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February 06, 2014

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Listed below are links to weblogs that reference Sony Q4 Results in Smartphone Wars - We now have all rankings for Top 10 for 2013 - and some tidbits:

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Elop

So you have inside informaion about the date for Microsoft Nokia date.

Interested to know

I hope Sony can get and maintain critical mass in the smartphone world. I mostly like their newer Xperia Z phone and tablet lines. But I only buy unsubsidized phones and Sony's are still too expensive for me off contract.

I also hope Lenovo can keep the Moto X & G lines up to their current quality and low price in the future.

Carl

I emailed you last week, as directed, after making payment for Phone Book 2012. No response. I emailed this week asking when I might receive this only to have email bounced back indicating your inbox is full. What's up??

Tomi T Ahonen

Elop - ??? it has been public info since they announced it that as long as both parties have final approval, the handover date is end of March and from Apirl 1 those handset business units will be owned by Microsoft. What am I not getting in 'inside information' ?

Interested - yeah me too. Sony is doing well in its handset division and the new CEO is to Sony's mobile re-direction what Eric Schmidt was at Google essentially going to every meeting yelling 'mobile mobile mobile' (except in Japan nobody yells haha). So they are well on the way but they are having severe profitability problems in other businesses and laying off 5,000 people and they also cut down their earlier foreast of smartphone sales for this year 2014. Nonetheless, if they don't fall down to Nokia territory, but can continue to compete in that mid-field in ranks 3 to 8 - then they should have good chances to remain large enough to innovate and compete. And this is a hits business. Sony is one of the most likely surprise players who may launch the 'next Razr' or 'next iPhone' any day. I am very curious what becomes of that Xperia Z2 they have on that Chinese website and if that near borderless glass is true - the screen size would be fabulous. I have the Xperia Z1 and love it and its large screen (5 inch and full HD defintion, its superb). Now that I look at the edges gosh, it could go really seriously into phablet space if they squeeze the edges off and make it display essentially edge to edge. Gosh. Me wants!

Also I have a soft spot for Lenovo. I used several IBM laptops in my corporate past at Nokia and Elisa and other things being equal, of the Chinese players Lenovo is a bit kind of my fave there. Sony - partly due to Ericsson and early good experiences there - is to me the next best thing nearest to what Nokia top phones used to be. Samsung does the full portfolio but the Galaxies are too plasticky. The Sony flagships have always had a good degree of luxury and class to them. Again this black Xperia Z1 is STUNNING not to mention the James-Bondesque optional zoom lens accessory QX-10...

Tomi Ahonen :-)

Elop

Mr T Ahonen all regulator need to aprove the deal. As far as I know there is no date for this. But you have a date. 1 april its good guess nothing more.

Baron95

Tomi,

On your top 10 list, once the Microsoft acquisition of Nokia closes, only two companies control their ecosystem - Apple and Microsoft/Nokia.

All the others are peddling dumb screen devices that funnel traffic to Google/Android/Play/etc.

If you believe that cloud services and ecosystems are important, then you have to understand that Apple and Microsoft stand apart from the others.

I'd like to see your comments on that. What compelling differentiation can the other 8 possibly offer, since they compete on HW and Marketing only?

Baron95

Tomi,

Also, looking at your top 10 list, 9 of those companies have one thing in common. Nine of them offer large screen 5" class or larger phones. One - Apple - does not.

I believe that Apple has lost significant premium sales due to the lack of 4.7"+ phone. And it is a near certainty that this will be addressed in Q3/2014.

I'd like to hear your comments on that. I have always been critical of your focus on HW specs (HFC, SD cards, physical keyboard), but I believe that screen-size is one area where it truly does make a difference.

Would a large screen iPhone deflate Samsung et all shares of the top end ($500+)?

Tomi T Ahonen

Baron 95 - be careful what you wish for haha... that is coming in the blog I mentioned. Hopefully no on Friday or then over weekend or early next week. Have been thinking about screen size (among other things...). hold on.

Elop - thanks

Baron - on the ecosystem, I totally agree it is huge differentiator and the players who have their own ecosystem are only ones in control of their destinies. The other 8 are in some way slaves to the whims of Google in this case. On differentiation there is lots they can do but nowhere near as much as on the software. Cameras, NFC, Dual SIM, waterproof - the list is massive but the more the first mover handset maker breaks with the expectation of yet another i-Phon-a-Clone the more they take a risk that phone will flop. Takes guts to try it and of the Top 10 probably only Samsung and Sony would dare, maybe LG. But the very small Chinese players have nothing to lose so innovation may bubble up out of Shenzhen. PS Baron did you expect some other answer? I thought you and I were in total agreement on the immense power of controlling our own ecosystem and how userful it would be (*cough* Elop *cough*)

PS Elop haha, I wasn't referring to you, I meant you namesake the dude who hoped to become King of Microsoft

Tomi Ahonen :-)

Satya Nutela

@Tomi,

When nokia fall out of number 10, you still list it just for the record for us. I was wondering where is BB now? Number 19? 20? 30? How bad is their situation?

