however it will be called) later in the year. If there was one year you don't want delays in your smartphone launches, it is obviously 2011, because of the bonus Nokia smartphone customer give-away which is worth a million customers per week. So if Apple gets the iPhone 5 out at the end of September, it will have abandoned - above all the sales the new iPhone 5 would steal from competitors under normal times - an additional 'Apple market share level' of about 18% out of the 13 million ex-Nokia customers given away during that period. That's 2.3 million happy iPhone 5 owners that will never be, because during July-September they went and bought an Android most likely..
But what of the iPhone 5? The early gossip had it, that it would come without a SIM card slot. Apple wanted to do a virtual SIM card, which would have allowed Apple to also deploy something called MVNO, and easily for Apple to manipulate which network is used by the same iPhone 5 in whatever country it was used. And potentially circumvent the international roaming fees that the networks usually charge. The networks said they were having none of that, and sent Apple back to the drawing board. Since that attempt, Apple went to the European standardization body ETSI with the proposal of a micro SIM card slot in May, and the Orange network has agreed to co-sponsor that micro SIM slot concept so it can advance to be accepted as a standard. We should know during June what happens at ETSI and you can expect a micro SIM slot in the next iPhone. That is the primary reason why it is now delayed, I believe.
In other iPhone news, first of all, I was the first analyst to call it, Apple has passed Nokia in Q2 and when the final numbers come out, the iPhone has sold more in this quarter than all Nokia branded smartphones, and Apple is now the world's biggest smartphone manufacturer brand (but Android will be the biggest smartphone OS platform obviously). Then the Apple iMessenger was announced last week. It will be a tricky move by Apple, the operators/carriers don't like it, but I think Apple will get away with it. It will most of all ciphon traffic and revenues away from SMS obviously, but the one brand smartphone maker most hurt by iMessenger is of course Blackberry.
The big news over at RIM are the NFC enabled Blackberries that are coming out during the summer, led by the new Blackberry Bold models 9900 and 9930. NFC ie Near Field Communications usually has mobile wallet and mobile money uses as the primary benefits, but from RIM's view, it also serves as a security access tech, so for example Blackberry owners could use the BB as their corporate identity pass.
Samsung's bada OS should be nearing its 10 millionth device sold any day now, and as they are rather eager to celebrate any milestones of the young OS, I would expect them to make a big splash about the number. My math says its any day now.
Meanwhile in Android powered Samsungs, an interesting twist from the South Korean maker. They have launched the most eco-friendly smartphone Samsung Replenish, which they say is made from 34% recycled materials. I would think that kind of marketing will find a strong appeal in especially the younger buyers and in particular probably in the European smartphone market where Samsung is strongly targeting to steal all Nokia customers. The Replenish is also sold for example by Sprint in the USA.
And in the world domination plans of Samsung, the Galaxy 2 has already notched up one million sales in South Korea where it was first sold. It is already available in Europe and will soon be launched in the USA. Oh, and I should mention in passing, that some gossip says Samsung is considering buying Nokia. My gut says the primary reason for that thinking would be defensive. Samsung wants to become number 1 in its markets including all mobile phones (where it is number 2) as well as in smartphones (where it is number 4). If a rival like ZTE of China or LG or South Korea were to buy Nokia, then the big mobile phone market would shift, and the traditional number 1 rival would no longer be the 'blated' old European giant, Nokia, but rather the company after the take-over would be run by a lean mean competitive Asian rival. But if Samsung bought Nokia, it could keep those assets it wants and sell the rest, and easily take over the number 1 ranking in both mobile phones and in smartphones. Can you imagine what 'execution perfection' Samsung would do with 'innovation excellence' Nokia assets? And they'd terminate the Microsoft deal obviously and migrate all low-cost Nokia phones to bada, and suddenly bada would be a serious rival Android which together would be the duopoly of the smartphone OS space. I think the Samsung rumor has some degree of legitimacy. But I also think, that part of Samsung says, we can do it better without the Finnish baggage - they are that confident they are that good haha..
