A Bloodbath for 2010: the Smartphone market preview

The big battle this year in mobile will be in smartphones. Not because of reasons many pundits and analysts now suggest, that somehow this is that everybody caught the iPhone fever or that Google somehow energized the field with its Nexus phone. No, those are overhyped views with an overly US-centric view. Remember that differing from most high tech and media industries like computers, TVs, air travel, advertising, military spending, music, movies, rocket science etc, where the US tends to reflect about half of global spending of the given industry. That is not so in mobile telecoms. US cellphone users (about 285 million subscriptions) represent only 7% of the global subscriber base of 4.6 Billion. While Americans are now getting heavily into smartphones, Forrester just today reported that the total installed base of smartphones in the USA is only 17%. The EU projects that for the EU region, smartphones will be half of all phones this year.

While the American pundits, journalists and analysts obsess about the iPhone, Palm, Google etc devices, that is not the main battle. Its a side-show in the big global fight for smartphones. And while some North American players are indeed quite strong - RIM is the world's second largest smartphone maker behind Nokia - this battle is now heating up considerably for 2010. Some very powerful players are bringing in their A-game. And both market leaders, Nokia and RIM have refocsed very hard for this upcoming battle to be able to respond to the challenges. Most other smartphone makers have not caught on. The battle will be brutal this year. It will not be pretty.

NOKIA

The reports of Nokia's demise were premature. Even Nokia's own analysis got it wrong for the third quarter of 2009 when they reported a serious decline in their market share. After all numbers came out, turned out that Nokia had had only very minor 1% fluctuation in its smartphone market share, and as is usual, Nokia's smartphone market share remained well above its global handset market share, itself the best in the world.

Last year analysts were not impressed with the N97 and then there was confusion about Symbian vs Maemo and what of Nokia's Ovi store for apps and various smartphone content and services. So where do we stand? Nokia's market share in smartphones is as big as number 2 and number 3 combined, and more importantly, Nokia's smartphone market share is better than its overall handset market share. And they are doing this with a mobile phone manufacturing juggernaut which has been profitable every single quarter of the decade, while each of their big 5 rivals has struggled and posted numerous unprofitable quarters along the way (the last quarter Nokia posted a loss, but not with its handset unit, the loss was due to its infrastructure unit NokiaSiemens Networks). Typically at least 2 of the rivals are unprofitable and in some quarters all four have been so.

Do not put any credibility to any "Admob" stats or pay too much attention to Nokia 'failing' in the US domestic market for smartphones. If the choice is to be the desired smartphone brand in the 93% of the world's phone market that is not the USA, or the 7% that is the USA, Nokia has certainly made the right call to its strategy.

But it won't be easy going. A couple of years ago, the Symbian operating system was owned across several giant handset makers (Nokia part owned with SonyEricsson, Samsung, Motorola etc) and had over 60% market share. Now being only Nokia's owned operating system, its installed base is about 50% of the world's smartphones and currently sell a little over 40% of the world's smartphones. Note that most of that decline was various non-Nokia phones shifting away from Symbian. Nokia's own Symbian sales level is very stable. But it is not growing, it is in slight decline. So don't mistake Motorola and SonyEricsson and Samsung (and others) shifting away from Symbian as somehow a 'Nokia decline' in Symbian. Nokia Symbian is still very healthy at or about 40% on an annual sales level.

What is Nokia doing? While it introduced Maemo to power high end smartphones, Nokia is aggressively pushing the Symbian system down to mid-price phones where 'feature phones' used to be. It is expanding its proportion of touch screen devices (to position more against the iPhone) and more importantly, expanding its proportion of QWERTY phones against the Blackberry. Some very promising news came out of the UK this past December, that Nokia is back as the top preferred phone brand among UK youth in the Mobile Youth survey of phone brand preferences.

Most of all, any analysts should keep in mind, that thephone market is not an open 'free market'. There are severe distortions by the enterprise/business segment, and the carrier/operator subsidy model in many countries. I explained these in my blog about smartphone market share secrets last year.

