Its that time again in the Bloodbath Year 2: Electric Boogaloo. We get to measure the performance levels of the major players. First, note that since we have new data on both Android and bada, I have calculated adjustments on previous quarterly data. Note that from now on I will be referring to those newer more accurate numbers which also means minor changes to Android and bada previous market shares in this blog. But lets start with the smartphone handset makers and as is my custom, lets do them in order of size.
(This blog has now been updated on 22 November to reflect the analysis I promised per each branded smartphone and each smartphone OS)
For those who just want to see the table without the analysis, here is the big picture and top 10 smartphone manufacturer brands for Q3 or the quarter from July to September:
1 (2) Samsung 25.1 Million 21% (17%)
2 (1) Apple 17.1 Million 15% (19%)
3 (3) Nokia 16.8 Million 14% (16%)
4 (5) HTC 13.2 Million 11% (11%)
5 (4) RIM 10.6 Million 9% (12%)
6 (7) SonyEricsson 7.6 Million 7% ( 5%)
7 (6) LG 5.9 Million 5% ( 5%)
8 (8) Motorola 4.8 Million 4% ( 4%)
9 (9) Huawei 4.4 Million 4% ( 4%)
10 (10) ZTE 3.1 Million 3% ( 3%)
(others 9.1 Million)
TOTAL 117.7 Million
So that is big picture. Now lets go and rate the smartphone makers for their Q3
SAMSUNG grew massively while making a profit: A+
While the industry grew 9% from Q2, Samsung grew a massive 41%. After Apple took the title from Nokia as the world's biggest smartphone maker in Q2, now Samsung has snatched it from Apple. The King is Dead: Long Live the King! As we heard that the bada sales have been well below expectation - Samsung had a target of selling 10 million bada phones in the first half of 2011 - and they have only sold 8 million cumulatively since launch a year ago - the vast majority of Samsung's growth is obviously Android and the Galaxy range of smartphones. And even as Samsung corporation had disappointing results overall - the bright spot was its handset unit powered by the smartphones. The Samsung brand is currently on every one out of every five smartphones sold worldwide and Samsung has now achieved roughly the same market share in smartphones as it has in 'dumbphones'. The real question is of course the Christmas season, when Apple rolls out the iPhone 4S. Can Sammy hold onto its lead for two quarters in a row?
APPLE declined unit sales but made huge profits: B-
This Q3 was a bad quarter for Apple's iPhone. And we must bear in mind, even in its bad quarter, Apple earned the lion's share of all profits earned by all smartphone makers - so 'bad' is obviously a relative term. Any rival (except perhaps Samsung) would gladly take Apple's 'bad' quarter over what they managed..
But yes, in previous years the summer quarter has had the newest iPhone model in full sales. This year the new iPhone model was delayed until October, into Q4. So while of course Apple loyalists were once again standing in line and once again Apple reported massive record-breaking new iPhone 4S sales - this time those sales didn't come for Q3 sales numbers. That is the main reason why the iPhone unit sales numbers are down from Q2. Nonetheless, this is the Bloodbath and some of those sales were lost - most likely to Samsung. Apple iPhone sales were down 16% from Q2.
But as I've written many times on this blog, Apple's sales cycle because of only one new iPhone model released annually is peculiar, and one should consider Apple more on annual sales than measuring one quarter against the next. Always heading to Christmas, Apple has great sales and in the new year they then tend to flatten out or even decline before the next new iPhone model. That Apple continued to make massive profits tells us that the iPhone is as desirable as ever. Hence yes, I give a B- as Apple should have been able to deliver a new model in late June as per usual (as I have written here on this blog, the primary reason why the iPhone 4S was delayed so much - was due to Apple's attempt to create a handset without a SIM card - and the carriers/operators revolted and forced Apple to make a last-minute redesign.
The race gets really interesting now for Christmas 2011 between Apple and Samsung. Apple has expanded its carriers adding Verizon and Sprint in the USA, KDDI in Japan etc. The iPhone 4S broke Apple's sales record for first weekend sales. Certainly Apple will break its own quarterly unit sales record for the iPhone which waws 20.3 Million in Q2. But how much more can Apple do? Can it catch Samsung? It will be an exciting time.
