The Truth about Smartphone Market Shares, is RIM dying, Nokia tanking and Apple at 40%? No...

Recently there have again been totally outrageous news items about smartphones, such as Forbes on Oct 1 writing that RIM (Blackberry) is doomed - a totally baseless article reflecting once again that Forbes writers are clueless about smartphones - and many echoed in the past month that Apple was suddenly at 40% market share - a fair reporting of what someone else had written, a totally unreasonable interpretation of some Admob data. And most of the news around Nokia have reported doom and gloom, that Nokia is in deep decline in its market share. Forget all those weird analyses that are not based on facts. And lets set the smartphone market straight. Lets do a bit of examination of the real facts.

Smartphones - and here please purists, lets not get into the arguments of what is and what isn't a smartphone, I am going by the two established and accepted analysts, Canalys and Gartner, so using their data, reported quarterly, on global market shares of smartphones, either by manufacturer or by smartphone operating system. The two analysts tend to find very similar facts for the quarters, so by averaging the two, we have very reliable and consistent data.

Baseline: the year of 2008.

Lets start with what the smartphone market looked like for the full year of 2008. Last year, Nokia was obviously the world's largest smartphone maker, with 42% of all smartphones sold. Note that this is a much better market share situation than their global handset market share which was 38% for the year. Nokia's smartphones are on the Symbian operating system, but several other handset makers also provide Symbian smartphones, so Symbian had a market share of 57% last year.

Last year the second largest handset maker was RIM with the Blackberry series of smartphones. RIM had 16% of the total market. Apple was next, the third biggest smartphone maker, with 7% of all smartphones last year. The fourth biggest maker was HTC with 5% with the rest of the makers, such as Fujitsu, Samsung, SonyEricsson etc in very small numbers.

The operating systems after Symbian's giant share of 57%, was RIM second at 16%, Windows Mobile third at 12%, and Apple OS/X fourth at 7%.

That is our starting point. The quarterly fluctuation is considerable in this volatile market, but we now have two quarters of 2009 data, so we can look at the half-year mark. I think it gives a reasonable view to who is going where in terms of market share. Lets examine the facts.

Half point in 2009

Nokia was at 42%. In the first two quarters of this year, Nokia smartphones have achieved 43% market share. So, was that what you recall reading in the press? Nokia's pending doom? No, Nokia, the smartphone market leader has grown market share. And note, the gap between Nokia overall handset market share, and its smartphone market share - has also grown. This is all good news at Nokia. But where is the "honest" and "fair" reporting to discuss this.

RIM was at 16% market share for all of 2008. The Blackberries have grown market share to 20% in the first half of 2009. Yes, one in five smartphones sold worldwide is a Blackberry in 2009. Enormous growth. Yet Forbes decided to write that RIM is the next Motorola??? Clueless. The facts do not support that conclusion to any degree. RIM is certainly firing on all cylinders right now, and if you think smartphones are a growth opportunity and a big potential market, then Blackberry is certainly doing all the right moves. Oh, and its far larger than Apple, the perennial darling of the IT press.

Apple yes, Apple is also growing, very strongly. From 7% in 2008 to 12% market share in the first half of this year. Yes, very powerful growth, and yes, Apple has achived the biggest rate of growth this year, congratulations. This is almost all due to the Apple 3GS, which as we have said, is finally the first complete smartphone from Apple and is clearly appreciated in many advanced markets. But do note, that Apple brand smartphones account only for one in eight smartphones sold worldwide. Lets not go crazy about this, that market share is roughly in line with the levels that the Macintosh achieved at its peak, and is nothing like the success the iPod had at its peak. I applaud Apple's success, but please, readers, do not look at these facts with bias. Appe is the small third place player, RIM is 50% bigger in its annual sales, and nearly double in size by installed base; and both RIM and Apple fit in the shadow of Nokia branded smartphones worldwide.

What of the others? HTC, perennial number 4, is still at number four. Their market share of 5% is still at 5%. The other also-rans are fighting for the remainder.

What of smartphone operating systems. Again if you read the press coverage, it would seem that Apple iPhone and Google Android are the big platforms. No, that is not the truth. The giant is still Symbian, with over half of the market. Yes, Symbian has lost market share, from 57% to 50%. But it is still half of all smartphones sold this year, and by installed base, of the world's smartphones in use, more than 6 in 10 are using the Symbian OS. No analysis or article about smartphone operating systems is credible, if it ignores Symbian. But how many of the articles this spring have discussed Apple, Android, Windows Mobile, Palm and Blackberry, while ignoring Symbian..

