Brief Notes from Smartphone Bloodbath Battlefield in Year Three: Digital Jamboree

A few quick notes that relate to the smartphone bloodbath years, that are now starting to come to a close. As I've indicated Samsung won the manufacturer wars (rather easily) and Android totally dominates the platform wars. But we have some odds and ends to report, so lets get to those

DELL QUITS SMARTPHONES

So, Dell the big PC maker who saw that the future of personal computing is the smartphone, tried its hand at making and selling Dell branded smartphones. It didn't build the dealer relationships with the carriers. It struggled and never got meaningful market share in smartphones, now it announces it will quit that business. Dell will still continue making tablet PCs which are closer to its traditional businesses of desktop and laptop PCs, also sold through the same channels and methods as traditional PCs.

FIRST RUSSIAN BRAND? YOTA

So while some big names of the smartphone space exit (HP, Ericsson, Dell) or are bought out (Palm, Motorola) we still see newcomers (like Finnish start-up Jolla) and now the first-ever Russian made smartphone brand is set to debut, called Yota. They plan a dual screen smartphone, one screen traditional touch screen for inputs and outputs, but the other, an electronic paper screen that can be used to read ebooks and such publications without major drain to the battery life. And interesting play as a hybrid. Lets see how it fares. First phones expected around Q3 of 2013. Good luck Yota.

And PS, as of the BRICs already China, India and Russia have their own smartphone domestic manufacturers, where is the Brazilian domestic smartphone maker? Cannot be far behind I think.

SCREEN RACES - NOW SIX INCHES

So mine is bigger than yours? After the Samsung Galaxy Note, now Sony is upping the ante and will introduce a massive 6 inch screen smartphone in the Xperia line. It will have full 1080 display resolution ie 1920 x 1080 pixels for supersharp display. It'll be run by a Quad-core CPU and feature a 13mp camera, 32GB of internal storage and - of course - a microSD expansion card slot for more memory storage.

HUAWEI EVEN BIGGER

And if 6 inches is not big enuf for ya, the world's third biggest smartphone maker, Huawei, is rumored to soon release a smartphone with a 6.1 inch screen.. 

HOW MANY NOKIA LUMIA 920 SOLD?

For those still interested in the former smartphone giant called Nokia, who has fallen to 10th in the Top 10 of smartphones (being number 1 only 24 months ago, and at the time, twice as big as its nearest rival) - there is rampant speculation of what the newest Lumia series, now with Windows Phone 8, might be doing in terms of sales. There is typical over-hype by Nokia and Microsoft executives promising ridiculous levels of sales success, but as this is the first quarter the new handsets are out, we don't have data to go by. Until the first tidbit came out a few days ago. An outfit called AdDuplex has mapped out the top 10 most used Windows Phone based smartphones. I have never heard of these guys before and can't say anything about their credibility but the overall numbers do look reasonable for Windows Phone 8 installed base and its distribution.

AdDuplex finds 7 out of the top 10 devices in use today to be made by Nokia, and two by Samsung and one by HTC. The only new Windows Phone 8 based Lumia is Lumia 920, which they find is used by 3% of all Windows Phone users worldwide. That would mean, that in the first month or so of its sales, Lumia 920 has achieved adoption by about 900,000 users globally. If we give it another month for the end of the Quarter, ie Q4 the Christmas Quarter of 2012, then Lumia 920 might be in the hands of about 1.8 million Nokia smartphone users worldwide. Nokia will have sold more than that 'into the channel' (meaning some are in stores waiting to be sold, or en route from factories to warehouses or  warehouses to stores) - then a total Lumia 920 sales level of maybe 2M to 2.2M is reasonable. Toss in some of the Lumia 820 sales, and total Q4 Nokia Lumia Windows Phone 8 based smartphone sales could be 2.5 million. 

If you think that is impressive, just remember, two years ago, when Nokia introduced the latest software version of Symbian, called S^3, it sold 5 million total units in the Christmas Quarter and 4 million of those were of the then-tops flagship phone, the N8. Since then the industry has grown in size by more than 2.5 times, so for the Lumia 920 to do 'reasonable' level of what Nokia brand and sales and distribution is capable of, it should sell 10 milllion units this quarter of Lumia 920 alone and another 2.5 million of the Lumia 820, for a total of 12.5 million new Windows Phone 8 based Lumia smartphones. That is what Elop should be doing even in his sleep, if he was competent as a CEO (not doing the stupid exclusive deals, not doing the idiotic design compromises, not offering top features that Nokia customers want, and pricing the range to be successful, etc etc etc)

Also a Piper Jaffray survey of 800 US consumers finds that the interest in all Windows Phone based smartphones in Microsoft's strongest market, the USA, is down almost a quarter from 8.7% of smartphone buyers interested in it in September to 6.5% now. Remember the USA accounts nowadays for only in in 5 smartphones sold (China is 50% bigger as a market than the USA) and this is Microsoft's backyard. The TREND is again WRONG WAY for Windows Phone. Do not expect Windows Phone miracles if its best market sees an erosion of demand as the new Windows Phone 8 devices appear on the market. This is not a good sign.

