I mostly do not comment on forecasts, as forecasts are guesses and your guess is often as good as mine. Except when there is a moronic forecast. Like IDC is peddling now its completely biased, clearly self-serving and baseless 'forecast' that by year 2016 smartphones running Windows Phone will outsell the iPhone. This is so ludicrous it warrants a 'Stats Police' blog posting. Shame on you IDC, shame on you! This is unworthy of you, no matter how much money Microsoft and Nokia have paid you. Because no facts in the handset space, none whatsoever, provide any basis for your 'prediction'. It is not even plausible. Besides, isn't this the same IDC which promised that Windows Phone would sell 30 million units in 2011 (the actual total was a little bit below that - 5.3 million - that was one of the worst forecasts in smartphone history)
What happened? This is what IDC has just published yesterday (see original announcement at IDC website - I will not provide link as I am totally against this kind of tactic of posting outlandish claims to try to drive traffic - do not buy any IDC reports or studies, they are unprofessional).
IDC projection of 2012 market shares in smartphone OS and forecast for 2012:
OS . . . . . . . 2012 . . . . . . . 2016
Android . . . . 61.0% . . . . . . 52.9%
iPhone . . . . 20.5% . . . . . . 19.0%
Windows . . . . 5.2% . . . . . . 19.2%
Blackberry . . . 6.0% . . . . . . . 5.9%
Symbian . . . . 4.9% . . . . . . . 0.0%
Others . . . . . . 2.4% . . . . . . . 3.0%
Total . . . . . 100.0% . . . . . 100.0%
First, before we even consider those, note that this is an 'update' to a bizarre and unrealistic projection IDC made last year in March, when IDC promised Windows smartphones would pass the iPhone (sound familiar? So this is a strategy by IDC to get headlines). They promised that by year 2015 Android would only have 39.5% market share, Windows would have 20.9% - yes by year 2015, not 19.2% as they now say for 2016 - and Apple would fall to 15.7% by 2015. They also said Blackberry would have 14.9% in year 2015. And their 'other' category had 8.8% but was not specified what all was in that.
LIES AND THE LYING BASTARDS WHO SAY THOSE LIES
So. If IDC issues an update to their forecast, and still claims that Windows will pass the iPhone. I say if IDC are the least bit professional, they will explain why their forecast has altered so dramatically in a period of one year. Android gained 13 market share points (!) from last year, dramatic growth, yet IDC boldly claims in its headline that "Android expected to reach its peak this year" - why would that be, if IDC itself has upgraded its forecast from 39% in 2015 to 53% in 2016 ??? IDC would at least owe us an explanation why their Android forecast is so much bigger now, and more so, why inspite of this huge jump, is this a peak year for Android somehow? I don't see any evidence of that happening, quite the contrary. Major Android providers like HTC, LG and Sony have shifted from Windows Phone to more Android. There is no evidence of a reduction in Android production from any news source or any Android manufacturer, but much news of added interest in Android. Android is likely to grow, not shrink. If IDC wants to make this hugely counter-intuitive claim, they should explain why. And as IDC itself has upgraded its Android forecast so dramatically, they should explain why inspite of this huge jump, is Android growth now stalling. Why IDC, why? You are a disgrace!
LIAR LIAR PANTS ON FIRE
Then the Apple forecast. How convenient. So IDC upgrades its Apple forecast from the promised 15.7% to 19.0% - but somehow this upgrade is 'just' below the projected Windows Phone market share of 19.2% so that IDC can still claim Windows will pass the iPhone. How convenient!
Why is IDC upgrading the iPhone market share so dramatically? 3.3 market share points above 15.7 percent is a jump of more than one fifth, mathematically 3.3 increase above 15.7 is a jump of 21%. That is a big change. Why not 22%? Because of course, 22% jump would make it impossible for Windows to supposedly pass the iPhone. Why did IDC feel forced to upgrade its forecast of iPhone from 15.7% to 19%? Because of what Apple is doing. When IDC issued its previous forecast, Apple's market share the previous year was 16%. The IDC forecast into year 2015 was reasonable to say 15.7%. Now we've seen how Apple did in year 2011. Its market share was 19%. And IDC was forced to upgrade that forecast. Why is IDC not explaining why this big jump?