I should point out that the drop from 57% was expected by most analysts who understand smartphones, last year, as the Symbian partnership was bought out by Nokia. The other partners would typically explore other operating systems, but if you see that Nokia as the owner of Symbian, grew its market share, all on Symbian, that is the true indication of Symbian's potential.

Second is RIM and its Blackberry OS, with 20%. Again, this is so often neglected by those who are drooling over Android. But while we look at the smartphone operating systems, the big story is Microsoft and its Windows Mobile OS. Last year 12% of all smartphones sold used the Windows Mobile OS. That is down to 9% in the first half of this year. This is the truly disasterous news for the industry, all rats are deserting this sinking ship, but where is the news about Windows Mobile, who lost a quarter of their market share, when the market itself grew almost by a quarter?

The big winner apart from Blackberry in the OS wars is of course Apple who have now 12% of all smartphones sold in 2009, growing that from 7% last year. Excellent performance, Apple.

What of Android? They had a negligable market share last year, but have now have 2% of the total. Yes, that is right. for the first half of 2009, one in fifty smartphones sold, uses the Android operating system by Google. Yes, its an exciting new OS and there are dozens of hot new phones coming, but this is the beginning for a new OS. Apple took 2 years go grow past 10%, don't expect Android to be big this year, or even next. We have to give it at least two years to see if it has the ability to become one of the big players.

Oh,.and Palm? an also-ran. Linux Mobile, another also-ran. Tiny market shares.

So there is your truth. From last year, the first half of 2009 shows that in smartphones, Nokia, RIM-Blackberry and Apple have grown market share. HTC has held steady. In the operating systems, Symbian has shrunk but still commands half of the global market. RIM and Apple are big rivals and growing. Android is a tiny rival and growing. Windows Mobile is crashing and Palm is nearly invisible. I would appreciate it, if future journalists reporting on smartphones bother to quote the facts, not some silly analysis of "market shares" based on Admob stats etc.

Comments

[Igor Burattini]

Great blog post. Reading the Admob report, it is clear that they are VERY much biased for the iPhone. Good-looking report with some insights, but need to keep that in mind.

One thing that I missed here was the iPhone touch OS market share. Yes, it is not a smartphone, but has wifi, Skype, bluetooth and most important: it uses the iTunes store.

[Tim]

I agree with this post - however there should be some discussion around what makes a smartphone a smartphone. My biggest issue is with Nokia, who claim that all of their N-series - and I assume their E-series phones too are considered to be smartphones... What do people do with a usual Nokia N-series phone? They make calls and text people. What proportion of N-series customers get e-mail on their phone? What proportion access the web (and the real web - not the "made for mobile" sites in the operator walled gardens)? What proportion download and install applications to increase the "smarts" of the phone? The problem is that we don't have a real definition of a smartphone. We believe what the handset manufacturers tell us. And I know that these exact same questions should be asked of all the smartphone manufacturers (i.e. how many consumers who buy a blackberry pearl even activate the e-mail function? so is that a smartphone?). There is just no way you can compare an N82 with an iPhone or Blackberry Bold. I realise that there is no perfect answer to the question of "what makes a smartphone" - but I feel it should at least be defined by the users or independent analysts - not by the manufacturers - which is the way it is defined now... As someone who follows the enterprise mobility space, I know that very few firms select Symbian for mobilising their business applications. Most Nokia "smartphones" are purchased by consumers and used as regular mobile phones. Yes, Nokia charged a premium for that phone, and the user paid that premium - but as far as I can tell, the only "smart" thing here is Nokia's marketing...

[Riku Seppälä]

Well, considering that Nokia wants to become a service provider, I would definitely say that the Admob data is more than relevant. Handsets are getting commoditized and margins are falling. That's not where Nokia wants to be anymore.

The innovation is coming from apps and content, and also the money (apps, games, ads). Innovation is done where usage can be monetized, ie the iPhones. That Apple is the leader in mobile web usage is clear evidence of this.

For future profits, I would say mobile web usage is a more important indicator than hardware sales, no?

[sam]

Riku, not really. Apple isn't able to get any profit from the "web usage", even if we include the itunes sales as "web usage". From profit point of view they're a pure hardware shop.

They don't even report much information from that side, only item being "iTunes Store sales", and not even that alone but included in "Other Music Related Products and Services". And the trend there isn't explosive growth, the sales actually declined first calendar quarter this year to second.

From monetized web point of view Apple has failed big time.

For the comparison, I challenge you to look up the services from Nokia's earnings reports...

[Tomi Ahonen]

Hi Igor, Tim, Riku and sam

Thank you all for the comments, and thank you sam for the reply to Riku. I will respond to each of you individually as usual..