I hope we'll see Kantar release new numbers in the next few weeks (their last numbers came out just before Lumia 920 had launched), that might give us a more familiar measure, but this AdDuplex outfit does suggest Lumia 920 has not taken the Windows Phone world by storm (so far) and is consistent with those who expect very poor total Nokia smartphone sales for Q4. Stay tuned, as more data comes in, I'll be reporting it..

BLACKBERRY 10 SHOWS HOPE

There are some good early signs for RIM. The large corporate clients are notoriously reluctant to ditch major IT investments on any temporary fads, ups and downs in smartphone fashions for example. Blackberry had done the hard work to land in over 80% of the largest US corporations and government entities, and that work is paying off. Now there are good signs that some US government agencies are pre-testing the Blackberry 10 OS and seem willing to continue using RIM's platform for their smartphones into 2013. A good example is the Immigration and Customs agency that will pilot BB 10 from January. Don't count Waterloo out of the smartphone races just yet.. 

FIFTY DOLLAR SMARTPHONE

The $50 US dollar smartphone is now a reality in Africa. In Kenya for example Huawei's lowest cost Android smartphones have sold 300,000 units. (And I have to make this point once again on unsubsidised price for American readers. Your iPhone 5 that you 'buy for 179 dollars' in reality costs 650 dollars, you are just paying a forced 24 month intallment payment plan on the remaining 471 dollars that AT&T collects for Apple on your behalf - plus interest, of course. The real cost of the iPhone 5 is 650 dollars. That is what I am talking about here, not the gimmick pretend-price of the up-front fee you are charged on a phone linked ot a contract. I mean unsubsidised price. Same for that 50 dollar Lumia 920 - its real cost that AT&T pays to Nokia is about 750 dollars, you the consumer are paying that full price hidden in your monthly payments of the contract price. I always talk 'real price' here on this blog, the unsubsidised price - and YES, there are true unsubsidised Android based smartphones that cost 50 dollars) 

Yes, Huawei (did I mention, the world's third largest smartphone maker already, by this time next year they will be bigger than Apple as the second biggest smartphone maker behind only Samsung) sells those 50 dollar ultra-cheap Android smartphones in Africa. Yes, in Kenya Huawei's lowest-cost phone has taken about 20% market share of the smartphone market already. Expect this pattern to rapidly spread to Nigeria, Uganda, Zambia, Tanzania etc..

AND MY PHONE BOOK 2012

For those who need more data and stats and facts about the handset industry from dumbphones to smartphones, market shares, operating systems, regional splits, features of the installed base, etc, see my TomiAhonen Phone Book 2012. 

Comments

[Spawn]

@Peter

That is WP7 and WP8 combined and probably the number for all WP resellers together and very likely under 3%. Lumia with WP7 are cheap currently. I would not wonder if Nokia sells more WP7 then WP8 Lumia.

@Kenny

And December is with x-mas the strongest month. If you sell under all that conditions so less units customers must hate you and your products. If grandma and grandpa not buy a cheap WP Lumia for there kids as x-mas present cause they just not know what a Lumia is/contains then two things must have happened:

1. Sells boycotts your products so much that they would never show it a customer if him not explicit asked for a Lumia. So, the Nokia boycott is still active.
2. People who know what a Lumia is spread the message to not sell that to those who do not know what a Lumia is and may otherwise have fallen into for a commercial spot saying how great that Lumia is.

Maybe even a combination if both where the sells-personal warns potential Lumia buyers active. "A Lumia cause you saw in a commercial how great it is? Let me tell you, its not. Here this SG3 is and it is about the same price of a Lumia 920..."

Does anybody have an update on Elop's view how there burning platform is not burning any longer?

[Tester]

>> Does anybody have an update on Elop's view how there burning platform is not burning any longer?