The key point to take away, is that Apple says openly that its best markets are in those countries with strong operator/carrier subsidies. They do not do as well in markets where customers pay full price for the phone (the real price of an iPhone 3G on AT&T is not 100 dollars, even Americans pay the real price of about 600 dollars for their iPhones, but the remaning nearly 500 dollars is hidden payments in the 2 year payment plan). Meanwhile, in every single market that is open, ie carriers do not subsidise most phones and the phone makers get to sell their own phones directly - and which are not controlled by a domestic maker or makers (like in South Korea for example) - Nokia is the run-away market leader in all phones, and in smartphones. For any analyst who suggests Nokia is 'losing' the game against the iPhone, that should give some pause. In all markets where there are no subsidies to distort the picture, Nokia wins hands-down...  And Apple itself admits it struggles in precisely those markets. Who makes the "most desirable" phones when we take price into the equation? Not necessarily the single best phone for internet surfing, but rather a series of phones to suit mass market tastes? Thats Nokia, hands down. As big as number 2 and number 3 combined.

Even with all that, expect Nokia not to grow market share this year in smartphones, and very likely to lose some in 2010. The competition is coming from every angle and the big leaders will likely feel the heat. Nokia has been aggressively moving downstream in price and gets some solace that its price points are difficult for smaller brands to match, but its going to be a very rough year. And whether any newcomer focuses against the iPhone or the Blackberry, they will automatically also then target some part of Nokia.

RIM

The amazing untold success story, far bigger story than Apple, is RIM. Blackberries were nerdy US centric business phones only a few years ago. Europeans and Asians would not take to the flat, wide, weird Canadian phones. Try as they might, even as American conglomerates took to Blackberries by storm, and started to call it the Crackberry - 75% of American business/enterprise smartphones are Blackberries (says Ostermann survey in 2009)

The rest of the world did not fall in love with Blackberries. But RIM plugged along and slowly got traction in many markets in the enterprise/corporate space. They did particularly well in Latin America. But then came the SMS texting craze even to American shores, and whether by design or by accident, the youth of the world discovered the Blackberry. Not your boss's phone, but your kid's phone. And success followed. About at the same time, again perhaps by design, perhaps by accident, RIM expanded its product line of Blackberries to more models and several of these were more suited to consumers. RIM added cameras to these, and what businesses previously were reluctant to accept - cameraphones - started to infiltrate the business phone space. But now the Blackberries were very well suited for consumer use.

First the overall numbers. Today one in five smartphones sold - actually already 21% by the third quarter of 2009 - was a Blackberry. Remember that only 17% of smartphones are Apple iPhones. Why all that hype about the Apple and total silence about the Blackberry? Partly because this success is on strange foreign shores. In Venezuela the bestselling phone brand - not smartphone brand - is the Blackberry. In Indonesia the youth most popular phone is now the Blackberry. In the UK survey of university students, UK is traditional SonyEricsson and Nokia 'back yard' - Blackberry is now the third most popular phone brand, not the iPhone.

On RIM, this is the only brand I can promise you, it will grow market share in 2010. Why? Because first of all, it has a 'lock' on the enterprise/corporate market. The business phone market will not shift simply because there is one hot new smartphone this quarter, like a Palm Pre or Motorola Droid or iPhone 3GS or Google Nexus One or Nokia E72. The business phone market is incredibly stable because business customer IT departments resist any change and any new systems to be added and to be supported. In the big US market, Blackberry can very safely rely on something nearly 75% of all business smartphone sold this year. It may fluctuate a little up or down, but it is incredibly stable.

At the same time, the Blackberry keeps making more inroads to business phone use in all other markets, due to its incredibly well optimized business oriented form factors, solutions and apps and services. The Blackberry is simply the best enteprise phone solution on the planet. Now they have President Obama as the ultimate unofficial spokesman, the Blackberry President. They have achieved such certifications as NATO level quality of security on their device so for any business users, this is really a secure and safe platform. Their non-US global business-oriented smartphone user base will grow disproportionately well, rivalled only by Nokia with its E-Series. This market share segment will be particularly secure from any inroads by any new operating systems like the Apple iPhone or Google Android or Samsung Bada. Not because the phone is bad, but simply because IT departments will fight tooth and nail against any new OS. A survey by TBI Research in 2009 found that 80% of US businesses refuse to have more than one operating system for smartphones - and in most cases that is now the Blackberry. This is an incredibly stable source of revenue and unit sales and subscriptions for RIM.