Igor - Yeah, the Admob data is great, but very skewed, obviously first of all, to ads served which is only a partial proxy for total mobile internet use; and far more importantly, it skews of course to the markets where Admob is active. So we miss out on China, Japan and South Korea. Japan and South Korea are the two biggest markets for mobile advertising in the world, so it is like considering car sales, and ignoring the USA and China in measuring how many cars are sold. A dramatically skewed result, in particular as the iPhone is not available in South Korea and China and only recently became available in Japan.. So by accident - Admob was not set up to be an iPhone measurement tool obviously - by accident Admob happens to be very active in those markets where the iPhone is most successful like the USA, Canada and the UK, while not active at all, in markets where the iPhone does not exist yet (officially, obviously there are grey market iPhones smuggled there) such as China and South Korea, and where the iPhone has only recently arrived such as Japan..

About iPod Touch. That adds roughly 50% to total iPhone installed base. As it uses the same operating system as the iPhone, it is very relevant to any developers who consider developing apps for example. But as the iPod Touch is not a phone, and is not connected via the cellular network, it should not be counted in the smartphone stats, as it cannot support any of the truly relevant "basic" technologies that all other smartphones do - such as SMS text messaging - used by 3 billion people and delivering over 100 billion dollars in revenues worldwide, the most widely used data application on the planet, and MMS picture messaging, used by 1.5 billion people and delivering over 10 billion dollars of service revenues; and basic voice calls on cellular, the true giant, delivering over 600 billion dollars worldwide (and used actively by 3.6 billion of the 4 billion mobile phone subscribers), three times bigger than the total internet industry, or bigger than the total IT/PC computer industry, just voice calls on mobile phones alone - and these three basic mobile phone services are only being able to be used on real phones on cellular networks, not any WiFi enabled rival devices or technologies.

So yes, the iPod Touch is an important stat and an interesting niche gadget, but in the big picture, it is a tiny anomaly, and obviously as it is not a real phone and unable to contribute to the basic service portfolios of any service - remember many advanced services like say Shazam the music recognition service - use combinations of mobile internet service combined with voice and SMS - it should not be counted as a smartphone. ...In my opinion haha..

Tim - I hear you. And there is very much merit in what you say. So, if we use the analogy in the car world, there used to be jeeps, four-wheel-drive cars like the Range Rover, the Toyota Land Cruiser and the Jeep Cherokee. Then the US car industry started to expand their car offering, perhaps due to legislation that treated basic "cars" differently from "trucks" and these "Sports Utility Vehicles" ie the SUV's became the hot new car types, where people could buy big vehicles that Americans often preferred.

But these new Cadillac Escallades and other such SUV's were not "used like a jeep" ie not used for off-roading by hunters, farmers, etc. Do we say it is no longer an SUV, when it is superficially, by design appearance-wise like a SUV, and features-wise is similar or identical to one, ie may or may not have 4 wheel drive, but most SUV's did have at least 4 wheel drive as an option. Just because someone owns an SUV, intended perhaps to drive it off road at some point, but never got around to doing it - does it make the car suddenly NOT an SUV.

I do agree with you, that most who own an iPhone, most but not all - do use its internet and "smart" features and many install apps to it. Not all do. Should we eliminate those who do not? Many have an iPhone not because it is smart as a phone, but because it is cool and sexy, and have it only for its looks.. The coolest looking phone. Like perhaps an SUV owner who drives his SUV from his home to his office and back but hangs a shotgun in the rear window to "pretend" to be an outdoors-person..

But again, you are right, in that many N-Series (and now mainstream ie "numbered" phone type mid-range Nokia phones using Symbian) phone owners do not download apps. Now, when you say they do not use the mobile internet - and you then say the operator walled gardens should be excluded - here I take issue with your view. It is the USER'S choice and perception. Why would Google or Yahoo or Wikipedia or Facebook or Twitter be "not" the "mobile internet" if we acccess Google or Yahoo or Wikipedia or Facebook or Twitter on an operator portal, but the identical mobile website "would be" the mobile internet, if we access it on the same device using say WiFi or an open garden based access? I think it is an artificial distinction, which payment method do we use, an all-you-can-eat plan or a "walled garden" plan. It still is the same device, and the mobile website we access is the same.

A far bigger distiction that is relevant to me, is whether we access the 6th mass medium internet - the PC metaphor "big screen" internet, on a tiny device like an iPhone or Blackberry etc - or if we access the 7th mass medium internet ie the real mobile internet, and a page that was designed for tiny device access and the utility we expect out of our phone. The iPhone is a perfect example of a phone that is poor as a phone, but brilliant to access the 6th mass medium internet. It is definitely the best phone to access the "real" legacy PC metaphor 6th media internet.