Well, it's not burning any longer. To sustain a fire there must be some fuel. But Nokia is out of fuel. Right now they are sitting in a huge smoldering pile of ash.

[CN]

Guys,

Are you creating a little bit too positive expectations around 4Q volumes of Lumia? I'm somewhat surprised that all over fairly high numbers are presented even though Nokia themselves said already in October that 4Q is not going to look good in terms of WP8 ramp up.

Looks to me that Nokia was already two months ago aware of something we are not. Call it shortage of components, challenges in production and logistics (something in which Nokia used to be quite good), late arrival of OS or whatever, but something is there. And in my opinion it's a huge waste of time to

a. speculate it here
b. expect some dramatically positive volumes

[Mudassir]

Also price for Lumia 920 without contract here in US on AT&T is $450(plus tax). Just a small correction needed.

[eduardo]

I have read that WP 9 will have a standard NT kernel. I suppose that means it won't run WP 8 programs. Of course, that assumes that Microsoft doesn't simply give up after WP 8.

[Kenny]

I would like to ask Tomi or anyone else who can make a reasoned estimate: How many smartphones does Nokia need to sell per quarter to keep its head above water? (i.e. break even instead of mega losses).

By smartphones of course it means Lumia. Symbian sales have crashed to almost zero and MeeGo sales have been forcibly stopped.

I think we will see Nokia's demise in the answer. We will probably see that Nokia can realistically sell only 10% of what they need to survive.

[Winter]

And here a small note from Nigeria [Pop. 162,470,737 - 2011]:
When cost and data consumption are real worries

When Will Nigeria Become An Android Market?
http://mobility.com.ng/when-will-nigeria-become-an-android-market/

This time next year, we might be looking at sub N10,000 [$64] Android smartphones from the nameless and faceless Chinese makers. When that happens, the fight would be over.

...

I have observed that in the last few weeks of reviewing the Lumia 610 and 920 here, as well as when I announced that the Galaxy note II was heading this way, a regular question that people asked is about data consumption. Clearly, the costs of internet usage on mobiles is a critical factor. As much as some people would love to switch to a different platform, the attraction of “no-worry” internet usage for N1,500 per month is too much to pass for a huge number of people.

[Spawn]

@CN

> Looks to me that Nokia was already two months ago aware of something we are not

Like how disappointing the WP8 user-experience is and how buggy the first version of Windows on ARM still is after all and like how much restence they face among carriers, partners and customers.

> Call it shortage of components, challenges in production and logistics (something in which Nokia used to be quite good)

Nokia used to be good in lot of thinks including selling there products to customers. That Elop's effects had effects on Nokia is without question.

He streamlined the products, they not sell any longer.
He streamlined the production process, closing factories, outsourcing and firing lots of people, the production process suffered up to not being able to produce enough products any longer to not sell them.

But then maybe those problems are wanted? They keeper the number of units available short to keep the small demand alive. That marches to his exclusive carrier idea. Its so stupid that it could be an Elop strategy.

After THE Lop defined the Elop Effect it may time to define a second phrase: The Elop strategy. To something that let's you look good for a short time and later becomes a problem for your company forever.

@Kenny

> How many smartphones does Nokia need to sell per quarter to keep its head above water?

Nokia Zero, Elop infinite. Since every Lumia is sold with lose I assume as lesser Lumia sold as better for Nokia's quarter results.

@Winter

> the costs of internet usage on mobiles is a critical factor

Except that with Blackberry you at forced to buy data-plans. This plays a role whenever you not need an internet plan yourself causr , for example, the company you work for has free internet or you have WiFi available at eg home with a fixed not-Blackberry data-plan. When those apply Blackberry becomes more expnsive compared to Android/iPhone.

I saw that changing in many countries. First everybody needs an own mobile internet provider and then internet becomes available on mass on most places for more or less free. Nigeria is slow on that transition cause usual public services fail cause of corruption. But its changing there too. I think its hardly an argument pro BlackBerry but becomes over time an argument contra. There data-plans are to expensive if you not Ned constant mobile internet or only need it very less.

[Winter]

@Spawn
I chose that quote about data plans because Windows Phone seems to be a truly horrible data-gobler, at least WP7 was. See these quotes:

WP7
http://forums.wpcentral.com/windows-phone-7/188689-internet-data-usage.html

"honestly 250mb is not enough. unless you turn off ALL your location+live tiles+notification = basically turn off every thing that makes WP cool."

"I'm 19 days in and have used 464MB. I have WiFi access almost everywhere. Probably would use less if I didn't live in the city (bored at stoplights)."