HTC MOVING AWAY FROM WP7
In HTC news, the big news is that they are now shifting their attention away from Microsoft Windows Phone 7 and onto more Android. They didn't give a reason for this (and we have it below in the Microsoft section of course). But this is again more bad news for Microsoft. HTC is the launch customer of Microsoft's smartphones with a 10 year history with the brand. If HTC doesn't believe in WP7, then Microsoft is having some serious troubles. And on the Android side of HTC, an interesting twist on the CDMA side of smartphones, HTC has released the HTC Merge, a world phone that works on both CDMA and GSM networks.
The big play by SE was with the Xperia Play, the 'Playstation' phone that runs on Android. It has not set the world on fire. Is it perhaps a problem with the concept, that gamers will go for the optimized device (Playstation Portable etc) or is it now brand and execution at SonyEricsson. But many of us in the industry - including myself - had expected that when Sony finally release a Playstation compatible smartphone, it would be the next big thing, and would sell like hot cakes, and be the biggest story since the iPhone. Also the management of Xperia Play titles seems to be mired in 1990s thinking, they annouced 20 new titles. Twenty? In an Android-iPhone world of today when we measure apps by the hundreds... of thousands.. of titles. Its not that its a total dud like the Nokia N-Gage but certainly SE is not getting the traction it would have hoped for, with the Xperia Play. Pity. But in other news, Tommi Laine-Ylijoki joins SonyEricsson as Head of Operations. He comes from where? He is part of the Elop-Exodus of top talent fleeing the sinking ship MS Nokia-Titanic where he was VP Materials Management.
The picture at the ole Moto-Moto is quite blurry, nothing that amazing to report. The big news past weeks is that Moto is killing its customization of Motorola Android smartphones called Motoblur. While others emphasize differentiation, Motorola boldly steps in the opposite direction. We wish them well, the poor sods. When will we see a strong Motorola again in this industry? Maybe some dinosaurs deserve to die in peace?
As I have had a long series of Nokia smartphone blogs, I will keep this brief. Nokia is now bleeding market share even more badly than before. The mobile operators/carriers have started a Nokia Symbian smartphones boycott. There are millions of Nokia Symbian phones sitting in warehouses, with the channel refusing to sell them. The Nokia Symbian smartphone factories are on idle, with capacity to make dozens of millions per quarter, and doing nothing. This at a time when rivals complain about such high demand that they cannot meet demand and the industry growing at its record pace. Bad timing, Stephen Elop! Bad timing to incite a reseller revolt.
Nokia decided to pull the plug on Ovi branding on its store and seems to be giving most of the crown jewels of Nokia's app store to Microsoft and all WP7 partners, free of charge (the maps, the carrier-billing relationships etc). Who is Elop serving, honestly, Nokia or Microsoft? And then Elop tried to talk back the Symbian end, by telling the China market that Nokia would now commit to Symbian up to year 2016. Haha, is that because Nokia 'wants' to extend the life of 'burning platform' Symbian or is it because Nokia has so many million unsold Symbian phones in its warehouses, it will take until 2016 to dispose of them?
The ship is sinking and the smartest are jumping off. We just heard last week that Nokia Chief Technology Officer, Richard Green had left (was on extended leave of absense) and why? Because of Elop's strategy switching from MeeGo to Microsoft. Green had been brought in, to build the most carrier-friendly and most developer-friendly, open, ecosystem on the planet, which included the concept of 'migration path' from legacy Symbian to MeeGo with Intel, via tools called Qt and with the separate branding of the Ovi store. As we have seen, Elop has killed all that, and rather wants the least carrier-friendly, least developer-friendly, closed, ecosystem led by Microsoft without Nokia co-ownership. No wonder Green refuses to support that.
This is your Arabic Spring, Stephen Elop, the channel has spoken and like Europe and Nato came to support the Libyan revolution, the Shareholders of Nokia have now joined the chorus by slashing the Nokia share price. Like the 60 Libyan army generals who fled to Italy, your best and brightest are already deserting your ship. You do have to go, Elop, like Libya's Muammar Ghaddafi. And what is worst of all, after Elop torpedoed Nokia's Symbian, and assassinated the evolution path to MeeGo, now Nokia is set on a path to Microsoft Windows Phone 7, where another reseller boycott has been started.. The Microsoft WP7 option is actually even worse for Nokia than sticking with Symbian!