But the 7th mass media mobile internet is already bigger by service revenues than the 6th mass media, the 7th mass media mobile internet is already more mature than the older 6th media legacy internet - ie I say this by how much the 6th mass media internet is still dependent on pornography as a revenue source for example; and the 7th mass media is about to eclipse the older 6th media internet by total users. The mobile internet can do far more than the old legacy 6th media internet can hope to do - look at ringing tones, we do not install ringing tones to our PCs, but the music industry earns more than twice as much money out of basic ringing tones, than all of iTunes sold worldwide. Twice as much.. The mobile interet is a far richer environment. So look at the iPhone, it didn't do ringing tones, it still doesn't do MMS - although should be doing that in this iteration - etc, it is the best pocketable device to access the 6th media, but is a very poor device for the 7th mass media channel. Any Nokia N-Series, E-Series, even Blackberry is far superior to capitalize on the full abilities and far greater revenues of the 7th mass medium..

Now, you mention E-Series, here I beg to differ with you, the vast majority of E-Series is sold to enterprise/business/corporate customers, in bulk orders, to fight Blackberries. That means they get automatically various business/enterprise apps installed, such as corporate email, VPN, firewalls, intranet access, remote management features etc. So out of E-Series, if your criteria is whether the device is "used like a smartphone" then the E-Series does (mostly, but not even the iPhone is used by all) to do so...

Riku and sam - Thanks for the reply sam. Riku - you make very good points, the direction for the industry is away from hardware and towards the software and services and Nokia is definitely on that path, as is Apple, RIM etc. But I agree with sam, that you can't really look to Apple as having discovered any way to significantly monetize that opportunity. They did not invent this revenue-model, they copied the NTT DoCoMo revenue-sharing model from Japan from ten years ago, that has been proven in all markets where it has been copied, to produce a healthy and vibrant eco-system of mobile services and apps. Not an Apple innovation by any means, but Apple was able to launch commercially a viable and vibrant Apps Store environment, strongly riding on the heels of its iPod iTunes store, obviously. Its not like they were the first to recruit developers to create apps and to offer a platform to sell them, but Apple popularized a "smartphone apps store" concept, under the handset maker brand. Now all handset makers and operators are jumping onto that bandwagon. And I say - in my humble opinion haha - that this is a fad and will not sustain the mobile apps/services industry, and is partly a function of how poorly designed and lacking the original iPhone is, many users need abilities and services that an iPhone does not have, but almost all rivals do - consider the video recording feature, most cameraphones in the smartphone class came automatically with the video recording feature built-in, but Apple for the first two editions of the iPhoen would only enable that by separate download.. creating unnecessary downloads, "to fix missing parts" on the iPhone.. Like I have said many times, the first two iPhones were seriously flawed, while being a transformational phone - and only the 3GS has been the first complete smartphone from Apple.

Also on "mobile web usage" obviously Apple is nowhere the world leader, the Japanese are on NTT DoCoMo, KDDI and Softbank, Japan was the first industrialized country to report that the majority of internet access usage, and time spent on the access device was from phones, not Pcs. Note this in the country that has the world's second best broadband internet penetration, speeds and prices, behind only South Korea. Japan is reporting the second year of decline in PC sales as users are migrating to mobile based internet use. And that internet is the 7th mass media internet, where the web pages are designed by default to be mobile accessed and PC based internet pages are the option..

sam - good stuff, and yes, agree with you... thanks!

Thank you all for writing

Tomi Ahonen :-)

[Vladimir Dimitroff]

By the definition based on usage, my 'dumb' feature phones for the last 3-4 generations (including current SE C905) should be 'smartphones', because:

- I regularly read and send mails from the phone
- I browse 'the real Web' and not the 'made for mobile' one, using 2 different browsers: the default + Opera
- I download and install (lots of!) applications AND I use them all the time. They are 'only' J2ME apps, yes - but, hey - they WORK and help me with many practical (and a few entertainging) tasks

Adopting such definitions for 'what is a smartphone' will make the iPhone even more INSIGNIFICANT as market share, as in this (featurephone) class the other vendors have dozens of models, all out-selling the iPhone in unit numbers.

So, please - don't go there! Leave those 'hated' (?) analysts make the definitions, and stick to those definitions.

P.S. Very curious to see Q3 data added to this analysis a.s.a.p.

[Tomi T Ahonen]

Hi Vladimir

Thanks. I already posted the update to the Q3 numbers on a preliminary basis, in the blog "Now we know who moved the cheese' where I discuss Apple eating Nokia's lunch..

Tomi Ahonen :-)

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