"I use my phone a LOT and I rarely hit 300mb in any given month. WiFi at work, WiFi at home. That accounts for the majority of my phone data usage right there and none of it goes on my data plan."

Not to speak of WP8 seeing:

High Phantom Data Usage
http://forums.wpcentral.com/windows-phone-8/205622-high-phantom-data-usage.html

[cycnus]

After the lukewarm release in China, apple try to pre-heat the iphone 5 in Indonesia.

During the launch period, Apple break their price policy and introduce the iphone 5 16GB for US$50 + US$70/month (12 month).

http://www.xl.co.id/iphone

[Winter]

@cyncus
But, but, Forbes tells us that:

"Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China,” according to Tim Cook

http://www.forbes.com/sites/panosmourdoukoutas/2012/12/16/apples-iphone-5-has-a-big-opening-weekend-in-china/

So, this must be yet another iPhone launch that breaks all previous records.

The alternative would be that Forbes/Tim Cook are spinning numbers. That would be inconceivable.

[Lasko]

@Peter

Do you know the difference between Windows Phone, Windows Phone 8, Lumia 920, Sales and Installation Base?

[vladkr]

An information I missed two months ago : Nokia cuts staff even in China

http://www.globaltimes.cn/content/738264.shtml

What to conclude ?

[KenAdams]

@ Winter Yes, of course Forbes and Tim Cook are lying (I am being sarcastic of course).

I never understood this blind hatred of anything Apple especially by people who have never owned an Apple product.

Seriously, who cares. All these companies are out there for our buck, some of them deliver and some of them don't. It is our choice as consumers to pick what we want for our money, but it does not mean that we need to bash other products.

http://www.thestreet.com/story/11794136/1/investor-alert-wall-street-analysts-screwing-you-on-apple.html

[Tester]

@Ken Adams:

Yeah, whatever. I'd rather trust the analysts on future outlook than someone with an apparent emotional attachment to Apple.

Some people don't seem to realize that stock price does not reflect current market situation but a projection into the future. And some people seem to seriously think that Apple may not deliver the astronomic projections of the past, hence the price drop.

I don't see the stock being plunged into an abyss, this seems more like a value correction to me.

[P910i - the original smartphone... ;-)]

"SCREEN RACES - NOW SIX INCHES" - another funny fact: Microsoft thinks 720 pixel wide is enough for everyone.

http://www.bloomberg.com/news/2012-12-17/htc-said-to-halt-larger-windows-smartphone-on-display-resolution.html

Guess we won't be seeing (m)any oversized WP8 smartphones soon (but don't tell anybody 'cause it's SECRET)

[KenAdams]

@ Tester, thank you for your kind and emotional response. However, I do disagree with you, not only about Apple but the state of so called analysts in general. Weren't those same analysts who drummed up the stocks in 2007 only to result in the biggest financial crisis of the past few decades?
I am in tired of Wall Street bulls who raise oil prices on speculations alone, we all feel the result every time we go to a gas pump. Same goes for everything else.
Personally I do not care about Apple stock whatsoever, I do not own a single one. However, I wanted to point out that the comments on this particular blog post have degenerated into Apple vs Android bashing. On one side is Baron95 (who was previously accused of being an MS troll -wtf?!?) and on the other is you and couple of other people - both parties deeply entrenched in their own position. I will leave you to it.

As far as my 'emotional' attachment to Apple is concerned, I have to concur with you, yes, I am to a certain degree emotionally attached to my MacBook Pro and the iPad, as I am attached to my cell phone (which at the moment happens to be HTC Titan - in service at the moment), my TV set, my car, and all other things that I have paid for. Since I paid for these things I expect them to provide value for the money, enjoyable use, good customer service when things fail, etc. I want a good return for my money, doesn't everybody else too?
It is an 'emotional' attachment to a particular product, not a brand. If it works - fine, if it does not, I will gladly change it (just like we all change cell carriers if they don't treat us right or provide cost-effective service).

P.S. As soon as my Titan gets out of service it is going on the second hand market. Too many problems. And, yes I am considering Galaxy 3 - but that does not mean I am getting rid of iPad in favor of Galaxy note tab. If it works, why fix it, or change it. Right?

[Tester]

I am in no way emotional about Apple.

I just look what happens in the market and there's no denying that Apple's position in the business is no longer the same as it was one or two years ago.

Last year the iPhone 4S was the undisputed king of the hill, on technical terms by far the best phone around.