So how's our Android doing? The Android ecosystem is picking up speed and now the whole Nokia-Symbian developer community has fled that sinking ship and joined Android. Android has 450,000 developers and is up to 200,000 apps already. The developers who do both iPhone and Android say its easier and faster to develop for Android, and obviously the Android platform is selling far more than the iPhone and will shortly become the bigger of the two platforms by installed base of devices. Google also celebrated the 100 millionth Android device shipped, a massive milestone. Bear in mind, that as Android is essentially about 2 years of age (vs Apple's iPhone which is four years of age).
The Android army of smartphone makers meanwhile keeps growing at breathtaking speed. Google announced the daily activation rate has passed 400,000 per day, so Android phones now are sold at an annual rate of 146 Million or 36.5 Million per quarter. Thats now twice the size of Apple iPhone. And toss in the news from the above that HTC is switching most of its Microsoft effort into Android, and remembering HTC is the biggest individual manufacturer in Android, and you see the potential for Android is quite enormous.
And in Microsoft Windows Phone 7 news. The life over at Microsoft seemed peachy in February, when the world's biggest handset maker, Nokia, announced it will terminate the world's biggest smartphone OS, Symbian, and end its partnership with Microsoft's long-term rival Intel to develop a next generation OS, MeeGo, and rather switch to Microsoft's severely underperforming OS, Windows Phone. The early projections were suggesting that Microsoft would end up as one of the big 3 smartphone operating systems in the big race (with Android and Apple's iPhone). Ironically, just as recently as 2008, Microsoft HAD been one of the big 3 smartphone operating systems, but that lead was squandered by the meddlings and mismanagement we typically associate with CEO Steve Ballmer.
Now some were projecting that Microsoft would end up with 20% market share, ahead of Apple, behind only Android. If that fantasy was perhaps possible in the early reckoning, it is now utterly impossible. Not only have the retail channel revolted against Nokia Symbian phones, destroying its market dominant position, so that at the end of this year, Nokia's smartphone market share can be discovered with a good microscope, in the mid-single digits; the latest news is that Microsoft's WP7 is on its own reseller boycott.
Why is that? Its Skype, Stupid. Microsoft purchased Skype, perhaps a clever move for Microsoft the corporation, time will tell. But it was the death-nail to Microsoft's ambitions in smartphones. Mark my words: No carrier will subsidise Microsoft WP7 phones that come with Skype. Voice calls account for 70% of mobile operator/carrier revenues, and 40% of their total profits. Skype would instantly destroy all that, like the fixed landline carriers/operators have witnessed. The mobile operators are not that stupid to subsidise their own death. And we see how vital a handset subsidy is, come on, even Microsoft has to know this, because it was a lack of subsidies that killed Microsoft's own phone project the Kin phones - the fastest death of any new phone brand ever, six bloody weeks!
The San Francisco Chronicile and PC Week and other sources are now reporting that the resellers have put all Microsoft based smartphones on boycott. They will switch the customers to Android phones instead. Already Microsoft in desperation has resorted to selling its current stock at the cost of one penny per phone and they are still not moving. That is desperation. Microsoft WP7 went from 'one of the big 3' to 'last of the bunch, worse than even toxic Symbian' in the eyes of the resellers. This is not because of anything in the software or the platform or the apps or the ecosystem. It is because Microsoft bought Skype, the company all mobile operators/carriers hate. Microsoft WP7 died that day. And incidentially, if there was anyone over at Nokia who was hoping that Microsoft will revive a Nokia resurgence, that wish died on the day Microsoft bought Skype. This is why the fast-moving HTC (who has an option, after all, idiot Nokia CEO torpedoed his own options in February, what a silly man to put all his eggs in one untested basket) is already now shifting its emphasis from Microsoft to Android. They see the market reaction and do not want to be victims of a reseller boycott. Nobody is boycotting Android, made by the 'Do No Evil' company also known as Google.
I think that is the big news from most of the big players in the Electric Boogaloo year 2. I will return of course with more news as they emerge and we'll be doing Q2 results when the big companies start to report quarterly results in some weeks.