As we headed into 2010, I predicted the smartphone wars would heat up and I labeled the year one of Bloodbath. And we had both carnage and intensified competition.
Among the early casualties in 2010, we saw the end of Palm (bought by HP) and Microsoft's Kin. And Google killed its Nexus One but changed its mind, and came back again with more Nexus by end of year. We saw the launches of bada from Samsung and Windows Phone from Microsoft, to replace its older Windows Mobile OS. 2010 saw the launch of Nokia's Maemo on the N900 as yet another new smartphone OS and also its end, when Maemo merged with Intel's Moblin to form MeeGo.
For 2011, I expected more and called it the Year 2, Electric Boogaloo of the Smartphones Bloodbath. We saw even more deaths and ever more intense competition. Gone now are Motorola, HP and Ericsson (who sold their share to Sony). And Nokia killed the world's bestselling smartphone OS, Symbian, while it was the leader. During 2011 the global lead in smartphone operating systems occurred (Android took over from Symbian), and the title for the individual largest smartphone manufacturer of the world saw the year with three different leaders (Nokia, Apple, Samsung) in three quarters. Nokia launched the N9 on MeeGo which was then promptly terminated as an OS and as Samsung replaced Nokia with the OS platform, the MeeGo project will now become Tizen. For Intel its the third separate smartphone OS in three years. Microsoft felt frustrated that Windows Mobile was still outselling Windows Phone, and ended its public mentions of Windows Mobile (which still sells in modest numbers). HP ended development of Palm WebOS turning it into an open source project. Meanwhile we heard that Nokia was not done building new operating systems, their next will be called Meltemi, designed for low-cost smartphones.
But some of the early fights are now over, and we can start to see the clear first and second tiers of the smartphone handset makers as well as the operating systems. Lets look into 2012 to see what kind of factors we should look for in the upcoming year. I am writing a series of blog postings as the form book for 2012, when we look at Year 3 of the Bloodbath. And we start with the biggest, Samsung. I think 2012 for Samsung will see several very close races for the leadership position by several metrics, so for Samsung it will be the year of the Leadwatch.
SAMSUNG THE LEADER
South Korean Samsung is currently the world's biggest smartphone handset maker. Globally world's second largest mobile phone handset maker and the biggest provider of Android smartphones, Samsung has two of its own OS's - bada is over a year old with about 2% market share of new sales, targeting low-cost smartphones, and Tizen being developed with Intel as an OS for premium-priced smartphones for 2012 release. Samsung is the only brand of mobile phones that has a number 1 or number 2 position on every one of the six inhabited continents but its market share of smartphones is still below that of its market share in dumbphones. Samsung seems to be on the rising side of most
trends of the industry.
Samsung played most of its cards just about perfectly in 2011. For 2012 we will have several intriguing storylines to follow. First, in January we get the Q4 results and it will be neck-and-neck between the iPhone and Samsung on who won the title for the fourth quarter smartphone sales. The race is also tantalizingly close for the full-year 2011 final numbers - between Apple and Samsung on who took the world's biggest smartphone maker crown for the full year 2011 (for 2012 it will not be close, Samsung will tower over Apple by this time next year). Nokia is now out of that race and relegated to third place for the year and falling more in 2012.
Samsung will intrigue us all year with mesmerizing battles both on smartphones (against Apple) and very likely also against Nokia for the title of world's biggest overall mobile phone handset maker. If Sammy takes that title from Nokia, perhaps the most unlikely scenario is what we will end up seeing - that Samsung will not be the biggest dumbphone maker - leaving that title to Nokia. To understand how implausible that seemed just a year ago, in the fourth quarter numbers last year when Samsung was closing in on Nokia's overall numbers that was done on the side of dumbphones - in smartphones Nokia outsold Samsung smartphones by 4 to 1 as recently as December of 2010. Now Nokia smartphone sales have collapsed and Samsung has been firing on all cylinders to capture the lion's share of those abandoned Nokia sales.
But that is the macro competitive picture. What to look for within Samsung in 2012? The three details to observe are Android, bada and Tizen. Samsung is currently the overwhelmingly largest Android manufacturer, grown far bigger than number 2 in Android: HTC. Meanwhile Samsung promised 10 million cumulative bada sales in its first year and only did about 6 million. Samsung shook up its bada organization but has not recently given public statements of its intentions with bada. The global average price for smarpthones continues to decline, and bada is well poised to capture the mass market side of smartphones in emerging markets from China and India to Egypt and Nigeria. Samsung will also be monitoring the statements that came from Sony(Ericsson) and Motorola both which boast high percentages of migrating dumbphones to smartphones - Sony will complete its migration to all smartphones by 2012. For Samsung to do that profitably and with a long-term view, they will need to bring bada to full status. We may well see Samsung numbers shift so, that bada becomes the biggest OS on Samsung smartphones and if that happens, bada will definitely become the third ecosystem during 2012 (not Microsoft Windows Phone with Nokia).
Then there is the new parent to MeeGo. After Nokia jilted Intel and announced rudely that they would not make any more MeeGo devices even if the N9 is a huge hit product, Intel went and found a new partner. Samsung stepped in and to show how they play hardball, on the very day that N9 sales started, Intel and Samsung announced the end of MeeGo and the launch of its replacement smartphone operating system, Tizen. Tizen phones should start to appear during 2012 and those are likely to be high-end smartphones similarly to how the N9 and N950 were high-end MeeGo devices. Tizen would be the logical high end OS of preference for Samsung if and when it wishes to move away from building Google's Android army. Expect Tizen to be built with plenty of family ecosystem thinking with bada and Samsung's app store, much like how Nokia's MeeGo strategy was supposed to work with Symbian and Ovi.