Tomi T Ahonen

Satya - BB is right now still at 11th but will very likely fall to 12th this quarter ie Q1 as Chinese Xiaomi benefits from the Chinese gift-giving season of their New Year.

Tomi Ahonen :-)

John Fischer

Motorola, ericsson, nokia... Sony, Compaq, ibm.. Handset or pc, it is the same. Huge market share won by huge price wars left all dead but microsoft in the PC arena and now the new winners will be Apple in total control of an echo system approaching the size microsoft once had and google.... It's the software and echosystem, control one you win, control both you are king.

Handset makers are a passing fad.....there will be blood and in the end they all loose when margins vanish, then what ?

Baron95

@Tomi
"PS Baron did you expect some other answer? I thought you and I were in total agreement on the immense power of controlling our own ecosystem and how userful it would be"

I'm not sure what happened to the long post responding to this - but I'll summarize below.

Actually Tomi, I'd like to hear the contrarian view to test my assumptions, plus I want to know if anyone other than Apple can capitalize on the ecosystem advantage.

Lets look at the data points we have:

1 - Nokia (Symbian, Maemo), RIM (BBOS, BB10), Palm (PalmOS, WebOS) - Were all leading smartphone vendors (top 3), all controlled their ecosystems and all crashed and burned. So, controlling your ecosystem didn't save them.

2 - Samsung - Was widely successful in the product lines where it outsourced the ecosystem to Google (and to a tiny extent to Microsoft), and failed in the product lines where they had their ecosystem (Bada, Tizen).

3 - Apple - With their ecosystem has raked in profits completely out of proportion to their unit market share.

So, I'm not sure we can have a definite conclusion here. It could be that Apple is unique, and only it can extract value from the ecosystem. Or it can be that everyone needs ecosystems to be super profitable, but only Apple has done it right now.

I'd like to hear your opinions on that - maybe with some data points.

LeeBase

Before Apple, RIM controlled it's own ecosystem. It was a very "Apple like" scenario. RIM invented it's own marketspace - highly secure email/instant messaging on the go. It was great until it wasn't.

I think most companies would prefer to be Apple if not Microsoft. You have to invent your space and build your ecosystem in order to do it.

Once a Microsoft has entered the fray, and licensed out (even Google doesn't give all of Android away) a platform....it's really hard to THEN come onto the scene with an "it's mine, all mine" platform. Had Windows 95 came out first...and the Mac followed 2 years later, then the Mac would have never amounted to anything.

We have Apple who invents it's own space (the computer in your hand, touch enabled, phone, iPod, web communicator). Invent and/or borrowed all the right pieces and put them together in the right way....

Nobody else is competitive and they are disrupted. Companies scramble for their "iPhone killer" and along comes Google at the right time with the "just about good enough" Android and makes it available to all comers.

If you didn't beat Google to the market with your "mine, it's all mine" alternative to Apple you were toast. Now, nobody CAN do such a thing until the next "it's really quite different" disruptive technology comes along.

Mao Nixon

@Tomi

"on the ecosystem, I totally agree it is huge differentiator and the players who have their own ecosystem are only ones in control of their destinies."

One of Google biggest innovation in Android is the way android is developed and maintaining the group of vast interest. Google took one of the GREATEST finnish engineer, Linus Torvalds, idea and make android more open & free* than the competitor offering. At that time symbian foundation is lean towards nokia benefit. Other manufacture simply can't compete with Nokia. In OHA (Open Handset Alliance) google make sure while the big guy can DIFFERENTIATE, but the small guy won't got leave behind. The key point here (other than Android is also good) is to be fair. If it's fair, it gain support, it gain momentum.

I think Google disrupt the phone industry so badly with the idea of OHA that it would be very hard for other OS to challenge android. and I think you (Mr. Ahonnen), need to adjust the way you think for this era. It is not "...own ecosystem are only ones in control...", it's a new era of collaborating while competing, competing while collaborating.

*The playstore fee is just US$ 0.75. Google wasn't really collecting the fee and counting the handset too. Google just accept what manufacture said the total of handset, and accept the payment. and the US$ 0.75 is way cheaper than the competitor (Microsoft).