But its huge growth is that successful transition from business phone to residential phone. And while all the press, analysts, pundits and 'experts' obsess about touch screen smartphones, the truth is that far more QWERTY phones are sold worldwide than touch screen phones. The internet use is not addictive, but SMS text messaging is addictive as proven in university studies like the one at Queensland University of Australia. So while both inputs are of course desirable and have their proponents, the fact is, that QWERTY trumps touch screen. Why is Nokia now rolling QWERTY keypads to its cheapest non-smartphones? Nokia know this, they invented the QWERTY keyboard in the world's first smartphone, the Communicator 9000, and they were the world's first entity to suggest SMS might be addictive, a decade ago. Nokia know this.

But RIM have optimized their phones for mobile messaging. It is a perfect starting point. Then they have the Blackberry instant messenger, which appeals to the youth in particular as it offers free messages between Blackberry users. That in turn brings in a contagion effect, you want to have the Blackberry specifically, because your friends use it. And then there is the cool factor, suddenly the Blackberry is the phone all older teenagers and young adults want to have. RIM is right now in a sweet spot, all things going for them. It is no surprise, that in the shadow of the world's most spectacular high tech launch ever, the iPhone - RIM has consistently outsold the iPhone and grown its own market share.

I can tell you that often analysts and pundits even in the various early adopter markets like say Indonesia, where Blackberries emerged as the youth 'must-have' phone, inspite of their considerable cost differential above typical youth phones; the early experts were dumbfounded and could not explain it. I have heard various RIM experts say the same, that they are not sure exactly how and why, but are trying to learn this as much as possible and then capitalize on this knowhow.

I think it speaks volumes that Nokia is copying RIM not only with E-Series form factors, but now with cheaper non-smartphones adopting QWERTY keypads. Both RIM and Nokia know that the biggest single segment of the smartphone battlefield will not be touch screens, it will be QWERTY phones. And I would hope that at times the operators/carriers would be reminded of this too - that AT&T and O2 and other networks complain about congestion with the iPhone, but QWERTY Blackberries and Nokias do messaging, very profitable services for the operators... So its in the core profitability interests of the operators/carriers to promote QWERTY phones, not touch screen phones.

Anyway, all signs suggest that Blackberries are achieving 'must have' status among the youth. Youth fashions and desires can be fickle so this is by no means a guarantee of long term success, but for this year 2010 this bodes very well for Blackberry. As they are very secure to hold onto business/enterprise customers and see growth in youth markets, they are sure to pick up some market share points even in this very competitive year of 2010.

APPLE

Apple is also growing strong currently. They have been expanding their global footprint but it is a worrysome detail, that out of all iPhones ever sold, 43% have been activated by AT&T (Said AT&T late last year). The iPhone is the darling of Americans but doesn't seem to engender the same level of passion across the oceans. Yet 17% of all smartphones sold in the third quarter last year were iPhones. That is very good news for Apple and they keep growing year on year. Remember that as Apple only introduce one new model per year in June, they have that peculiar sales pattern where their sales grow in the second half of the year, but then always decline stronly in the first quarter of the new year. So don't be alarmed, but be prepared, that when the January-March quarter sales numbers come out in about April of 2010, there will be inevitably a decline in Apple market share. That is not a sign of trouble, it is only because the 3GS will be 9 months old by then - near-obsolete in smartphone terms - and the next iPhone is not due until June of 2010.

But its not going to be an easy year for Apple. The early strongly operator/carrier subsidised markets are all now 'done' and have the iPhone. As Apple tries to bring its ultra-expensive superphone to ever less affluent markets, it finds it hard to sell meaningful numbers. China is a perfect example, Apple was really struggling to get its iPhone to move in any relevant numbers in China. And its strategy of going with an exclusive carrier/network in major markets is backfiring (as I predicted) and they are now expanding networks in many markets. There is continuing speculation that the exclusive deal with AT&T will end as well.

Most of all, Apple faces severe competition in the consumer space. The 3GS was a good phone last summer but now is really showing its age already. 3 megapixels is very modest for a 600 dollar smartphone where other brands do 8 megapixels and in advanced markets like Japan and South Korea 12 megapixels is now the standard for premium phones. A flash? When can we see that? And no removable battery, no memory slot, no QWERTY keyboard, etc. Apple is seeing a lot of business going to near rivals who also offer 3 inch touch screens but in many ways 'better' features. And please Apple fans don't write about that. Yes, the Apple is by far the most user-friendly phone. But that goes only so far. And at some point Apple has to release more than one phone model per year else its market share growth will stagnate. I believe this year 2010 will drive that lesson home to Apple HQ loud and clear.