LIES AND THE ABSENSE OF TRUTH
And then the big point that forced me to comment. Where is bada! Yes. Samsung's smartphone OS. If IDC is going to take money from Microsoft and Nokia to sell its bogus forecasts, then at least they should admit that bada has been outselling all Windows Phone smartphones every quarter since both launched! Yes. Last quarter, Q1, all Windows Phone based smarthpones sold 2.3 million units (plus another 0.4 million of the older Windows Mobile based smartphones). Samsung's bada sold 3.8 million units - bada outsells all Windows Phone makers and their total line of smartphones, including Nokia's new Lumia series in total, by more than 65%. For last year, 2011, when Windows Phone sold 5.3 Million units in total, globally, bada sold 9.1 million. Windows Phone had 1%, bada had 2% of the market. Where is bada? This year we see Samsung releasing Tizen based smartphones and the Tizen partnership includes several major handset makers some of which have committed to releasing Tizen phones also this year. Where is Tizen. Where is the Samsung ecosystem - which today is far bigger than Windows Phone in total! They are exactly as old in age. Where is bada (and Tizen). IDC, you are not telling the whole truth. You are deliberately deceiving your readers by ignoring a major, rapidly growing player. Shame on you IDC!
LIES, DAMN LIES AND STATISTICS
And most of all, the whopper Windows Phone projection. IDC must have been paid to get that story out, why else would they risk their reputation with this whopper of a fantasy. It is against EVERY historical precedent in this industry. What did IDC promise us in this forecast? That by year 2016 Windows Phone will reach 19.2% market share and be bigger than the iPhone. Absolute rubbish! But first, note, that IDC has become significantly less optimistic about Windows Phone in one year. They pushed their forecast back by one year (last year they promised over 20% by year 2015). By linear growth, that means year 2015 had been cut by 3.5%. Where IDC last year promised 20% for Windows Phone in 2015, if they now say 19% in year 2016, that means their Windows Phone projection for year 2015 is down to 15.5%. That is yes, a drop of one quarter! What happened IDC. Please tell us why you are so pessimistic about Windows Phone that your forecast has been cut by a fourth! You owe us the explanation! You issued the press release! Tell us why you are so pessimistic about Windows Phone now.
But the growth rate? Windows Phone had 1% in year 2011, the first full year it was sold. Compare it to Apple. The first full year that the iPhone was sold (calendar year 2008) Apple sold 13.5 million units and took 11% of the smartphone market globally. Windows Phone in its first full year of sales, only managed 5.3 million units, and as the market has grown a lot, only did 1% market share. Hold that thought.
Now IDC claims that Windows Phone will take 19.2% market share by year 2016. How many smartphones is that? On a very conservative estimate, the world will sell about 1.7 Billion smartphones in the year 2016( it will be more than that, close to 2 Billion in reality). Out of this low-ball estimate, at 1.7 Billion, Windows Phone would need to sell 326.4 Million smartphones in year 2016. Is that realistic? The iPhone has now been selling for four years. By the end of this year, it will have sold 5 years. And the iPhone will sell about 145-150 million iPhones this year (I agree with IDC's iPhone market share projection for this year). Apple went from 13.5 million to 145 million in five years. A growth of nearly 11-fold in a five year period. It is an Annual Growth Rate sustaining on average of 81% annual growth rate (nearly doubling every year) over the 5 year period. This is the world record in smartphone launch, in history.
Now IDC promises that Windows Phone will start from half the level Apple had, and then growth to more than twice the level where Apple will be? Rather than grow from 13.5 million to 145 million, IDC dares to suggest that Windows Phone will go from 5.3 million to.. 326.4 million in the same amount of time!!!! Not a growth of 11x in size - IDC thinks Microsoft Windows Phone (with the loss-making Nokia) can grow .. 61X in size !!! That means nearly tripling in size every year, growing by 2.8 times every year, year on year. This is utterly impossible. IDC are suggesting that Microsoft, Windows and Nokia can somehow grow at twice the rate than the best-ever launch of smartphones ever in history. Somehow Nokia and Microsoft can be twice as desirable as the iPhone? What planet are the IDC forecasters living on? What solar system? What galaxy? Not in this planet earth, not in our lifetimes. No way. No f*cking way will Windows Phone grow from 5.3 million units sold in one year to 326.4 million in five years. No way will Windows Phone grow from 1% to 19.2% in fivec years. No way will Nokia and Windows grow to be bigger than the iPhone in five years. This is one of the most ridiculous forecasts ever published. Shame on you IDC, this is a disgrace!
AND THE FACTS
Windows Phone is not growing manufacturers. The Microsoft Windows partnership is bleeding partners. Yes, their handset manufacturer base is shrinking! Not mentioned in the IDC press release, is it? Since Windows had 12% market share of smartphones, we've seen Motorola quit Windows and Dell quit Windows. Now we hear LG, Sony, HTC all reducing or quitting their Windows Phone based production because the retail channel and the consumers and the carriers don't want Windows Phone. They are all shifting to .. Android. Meanwhile we see Samsung shifting from Windows Phone to bada (and Tizen) as does HTC.
So there is a retail boycott against Microsoft based smartphones. It started when Microsoft bought Skype one year ago. We have seen at least three separate US based news organizations verify that boycott, in three separate parts of the country in the past year. Microsoft's Windows Phone boss was demoted, Ballmer has said Windows Phone sales were 'below expectation' in September, one year after Windows Phone had launched. You think Nokia makes it better? Think again. This is what Stephen Elop said of Windows Phone based Lumia sales so far, Nokia Lumia sales, running Windows Phone are "below expectations".