SOON BIGGEST OVERALL
On the handset side, Samsung has been pushing the envelope already with the world's first pico projector on a smartphone, the largest display on any semi-pocketable device - the Samsung Galaxy Note with its massive 5 inch screen, and just now in December, Samsung announced the world's first smartphones by any major global brand, with dual SIM slots. This is well in line with Samsung's past, the company was also the first to do the dual SIM phones on the dumbphones side among major global brands. Expect Samsung to take more of a leadership role and I would not be surprised if Sammy brings some 'superphone' spec devices at price points well above that of the iPhone. Just look at how the Galaxy series compares to the iPhone, and how much the Galaxy Note could be seen as a big brother rival to the iPod Touch. Don't you get the feeling that Samsung is giving us what we hoped would be in the next Apple product?
Expect Samsung to show us a direction on its strategic vision for mobile phones towards the middle or end of the year. Up to now, and into the first half of 2012, we will see Samsung continuing to execute faithfully their diabolical plan for world domination. I have said before that the Samsung strategy in mobile is just like they have had in other industries - they study the market leader meticulously - then they copy every aspect of the market leader's strategy in every minute detail, without bothering to question whether that strategy was wise or not, simply because everything the market leader did, had given it the market leadership position. And Samsung feels their South Korean heritage and incredibly rapid implementation speed will allow them to execute that same strategy inherently better than the market leader. This means, Samsung will inevitably catch up and pass the market leader.
In mobile we saw Samsung leapfrog three rivals during the past decade from fifth place to second biggest mobile phone maker. In smartphones they have already taken first place, and if current trends hold, Samsung will become the world's biggest overall mobile phone maker by the spring or summer of 2012, and most importantly, compared to their global rival Nokia, it will be Samsung who has a bigger share of the more lucrative smartphone segment - where the future lies, while Nokia will hold onto the bigger share of the older featurephone segment which reflects the past. Exactly like how Nokia rapidly took Motorola's leadership in the late 1990s when Nokia's handsets had the lead in digital phones while Motorola led in older analog phones.
I wrote when Nokia had its moment of madness in February with the Elop Effect, in my long analysis of how will the Nokia dividend be distributed among the smartphone maker rivals - that it most of all depended on execution - which of the Nokia smartphone rivals was most capable of ramping up and pushing smartphones at every price point, on every carrier, in every country. We see now that it was obviously Samsung who executed that tactical move to perfection, while others - most notably RIM - who were equally poised to capitalize, utterly failed to take advantage of the Nokia dividend (after all, for essentially all Nokia Symbian E-Series users, the obvious rival handset was the Blackberry. If Nokia E-Series was about a quarter of Nokia smartphone sales, why is RIM not today as big as Apple and Samsung?)
Now Samsung is poised to take the world leadership title in the truly big battle of this era, that of all mobile phone handsets. And that will bring a new era for Samsung. No longer able to copy the rival, Samsung will need to chart a strategic course for world domination. If Nokia could do it for more than a decade, surely Samsung must do so for the next ten years or so. And we should hear early signs of that new strategy towards the second half of this year.
Expect synergies here between the various units that Samsung is involved in from TVs to PCs and tablets to mobile, but also lessons from Samsung's South Korean domestic market, such as the digitally connected automobile and mobile money. Intel's Moblin-MeeGo-Tizen project had collected many electronics and automobile makers to join that ecosystem and it will give Samsung opportunity to differentiate - and to bring such benefits again back to Samsung flat screen TVs, tablet PCs etc. And if Apple's TV initiatives turn out winners, expect Samsung to have a rival up on the market soon as well.
So its the 'Leadwatch' for Samsung. Who is the global market share leader for Q4, for all of 2011, for Q1, for Q2, Q3 and Q4. By the end of 2012, it will be clear that for the full year, the global smartphone leader will be Samsung.
Then we watch in Q1, Q2, Q3 who is the world's biggest total handset maker. Samsung will be catching up to, and passing Nokia. Then there is bada. How will it fare against Microsoft's Windows Phone as Nokia ramps up Lumia sales. Then we have Android. How will Samsung do among the Android army against HTC and a surging LG and the others.
All of these will also yield local versions of the contest. Will Samsung continue to be the bestselling mobile phone handset in the USA? How big will its lead be in Europe. Will it lead in China? Can Samsung take Nokia's lead in India. How long will the market share in dumbphones continue to be bigger for Samsung than that in smartphones. And how rapidly will Samsung ramp up the transition of its dumbphones to the bada OS.
2012 will be a great year for those of us following the smartphones races, and Samsung is proving a remarkable competitor that is capitalizing on its opportunities.
Next up in this series: Apple, Nokia, RIM etc..
NOTE - For those posting comments - I love discussion on this blog. But because I will be publishing a series of articles about individual companies, I will be limiting all comments in these articles to related to that one company. So do not post comments about Apple or Nokia or Microsoft or RIM here in this thread. This discussion will be limited to Samsung. All comments that attempt to discuss non-Samsung aspects of the smarpthones races, will be deleted. You may, of course discuss Samsung in the context of whatever rival you want, but make sure you frame your comment to be about Samsung.