Baron95

@Mao - Google is doing the same bait and switch that Nokia did. Google is more and more making sure that you can't release a modern Android device with out all the google hooks and services in.

So it is really impossible for any of the Android OEMs to derive any meaningful financial or differentiation benefit.

While there is a lot of fast evolution on HW, distribution, marketing, etc, you can have a few dominant players - e.g. Samsung - who can figure out a way to get decent margins. But markets mature. In time, an Android Phone or Tablet will be no different than a Microsoft Intel PC.

Only Apple can charge $8,000 for a Mac Pro, $2,000 for an iMac, $3,000 for a a MacBookPro. All the other guys are fighting in the $300-$1,200.

People have been saying for years - Microsoft PCs are getting good enough, and Apple will be doomed (not being able to charge premium). Instead, the Apple premium increases, while its market share slightly increases, and it is PCs who get ever cheaper dooming their vendors.

sve

The ecosystem arguments are interesting, but there's more at work. BBY and NOK had ecosystems, but very few of their customers actually ever used them (except maybe ringtones, some texting). iOS was the first one to actually be used, soon followed by Android. Looking forward, there's plenty of opportunity for a competitive ecosystem to arise (WP even could). The reason is that our mobile experience isn't so fabulously wonderful and solving of all our problems. The iPhone succeeded because it was a standout by being good in a field of incumbent phones that was absolutely horrible. Having said that, much still sucks today. Mobile commerce, mobile content, friction-free roaming, control over the built environment, etc, are still awful. Anyone making a big step there will move to the fore right away. All the pronouncements saying it's game over except for Android, iOS, and maybe a little WP ignore the still dismal state of our mobile experience, and how a major improvement there would allow a new huge player to emerge.

RottenApple

@Baron95:

"Only Apple can charge $8,000 for a Mac Pro, $2,000 for an iMac, $3,000 for a a MacBookPro. All the other guys are fighting in the $300-$1,200."


Don't be fooled by this. Ultra-expensive Windows PCs exist, but they are either made by smaller businesses who custom build or self-assembled.
The only reason Apple can sell in this segment is because nobody else can use their operating system.
With Windows nobody has to buy from such a rip-off.

And now the big difference to mobile: Mobile phones CANNOT BE CUSTOM BUILT OR SELF-ASSEMBLED.
So the entire comparison is faulty by default.

Leebase

@RottenApple what has manufacturing to do with the question? F course ANY PC company can make a premium PC. How many can SELL them!? That's the difference. I buy Hyundai cars, does that mean BMW's are rip offs?

When I bought my daughter a graduation present I went with the Mac Air. I looked at PC solutions running windows. The Ultra Portables with SSDs that compete with the Air are MORE expensive. I could have bought a $500 laptop that weighed twice as much and has to be constanty plugged in. I went with the Air giving her a truly mobile computer she could carry around easily and the battery lasts all day.

On top of that there is an Apple store close by for support and free classes.

Apple cultivates customers willing to pay for the better experience. The typical PC customer looks for the cheapest option...the way I do with my car. That's why the Mac is a good computer business to have and Sony is leaving the business.

eduardo m

Great article on Microsoft's mobile problem.

http://stratechery.com/2014/microsofts-mobile-muddle/

RottenApple

@Leebase:

"what has manufacturing to do with the question? F course ANY PC company can make a premium PC. How many can SELL them!?"

None!
For the simple reason that people who want to buy high price product have special requests so an off-the-shelf system is not suitable for them. They want to choose their parts, not some prebuilt box.
Even Apple wouldn't be able to sell those if there was a way to custom build high end Macs.

And the smartphone manufacturers are in the same situation as Apple is with Macs: It's simply not possible to custom build a smartphone so customers are restricted to the offers of the manufacturers. But it also means that there will always be a market for expensive non-Apple high end smartphones, quite unlike in the PC market.

You guys always seem to imply that high end customers will prefer Apple by default and every other manufacturer selling in this segment will develop problems, which of course is utter nonsense.

RZA

The point about South Africa isn't entirely correct - if you visit Johannesburg, Cape Town or Durban it definitely is a western industrialized country as you put it. Most of that 20% conversion exists in these regions, so it's not really a big shock and it would be a bad idea to assume that 20% will increase rapidly into the 3rd world african parts of the country.

chithanh

@RZA:
Just how big are the 3rd world parts? Urbanization in South Africa is at 62% according to 2011 numbers.