Anyway, Apple needs yet another hit this June. If they manage once again to do a magical phone that everybody loves, they'll be fine to the end of the year. But in 2007 when there were very few phones of a similar form factor, Apple had this 3 inch touch screen market segment to itself. Today every major maker offers 3 inch touch screens, and the competition is proving rough for Apple.

What is certain, is that for the start of the year 2010, Apple's market share will sink of course, due to an aging model line. Will it recover for the second half of 2010, will depend on how amazing the next iPhone will be (it will definitely be better of course). But now most new rivals are all targeting this Apple area - not the enterprise space where RIM is, and not the low price angle where Nokia is. The new competition will almost all hit Apple square center. Like the Google Nexus One right now.

I would say for the year, if Apple can hold onto its market share - remember the smartphone market itself will explode this year -so there is going to be a lot of organic growth for those who can hold onto market share, so that is still good news. I don't see much chance for strong growth, but it does depend on that one new iPhone model next June. It could be a 'must have' phone perhaps. I'd say the single best tool for Apple would be a QWERTY keyboard but I've been saying that since 2007 and of course Apple don't listen to me haha...

HTC

The fourth largest smartphone maker is not SonyEricsson or Motorola, it is Taiwanese HTC. They manufacture for example the Google Nexus One. But even before there was an Android operating system from Google, HTC was the fourth largest smartphone maker with about 5% of the market. HTC has often struggled with the lackluster performance of Windows Mobile - HTC was the launch smartphone for WinMo early int the decade (after MS suddenly pulled the rug out from under their first-annnounced WinMo launch handset maker, UK based Sendo, if you remember) - and HTC has been WinMo's standard-bearer ever since. HTC CEO said in 2009 that 80% of all WinMo phones ever made, were manufactured by HTC. So now that HTC is shifting most of their smartphones away from the Microsoft operating system to Google's Android, is coming as a very hard hit to Microsoft.

So HTC was already plugging happily along in the fourth place, and now they have been increasing the awareness of their own brand, and then they have the sudden added support of the Google brand. This is sure to bring growth to HTC.  How far can they grow? They are perceived as a small 'built-to-order' maker, and don't have the brand appeal of the Samsungs and SonyEricssons in the eyes of the big mobile operators./carriers or the independent handset resellers in open markets. But they are now on a good growth path. I think they're a pretty sure bet to increase market share in 2010.

FUJITSU

So the fifth biggest smartphone maker is Fujitsu out of Japan. What? You never heard of Fujitsu's smartphones? Thats because they mostly focused on the home Japanese market the past few years. In Japan the major smartphone platforms are Symbian and Linux, but most smartphones are 'crippled' by the operators/carriers with standard features and often the user cannot install apps like they could on a similar device in most other markets. Still, as a smartphone maker, Fujitsu is experienced and big. Plus they are one of the biggest makers of laptop computers so they have that synergy in distribution chain, brand and tech support.

What can we expect out of Fujitsu. Last year they said that they are going to refocus on the world market. Expect Fujitsu branded smartphones to appear in selected markets during the year. They are a luxury brand sitting right next door to China, it would sound like a good strategy to push into China. Japan often looks at Taiwan as their back yard, so its another obvious early target market. Beyond that, it will probably be random markets this year as they sample world tastes and see which markets would be receptive to the Fujitsu brand of phones once again.

Fujitsu have the advantage of learning about end-user preferences in the single most advanced mobile phone market, Japan. So they can bring ideas and innovations and technologies that have an advantage. I would expect that Fujitsu will be targeting initially the top end of the smartphone market, nearer to netbooks and web tablets, and going of course head-to-head with the Apple iPhone line. But if they can hold steadily onto about a 4% global market share in smartphones simply by selling in Japan, and now start to expand, expect them to grow organically at least a few percentage points globally.

SAMSUNG

Samsung had been giving smartphones lip service for many years. They had smartphones on just about every platform, on Symbian, on Windows Mobile, on Android etc. Now they have decided that it is a battle they want to enter and to win in it. And they have made that strategic commitment of releasing their own smartphone operating system, Bada. Samsung had previously held something like 3% market share in smartphones, but - in feature phones with touch screens - they already outsell the iPhone. All Samsung need to do, is to switch their touch screen phones from their proprietary operating system to Bada during 2010, and they will exceed the iPhone annual sales in smartphones... 