NOKIA - lost market share and made big losses: D
Nokia actual smartphone unit sales were flat or technically grew by 1% from Q2 ie from 16.7 Million to 16.8 Million. But this miniscule growth was in a market that grew by 9% so Nokia was falling behind the industry growth rate by 8%. And its market share of course therefore shrunk from 16% to 14%. What is far worse, obviously is that whereas Nokia smartphones unit was a profit engine for Nokia up to Q1 of this year, after CEO Stephen Elop announced a shift from Symbian and MeeGo to Microsoft based smartphones, the sales collapsed. Nokia resorted to massive price cuts for Q3 to try to hold onto some market share, which meant that the smartphone unit was destined to report a big loss. Now it is Nokia's cheap 'dumbphones' that are the only unit capable of generating profits for the world's biggest handset maker.
Things could be worse. This is not a 'failing' grade as Nokia did technically grow sales even as losing market share but a dismal performance all the same, as Nokia reported another quarterly loss. The bizarre CEO decision to not launch the hottest smartphone this side of an iPhone 4S (the Nokia N9 with MeeGo) in any of Nokia's major markets, in fact mostly releasing it in only very distant and/or small markets like New Zealand and Kazakhstan - where the N9 would be a high-priced and high-profit phone. Further lunacy from Espoo is that the sister phone to the N9, the QWERTY-slider variant, the N950 on the same highly praised MeeGo operating system, while the phone is shipping (it is being manufactured and distributed) - is not sold anywhere! Nokia is only giving tiny numbers of the N950 to some developers.
Q4 sees Nokia's launch of the first Windows Phone based smartphones, that Nokia has branded their Lumia line (reversing CEO Stephen Elop's earlier decision to name all Nokia phones only by numbers; Nokia also introduced the Asha line of phones at the low cost dumbphones space). I visited the UK and noticed the launch marketing had mixed reviews; for example the Orange network store out of its two window displays, one featurede prominently the Nokia Lumia 800 (with a promotion that you get a free Xbox 360 gaming console if you buy the Lumia 800). But rival network T-Mobile in its two-window display featured only smartphones from rival makers, no Nokia/Lumia promotion in its window. And the independent phone store, Carphone Warehouse, in its two-window display had the iPhone 4S on one, and the Nokia Lumia 800 on the other. Where Nokia had hoped that all carriers/operators would eagerly promote the Lumia, that wish has clearly not come true but also, with Microsoft deep pockets for marketing - gimmicks like giving free XBox consoles should help boost early sales. We'll see how the launch of Microsoft on Nokia succeeded, when the numbers come out from Nokia in January. In any case, even if the Lumia 800 was a roaring success, as it is only released in a few countries before Christmas, and its the only smartphone running Windows Phone from Nokia, this will not propel Nokia back to compete with Apple and Samsung for the world lead.
HTC - Holds market share and made a profit: B-
HTC did a good job but not great. It saw several of the big rivals either stumble in Q3 (Apple, RIM) or fail to capitalize on that (Nokia) and there was a big opportunity for HTC to grab some market share, which it did not manage. HTC did grow sales nicely at 8% from Q2 but obviously this is slightly less than the industry grew, so again, HTC is only holding steady. But HTC did report a good profit. Lets see how the company performs for the Christmas quarter.
RIM - Lost market share massively but did report a profit: C-
Blackberry is in a tailspin. Because it had very strong profit margins and with rather high-priced phones sold to enterprise/corporate customers, RIM has a kind of safety-net for its profits - if a company has specified they use the Blackberry platform and have a budget for their phones, Blackberry's profits are not squeezed as badly in that sector. But its performance in the consumer sector is of course subject to normal rules, where it is seeing competition squeezing it hard. Meanwhile the business customers are gradually allowing more other phones, in particular iPhones, to be used so the business sector market share is slipping. And worse, while Blackberry did do a good shift from business oriented phones to also consumer-used phones, the problem with the youth market is that they are addicted to Blackberry Instant Messenger, not necessarily the phones themselves. So even a four-year-old Blackberry works fine. The youth will then replace their 'other' phone - with a new iPhone, Samsung Galaxy, HTC etc - and hold onto the old Blackberry for heavy messaging. Thus the replacement cycle for Blackberry is far slower than that for the industry overall, and this further hurts Blackberry sales. We see actual unit sales crashing 20% from just three months prior; and market share falling from 12% to 9% (lost one quarter of its market in only 3 months! That is disasterous). The only reason why this is not a failing performance is that RIM still generates a profit.