Stephen Elop admitted to the Nokia shareholders that there is a retail channel problem covering all Nokia sales. This has been an ongoing problem ever since Elop's idiotic Burning Platforms memo, that caused the Elop Effect (like the Osborne Effect). Elop even admitted to the Nokia shareholders meeting that yes, his Burning Platforms memo did hurt Nokia smartphone sales. That was early May. What since? We hear that Nokia's retail partner in Russia - with 43 400 stores selling exclusively Nokia - has switched to selling Samsung. And Nokia's Africa distributor has quit selling Nokia phones, now sells Samsung. If you thought Nokia had a retail problem before - and if IDC thinks Windows resurgence will be in the Emerging World markets - those problems were bad Elop saying Windows Phone selling at 'below expectations' even now in May - and those problems are getting far worse with the distributor channel.
What of Windows Phone? Elop admitted to the Nokia shareholder conference that not only do carriers dislike Windows Phone because Microsoft bought Skype - but its not just Nokia Lumia smartphones, it damages all Windows Phone manufacturers. Elop admitted some carriers have decided not to sell any Nokia Lumia smarpthones because of the Microsoft-Skype issue. So absolutely, concretely, we heard it from the Horse's Mouth, it is 100% true that the success Nokia has had in the past, is not happening in Windows Phone because of the Skype connection. And this was on Windows Phone 7.x based smarthpones that did not even have Skype. The cheapest Nokia Lumia has so little memory, it can't even handle Skype as an installed app. But Nokia faces carrier repercussions because of Skype. How much worse will that get with Windows 8 which has Skype integrated. Remember, Nokia CEO Elop told Nokia shareholders that even after a year of negotiations that Microsoft (and Nokia) had had with carriers, they did not achieve even one breakthrough among the 600 carriers, to take a Skype based solution from Microsoft. A year of total failure.
So IDC? The Nokia CEO admits there is a retail problem specific to Nokia (that was caused by Nokia's CEO himself) and he admits there is global revolt against Windows Phone, where the carriers are so united, Microsoft has not been able to get even one carrier to jump into their solution. And Nokia CEO admits this problem is with all Windows Phone makers, and that there are carriers who completely rejected Windows Phone based smartphones because of this. We also heard from Dell, LG, Sony, HTC and other Windows Phone manufacturers, that the carriers do not want Windows Phone based smartphones, so they are of course shifting away, to Android. Where is IDC explaining this? Why, if only Nokia and only Microsoft Windows are under these retaliatory measures by the retail channel and carriers/operators - why would then Windows Phone manage to sell at double the rate of the most successful smartphone ever?
AND THEIR HISTORY? TOTALLY OFF
Why does this sound so familiar? IDC has made outrageous forecasts about Windows Phone before. Not just last year. Lets go to 2010. In June of 2010, just before Windows Phone launched, and based on Windows Mobile market share - long before there was any Nokia contribution to Windows Phone mind you - IDC, yes this same IDC, promised, sorry, forecasted, 30 million Windows Phone sales in year 2011. 30 Million. 30 Million would have been 6% market share in 2011. No, Windows Phone did not do that. Not even close. Not even distantly similar. Windows Phone missed this target by... 82%. The error was SIX-FOLD !!! This was one of the most mistaken forecasts in the history of smartphones - and that was in a one-year time-frame. Next year's forecast. Can you trust this company to make forecasts for you - on anything? And now they peddle yet another outrageous, utterly unbelievable, truly fantastic, out-of-this-world forecast for the same Windows Phone?
If IDC only makes the same level of error for Windows Phone now as they did in 2010, and the 2016 market share is promised to be 19.2% and thus about 324 million smartphone sales - and we adjust it down to the typical IDC error rate, then yes, if we adjust those ridiculous numbers down by 82% yes, then at 3.5% market share and about 59 million smartphone sales by year 2016 for Windows Phone - that is realistic. Of course that 3.5% is slightly less than the 4% I am now projecting for Windows Phone for this year 2012, so while yes, its better than the 1% they had last year, its not exactly the 'Third Ecosystem' haha, far from it.