Comparing this to India (18% smartphone penetration, 31% urbanization) or China (71% smartphone penetration, 52% urbanization) there still appears to be quite some growth potential.

About the Nokia Android phone:
Microsoft will probably not release any Linux distro, as this would cause problems for patent enforcement. The Linux kernel's license (GPLv2) contains an implicit patent grant according to some legal experts.
The rest of Android is under different licenses, so maybe they can find a way to work around that issue, but I would not bet on it.

LeeBase

No, my point is NOT that everyone will prefer Macs. Clearly more than 90% of the market choose non-Macs. But every PC is not the same. Every PC customer is not the same. If all things were equal except the Apple name and price...the 90-95% marketshare advantage of Windows would have crushed Apple long ago. As we all know, that almost happened once. But Apple did survive when no other PC platforms did.

This is the point where someone would say "what about Linux, it survives and rules the world". Not not the desktop. Despite every year being hailed "the year of Linux" since about 1995...Linux never arrived on the desktop in any meaningful way. Linux was FREE and STILL people chose Windows or Mac. The commercial, Easy-to-Use consumer software market never appeared. Even Open Office couldn't ween corporate customers off of Msft Office. Even the web becoming where most all apps are hasn't ushered in the ascendency of Linux...though it is FINALLY seeing traction with Chromebooks.

But Apple found a way to provide a differentiated experience, and a quality level, to not only produce Macs but entice enough software support from developers...such that consumers VALUED the experience enough to pay more. Not all consumers. But enough such that Apple's computer business is far more profitable than any other...and almost as profitable as the rest of the industry combined.

And all that with 1/3rd the market share that the iPhone has and with the PC market being far smaller than mobile. Apple sold more iPad's than all Macs ever in about 3 years of selling iPads. Last qtr Apple sold more iPad's than any PC company sold PC'S. All while seeing a precipitous drop in "market share". In quotes because just like every PC is not equal, and every mobile phone is not equal...every tablet is not equal.

The iPod and iTunes were flukes in that they dominated their industries in market share. Apple is most expert at providing a differentiated, premium product and services line to a minority of the market who...nonetheless...pay enough more to make it all worthwhile.

Apple's position in mobile is far stronger than it's Mac ever was in PC's. Apple has far more customers and an ecosystem that is far more sticky. iPhone, iPad, iPod Touch, Apple Tv, iTunes, App Store and the Mac. 600 million credit card backed iTunes accounts creating an economic engine for developers and content providers that still dominates with Android having 80% marketshare.

I'm not saying that everyone will choose Apple. I'm saying that Apple provides value far in excess of it's marketshare and always has. Apple's only problem is that it's compared to Apple and no other company is. Apple is expected to disrupt a brand new industry every few years...no one else is...but no one else has done it time and again like Apple has. No one else is making the profits Apple is...but Apple is compared to Apple and has to try to grow 25% or more over already record breaking profits.

N9

@Leebase

"Linux never arrived on the desktop in any meaningful way. Linux was FREE and STILL people chose Windows or Mac."

This is not really true. It is nearly impossible to buy a PC without Windows. As such there is not price advantage from installing Linux afterwards and also a considerable hurdle for non-technical people. PC vendors could not experiment with alternative systems due to partially illegal behavior of Microsoft. Also other operating systems never had a change (e.g. OS/2 and BeOS) - both clearly better than Windows. That Apple managed to survive is much more complicated reason and has to do with building their own devices, having a loyal fan base is just one reason, and winning certain lawsuits...

LeeBase

@N9 - one can debate the "why's" - but it is true that the ecosystem necessary to establish Linux on the desktop never appeared. It did for Apple. Linux is doing fantastic on servers and there is a vibrant commercial and open source support for Linux server apps.

The lesson is that a vibrant ecosystem is necessary for a platform to survive. Apple has that in mobile far an above anything it achieved on the PC. Google has achieved this as well. Like with the Mac, Apple achieved it with initial innovation and kept it with differentiation on the ease of use front. Like Msft, Google achieved it with numbers.

Unlike the Mac, Apple has the dominant economic ecosystem on mobile. Far and away better than anything Apple ever achieved on the Mac. So much so that Apple just isn't "supported" but remains "first target". Google is also well established. There is a duopoly in mobile with two equally established platforms and neither one is in jeopardy.

In mobile Apple has a platform with more pieces at every level. More services. Centralized software distribution and purchasing. All while NEVER having the majority marketshare.

Apple did this for 30 years and counting with the Mac. Apple has far more going for it in mobile. Whatever comes to knock Apple out will knock Google and Samsung out as well. It will be something that none of us is imagining today.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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