SONY ERICSSON - grew market share but dipped into losses again: C+
SonyEricsson has been on somewhat of a come-back. They plunged into deep loss-making after the iPhone appeared and stole their thunder but recent quarters they've clawed back to about neutral position and even slight profits. The design team is quite capable of making highly desirable phones and SonyEricsson leads the legacy phone makers in transitioning from dumbphones to smartphones, as they now report that 80% of SonyEricsson phone handsets sold in Q3 were smartphones. This company will likely become the first of the legacy 'full portfolio' handset makers to complete the corporate shift from dumbphones to smartphones, something Nokia was well on its path to achieve first, until Elop torpedoed Nokia's strategy. Note that in Q3 SE grew smartphone unit sales by 43% from Q2, which is even more than Samsung!
The big news over in SE land is that this company will in future be called Sony. The parents had their final split, Sony bought out Ericsson and SonyEricsson will have lived for about 10 years as a brand, but now Ericsson is finally completely out of the handset business, and Sony becomes the sole parent of this company. I do believe it may be great news as Sony seems to have had a recent 'rediscovery' of the mobile phone (and smartphone) opportunity - no doubt that too was caused by the launch of the iPhone. Sony had been badly burned by Apple's entry into the portable music player business, and must have felt, that with the full weight of Sony's assets, the smartphone unit could do better battle against the iPhone now. Give Sony as owners a bit more than a year from now, but the new completely Sony-fied smartphones should be out for Christmas 2012 and they could be true iPhone-killers haha.. Meanwhile, SonyEricsson or whatever we should call you now - get back to making profits rather than growing market share with losses. Its healthier that way.
LG - held market share, made profit: B-
LG is plugging along, now happily in the Android space from its Microsoft-Misadventure and grew unit sales by 10% which wasn't enough to pick up a market share point, so they are still stuck at 5% market share. LG big news was that the management admitted they will not hit the announced targets this year for total smartphone sales. Apparently the 3D displays and 3D cameras were not as sexy and hot as many pundits expected.
GOOGLE IE MOTOROLA - held market share, posted a loss: C-
Then we have Google in smartphone sales ie the Motorola handsets unit. This much-maligned former giant is a badly injured unit. It is now quite the orphan with Google as its 'saviour' - because Google cannot let its Motorola unit grow strongly, for fear of alienating other Android makers - Google did buy Moto primarily for the patents portfolio. Now I am predicting that the handset-maker part of Motorola is so 'toxic' for Google's Android partners, that G will soon sell Motorola on for some other global giant. Who was just in the news wanting to enter the phones space? Amazon? Or could be some PC maker struggling to find smartphone traction like Dell or Acer for example. Could even be Intel haha, after the struggles it had with the Nokia partnership around MeeGo.
HUAWEI AND ZTE - held market share and made profits - B
We haven't had exact breakdowns of either Huawei or ZTE smartphone sales for Q3 and their sales numbers even in my estimate here are just that, estimates. I'm pretty confident they have increased sales roughly in line with the industry (if it was significantly more, we'd hear about it) and no signs say they are suddenly failing, both being Android producers. Their overall scale is now so big, that the Japanese rivals around positions 11th and 12th biggest makers (Sharp and Fujitsu) are not big enough to rival the Chinese.
Then we have the operating systems. First, for those who may be here for the first time - remember, I am only counting smartphones, so where for example the iOS operating system also is used on iPad Touch and iPod devices, those are not counted as smartphones. Similarly Android tablets are not included in the Android smartphone numbers here, etc. Bear in mind that I have 'downgraded both Android and bada from the previous numbers, so you may find especially that my Android and bada numbers may be significantly different from numbers reported by some other analysts recently. But I trust my math, so here goes:
1. (1.) Android (Google) 56.4 Million 48% (40%)
2. (3.) Symbian (Nokia) 18.1 Million 15% (17%)
3. (2.) iOS (Apple) 17.1 Million 15% (19%)
4. (4.) Blackberry OS 10.7 Million 9% (12%)
5. (5.) bada (Samsung) 2.6 Million 2% ( 2%)
6. (7.) Windows Phone 7 (Microsoft) 1.3 Million 1% ( 1%)
7. (6.) Windows Mobile (Microsoft) 0.4 Million 0% ( 1%)
(others 11.1 Million)
TOTAL 117.7 Million
Note the others includes all other smartphone operating systems including Palm/WebOS, Maemo, MeeGo, LiMo (Linux Mobile) and a multitude of unlicenced variants of Android. No other OS reaches 1%.