WHO IS ACCURATE AND WHO IS CLUELESS
So yes, maybe it is difficult to forecast market shares in the volatile smartphone market space? Or maybe not. I predicted on February 15 of 2011 the Q4 market shares of Nokia and Microsoft, where my forecast had their combined market share at between 15% and 17% by Q4. What was it? 15% combined. If you know what you are doing, this is not an impossible industry to forecast in the short term. Or go look for example how Horace Dediu forecasted Nokia fall at Asymco blog, after the Microsoft partnership was announced. He said Nokia's market share in Q4 of 2011 - including early Windows Phone smartphones, would fall to about 14% (my visual estimate from his diagram). The actual Nokia market share was 13%. This is not rocket science. But the IDC projections about Windows Phone are utterly completely beyond anything reasonable. They were in 2010, they were again in 2011 and they are again, now in 2012. IDC is simply peddling fairy-tales that have been paid for by Microsoft to boost Microsoft's Windows story and IDC is the willing prostitute that sells its reputation for the highest bidder. Shame on you IDC (and readers, do NOT buy any IDC reports on anything until they explain their faulty forecasts and why they persist with these implausible numbers).
THIS IS BLATANT HEADLINE-BAITING BY IDC
This is unprofessional behavior by IDC. They are making unrealistic projections. They have changed their past forecast and not issued any statement why the changes. They make a totally unrealistic claim that Android is peaking now, when Android is gaining sales and many Windows Phone partners are shifting away from Windows to Android. They make a massive omission of ignoring Samsung's bada and Tizen - where bada has outsold all Windows Phone smartphones ever quarter since both launched. That is totally unprofessional by IDC. They furthermore make a forecast of an utterly unrealistic - truly fantastic - projection, where Windows Phone, that has underperformed Apple in the comparable period by half - would now somehow accelerate and over the next 5 years would outgrow the growth rate of the iPhone by more than twice the rate. Totally, completely, utterly unrealistic under the best of circumstances.
That is before we take into considation the facts from the field. That Ballmer himself says Windows Phone is selling "below expectation" after a year. That Elop himself, after Nokia had sold Windows Phone based Lumia for half a year, says Lumia series is selling "below expectations". This after Elop admits his memo destroyed Nokia customer, retail channel and carrier confidence to the degree - he admits it hurt Nokia smartphone sales. This after Elop admits retail channel is not supporting Nokia brand. This after Elop admits all Windows Phone handsets are rejected by carriers, not because they are badly designed (which they are, by the way) but explicitly because carriers hate Skype and now that Microsoft bought Skype, carriers are punishing all Windows Phone makers. Look at the world's largest carrier/operator, China Mobile, which dominates the world's largest smartphone market, China. China Mobile was offered the Lumia series, said no, and insisted Nokia provide a Symbian based smartphone instead. This is why Nokia's top Windows Phone sales guy quit. And Elop says now in May, six months after Lumia launched, that Nokia Windows Phone based Lumia sales are "below expectations". And what did Nokia promise for the future? Elop said at the Q1 results that "we have faced greater than expected competitive challenges." He added about Lumia sales "The actual sales results have been mixed." He further explained about Lumia problems "establishing momentum in certain markets including the UK has been more challenging."
How badly is Nokia doing now in Q2 compared to Q1? We see in the official Nokia Outlook printed in its quarterly results, to give guidance to Nokia shareholders: "Nokia expects its Devices and Services operating margin to be similar or below the first quarter 2012 level of negative 3%." The "Devices and Services" unit is the handset unit for Nokia where smartphones belong. So Nokia's official position of looking at this current April-to-June Quarter ie Q2, is that Nokia's handset profitability is "similar or below". Nokia expects its devices to be so poorly received now in Q2, that Nokia's profitability - already generating a loss mind you - will be worse. This is not a hot product taking the world by storm, outselling the iPhone by 2 to 1..
Remember the bullshit we saw coming from Microsoft about somehow Windows Phone outselling the iPhone in China. Total lies. Absolutely categorically false. Even various local China experts were totally of opposite view. This is the same Lies and More Lies that Microsoft is known for, and Nokia is now adopting. So they have corrupted IDC. This is the most ridiculous forecast of the smartphone market I have seen this year. Do not buy anything from IDC until they issue corrections and explanation in public about those blatant falsehoods and omissions and baseless expectations! That Windows Phone, which is genuinely struggling, would somehow outperform the strongest smartphone launch of all time, the iPhone, in a similar 5 year period. Ridiculous! Absolutely will not happen. Shame on you IDC. Correct this rubbish.
If you want to see what the real world looks like in smartphones, see what I wrote for example one day ago on this blog: Smartphone Market for full year 2012.
One plug. If you are in the market for a forecast, and want the most reliable numbers, why not consider the best forecast, by the consistently most accurate forecaster of the smartphone market? Take a look at my TomiAhonen Mobile Forecast 2012-2015 which has two chapters about handsets and smartphones, including several interesting scenarios. Even if you don't like my base case forecast for smartphones, there is the realistic upscale scenario for Windows 8 smartphones, and the Blackberry comeback scenario, and a Samsung ecosystems scenario, and even a Nokia separation from Windows and Nokia-Meltemi Linux based comeback OS scenario. Take a look at TomiAhonen Mobile Forecast 2012-2015.