If executed perfectly, Samsung would seem to appear out of nowhere and in one year leapfrog Microsoft Windows Mobile, Google Android and Apple iPhone. Don't be surprised to see this happening. The South Koreans are nothing if not competitive, and they work day and night and weekends to achieve their objectives. And Samsung says in every market they intend to be one of the top 3, or its not worth competing. They have the scale to do it, and I am very confident within at least 18 months they will overhaul those three, lagging only behind RIM and Nokia. Whether it happens in 2010 remains to be seen how far Samsung is along its diabolical world domination plans. But they will certainly grow every quarter this year once the Bada phones are launched. Grow every quarter, mark my words.

I expect that during 2010 Samsung will push its Bada operating system aggressively to its mid range feature phones, and by converting these to 'smartphones' - they will achieve the most amazing market share growth ever seen in the smartphone space. Yes, in some ways its a bit of 'cheating' with accounting, but it fits the smartphone definition and Samsung will be grabbing headlines. As these will predominantly be touch screen phones, it will be seen as being head-on battle against the iPhone, even though in price it will more appropriately be a battle against market leader Nokia.

SONYERICSSON

A bit player in the smartphones space, SonyEricsson was one of the first major smartphones and has had very high end prestige and popular business and residential phones in that area, but only a tiny part of their total lineup. Since Sony released the Walkman and Cybershot brands to the SonyEricsson partnership, the SE phones have been in the mid-range of excellent dedicated musicphones and cameraphones. But the advent of the iPhone decimated SE's musicphone market and the brand has been struggling severely to find a place recently. SE has been losing global handset market share and its smartphones have suffered in that same process. Even that news out of UK university students preferring SonyEricsson as the second most popular phone brand is actually bad news for SE, as previously SE was tops. They are moving down in preference among even the youth. All news is bad news at SE.

Recently with the Symbian OS shifting to Nokia ownership, SE has little reason to particularly push Symbian in its smartphones and is shifting to Android. But the total shipments are low in numbers and the total brand is in confusion. I don't see SE particularly growing. They have to stabilize their overall handset market share first, and then worry about smartphones. This could be a good year for SE to ignore the wars in the smartphone bloodbath and find attractive niche markets elsewhere and stabilize their profitability. I've been saying dfor years now, that what SE needs is the Playstation phone, which could be a hit product. Remember that most of the paid apps on the iPhone are games. But yes, if the PSP  phone appears, SE could have a sudden surge. Else - and more likely not - I don't see them as growing. They will be in the 'other' category of smartphones and mostly ignored.

MOTO

Poor Motorola. They are so on the ropes. I wrote my open letter to them, that they should do SMS texting optimized phones to save the company (something RIM ended up doing and growing magnificently). But Moto have staked the whole company on one Android phone, the Motorola Droid, and now 'Do no evil' Google has stabbed them openly in the back with the Nexus One. Motorola is doing its best, but their global handset market share has been in total freefall for years - they have gone from 22% to 5% in three years! - and they now are feeling the breath of RIM in their neck, a pure smartphone maker who may overtake Motorola in total phones shipped some quarter this year.

It was a risky move to make a heavy move into smartphones. The Droid is not going to make meaningful inroads into the enterprise space for the same reasons that RIM owns that space and others can't get in. So the Droid has to fight it out in the high end of the smartphones, against the iPhone and high end smartphones from Nokia to Google to HTC to Fujitsu to Samsung to Palm to just about anyone..  But it was a popular move to US based investors, so Moto made its bed and now must sleep in it.

I don't see Moto having much chance outside the US market in this heated contest, to peddle its smartphone to consumers who had grown very tired of the Moto brand the last few years. Not in this year with so many exciting new smartphones appearing in the same price bracket. And the US market is not big enough to give Moto the gains it needs. I see Moto overall losing handset market share and being irrelevant in the numbers of the smartphone battle. Incidentially, ZTE out of China as a non-smartphone basic phones maker is about to pass Moto as the fifth biggest phone maker, so the fall from grace continues in any case, Moto is headed to the waste basket of the industry.

Motorola may appear on the charts for US smartphones with some market share, but nowhere near market leader RIM or second place iPhone. Too little too late. When will Moto close shop? At Forum Oxford we have already a Motorola death-watch... They are certainly already on the ropes

PALM

Palm sells only about 800,000 smartphones so apart from being a curiosity in the US market, they are irrelevant in the big picture. They don't account for one percent of the market and have essentially no chance of growing market share in this bloodbath of a year in smartphones. I would not be surprised if Palm passes onto history during this year.