But that's no longer the case.

Today Apple no longer has the largest screen nor the largest resolution.

Aside from 'it's an iPhone' it's just one of many phones on the high end of the market, in many countries not even the most popular.

And this is a major change from the time the Apple stock rose to its former highs.
Say what you want, but since the market changed the future outlook of Apple's market value needed some adjustment.

[Spawn]

@Winter

> Windows Phone seems to be a truly horrible data-gobler

Now why I do not really wonder about that? Its so much inline with all the basic problems like multiple unexpected reboots per day Windows Phone has. Microsoft should have done like RIM and delay the lunch. The product is just not ready.

> Customer response in China has been incredible

Whenever a company says that, may it be Microsoft, Nokia or Apple, we know that it translates to: Customer response in China has been "mixed" and later: It will be all better soon with the next generation, more marketing Dollar and teaching of sales personal! Oh, see there, a flying elephant! *runs*

@vladkr

> An information I missed two months ago : Nokia cuts staff even in China
> What to conclude ?

Focus more on the US! Abort everything else!

@P910i

> http://www.bloomberg.com/news/2012-12-17/htc-said-to-halt-larger-windows-smartphone-on-display-resolution.html

Thanks for that link that gives us one running gag after another. My favorites are:

"Microsoft said it’s selling four times as many Windows phones as this time a year earlier"

Maybe because last year Nokia did not had to pay licenses but now they have too? Would be the only logical explanation. Now this makes currently ONLY 4x of what all the other WP7 resellers sold last year? If that's the case then Nokia lost HUGE compared to there 2% Lumia market share from last year. And Microsoft names that right now! Man, Nokia is so screwed :-(

"Microsoft also limits ... screen size ... CPU"

Not new but always a good joke how the software defines the hardware.

"HTC concluded that ... Windows Phone 8 phone wouldn’t be competitive"

Welcome HTC. Took you really long to figure that out. But better later then Nokia!

[vladkr]

@Spawn: The only subject I focus on the US about, is... shopping; USD is lower than CAD... for the rest, the US aren't a superpower any more.

[newbie reader]

>>> Today Apple no longer has the largest screen nor the largest resolution. >>>

Just to share my web research on subject.

Companies, that announced 5" 1080p devices:

HTC, Sony, Sharp, Oppo, Huawei, ZTE, Samsung, LG, and also could be Panasonic.

It includes 6 of top 10 smartphone vendors, and all Android vendors but Lenovo. Nothing like this on Apple-RIM-Nokia street.

Screen manifacturers:

HTC, Sony - JapanDisplay
Sharp - in-house
LG, Samsung - in-house
Oppo, Huawei, ZTE - ?
Panasonic - in-house(?)

PS.
HTC Droid DNA is 5", 1080p, and its width is just SGS3-sized, so I consider it a phone, not phablet.

See good review of HTC DNA vs. Sharp, SGS3 and iPhone here
http://translate.google.ru/translate?sl=ru&tl=en&js=n&prev=_t&hl=ru&ie=UTF-8&eotf=1&u=http%3A%2F%2Fwww.mobile-review.com%2Freview%2Fhtc-butterfly.shtml&act=url

[newbie reader]

update:

1. Lenovo also plans 1080p.

2. Right now there are two 1080p screens in avaliable 1080p phones: JDI and Sharp. /imho/ Sharp screen looks better, see screenshots in previous post.

[Baron95]

@Tester "I just look what happens in the market and there's no denying that Apple's position in the business is no longer the same as it was one or two years ago."

Of course not. Apple's profits are 8 times larger than they were two years ago. Their market share (of all mobile phones) is 4 times larger. Their mobile phones are sold in twice as many countries by three times as many operators. They now have 75% of the industry's profits vs 40% 2 years ago.

Yep - on that we can agree. They are NOT in the same position as they were two years ago.

[John Waclawsky]

To counter the total BS from Baron95, our Microsoft astroturfer. Apple profits are declining. Read some reality

http://www.theregister.co.uk/2012/11/20/open_and_shut/

And of course because of the same reasons mentioned in the article you can see that: NO ONE WANTS A WINDOWS PHONE OR TABLET

[John Waclawsky]

Same for the Apple iPad, you could see this coming for months

http://www.businessinsider.com/apple-tablet-profits-2012-9

It seems Microsoft wants to embrace Apple's strategy just as its finishing its run and heading onto decline. But Microsoft will find NO ONE WANTS A WINDOWS PHONE OR TABLET