ANDROID - Grew market share strongly: A
Android is the run-away train. Some analysts are already calling Android as having passed the mid-point and have more than 50% market share for Q3. I was leaning towards that analysis too, until we got the official number from Google of total activations at 190 million units, and I did my correction to Google total shipments so far. By my analysis now, in Q3, Android is still a bit below the mid-level, but did grow by 30% just from Q2 and are obviously dominating the OS race. I peg their Q3 market share at 48% but they will likely pass the 50% level easily by Q4 of this year.
SYMBIAN - Dropped market share: C-
Whereas Nokia itself slightly grew smartphone unit sales, the other remaining Symbian partners are only left in Japan and after NTT DoCoMo announced in late February to discontinue Symbian because of Stephen Elop's announcement of Microsoft - and tellingly, NTT DoCoMo did not pick Microsoft but rather went Android - now most DoCoMo handset makers in Japan do Android phones and Symbian is vanishing from sight. Still, for this quarter one more time, Symbian is technically the second bestselling OS on the planet. Note that even 9 months after Nokia CEO killed Symbian and switched form it to Microsoft Windows Phone, this 'dead man walking' OS called Symbian is outselling that 'wonderful' new Microsoft OS by ... 14 to 1 !!! Even if we add the obsolete Windows Mobile OS (which Nokia is not adopting) then Symbian alone outsells both Microsoft smartphone OS's by.. 11 to 1 !! Still, while the industry grew 9%, Symbian sales fell 4% so Symbian effective decline was 13% compared to the rivals in the industry.
iOS - Dropped market share strongly: B-
Apple's iPhone dropped market share more than Symbian but gets a better grade? Why is that? Because this is the seasonal dip in Apple sales, before the new model is released. But why the B-, because Apple should have managed this far better (see above about futile attempt to launch iPhone 5 without SIM card slot). Expect strong rebound for iPhone in Christmas Quarter.
BLACKBERRY - Dropped market share severely: D
Blackberry as written in the above. The OS had over 20% market share just two years ago, and is now down to single digits.
BADA - increased market share strongly: A-
While the gossip and guesstimates of bada performance had yielded a very wide range of guesses of what bada quarterly sales and market shares were, we now do have the cumulative numbers and can count a reasonably good guess on the quarterly splits. But the clear evidence is that bada is the run-away fifth biggest OS, miles ahead of Windows Phone 7 for example (which is about as old but supported by a large army of handset makers, while bada only powers the low-cost end of Samsung's smartphones). bada is still a big-player, globally only at 2% of the market, but they do power more than one in ten Samsung smartphones sold today.
WINDOWS PHONE - declined market share: C-
So here is the pride and joy of Microsoft, why they decided to abandon Windows Mobile, an OS they had developed for a decade and which at its peak held 12% market share. Now how is the 'magnificent' Windows Phone 7 doing a year after launch? Well, it is following the devastation path of its predecessor, Windows Mobile. Both OS platforms lost actual unit sales, and saw big drops in market share from Q2. As recently as Q1, when Nokia's partnership was announced, Windows Phone 7 had achieved a 2% market share position. Half of that is now gone - where you'd expect the opposite, a strong growth pattern after Nokia was announced? - and Windows Phone is now at 1%. They lost 7% actual unit sales ie with the industry growing 9%, the effective loss compared to the industry for Microsoft's Phone OS was 16% in just one quarter. Disasterous indeed. The first Lumia 800 phone by Nokia cannot come soon enough for Microsoft.
WINDOWS MOBILE - declined market share: C-
Some analysts are grouping both Microsoft OS's together - that is unfortunate and definitely it is inappropriate, as they are incompatible. But this OS is truly disappearing before our eyes, I count WinMo sales now so low that the market share is rounded off to zero percent (ie under one half of one percent) and I think from Q4, I will start to put WinMo into the 'other' category where the other tiny operating systems are like Palm WebOS, MeeGo, Maemo, LiMo etc..
Thats the analysis of Q3 in the smartphones bloodbath. More news and analysis coming on this blog as we await Q4 results and report on the full year.
PS for those who need more info about the handsets industry, please take a look at my TomiAhonen Phone Book for all the stats and facts that you may want..