LG

A more interesting player in smartphones is LG. LG is the third biggest handset maker out of South Korea and like Samsung, they have pretty much ignored the smartphone space. But - remember the original 'amazing' looks of the iPhone? That totally radical one button touch screen flat 3.5 inch screen wonderphone when first shown by Steve Jobs in January 2007?

The looks of the iPhone, exact dimensions, etc, were considered in January 2007 to be a copy of an industrial design winning LG phone - from 2006. Apple designers cleverly copied an award-winning LG design to create the 'wow' factor in 2007, because LG had not brought this phone to the Western markets (we eventually saw the consumer version of it as the LG Chocolate, released in Europe before the iPhone launched in the USA in 2007). So LG knows fully well how to do this type of phones and form factors. They just haven't bothered to do that as a "smartphone" so far. But the LG Chocolate was Europe's bestselling phone at one point in 2007 and in its lifetime has sold more units than all iPhones.

If LG feels like they'd want to have a major market share in smartphones, they could do the same as Samsung, introduce a smartphone OS to the next edition of the Chocolate and having a far cheaper phone of the popular touch screen and 3 inch screen form factor, they could easily outsell the iPhone 'as a smartphone' within about a year - to 18 months. But that 'step' is not even taken yet, as Samsung did announce its Bada operating system and will clearly now fight for the smartphone space, LG has not made any such bold announcements. At the CES this week LG has introduced two smartphones and they made noises that they'd like to get more market success in smartphones. If they so desire, they can become a massive global rival in no time. Remember in scale as a handset maker they already are far bigger than any North American phone makers including Palm, Apple, RIM and Motorola.

OTHER JAPANESE

There are actually seven handset makers out of Japan and several have expressed interest last year in moving abroad, or 'returning' to the overseas phone markets that the Japanese brands (other than Sony/SonyEricsson) abandoned a decade ago. Some of the brands will not be doing it as smartphones but some may. We have powerhouse electronics brands there like Panasonic, NEC and Sharp. And the biggest of the Japanese handset makers is Kyocera. Any of them may find it suddenly appealing to capture part of the limelite in smartphones and do a nice little splash some time in 2010. But I don't see them taking big market shares in smartphones but keep an eye out for the GSM World Congress in Barcelona in February for any surprise announcements.

DELL

Doesn't it seem like every PC maker is suddenly doing smartphones? Dell is also in the game now. They will be releasing their first smartphone in America on the AT&T network. Dell will struggle severely for early years in their entry, in building carrier relationships with the 160 or so significant mobile operator/carriers and the 600 overall; as well as hundreds of national resellers in so many markets. They will find that the smarpthones market is totally different from the PC market and that normal free market rules do not apply. And that to get scale, they have to move downstream and diversify fast - like Blackberry has done. I don't see them being a global powerhouse yet and won't register in the one percent market share range this year, but they are yet another brand doing high end internet-oriented smartphones (against the iPhone).

GOOGLE

Google's entry into the smartphone space is seen by some as going back on their word (that they do not intend to be a phone maker), and by others as stepping severely on the toes of their Android handset maker partners. The Google Nexus One suggests there will be a Two and more, so it seems like Google has made a strong commitment to become a handset maker brand, whether their phone is physically made by HTC or not.

Initially the Nexus One is energizing the US focused tech media and analysts into a frenzy but I would think this will subside. It is a phone positioning at the iPhone end of the consumer market, as a pure touch-screen device and labeled a 'superphone' in the US market, it is already attracting direct comparisons to the iPhone. Price wise its conveniently 10% cheaper. But Google has the advantage of not limiting the Nexus to one carrier only. And quite alarmingly for the iPhone US market aspirations, the Nexus will be both in a GSM and CDMA version (T-Mobile first, but Verizon version to follow). Google also has the Vodafone networks as reseller partners so it will make quite a splash globally as well.

Because it goes against so many other similar Android devices and tries to fight against the iPhone head-on, I don't see them replicating Apple's first year success of 10 million units, so the Nexus will be very low in the single digits even if all goes well. But behind the scenes, many Android device makers cannot be happy and there is probably a lot of lobbying to stop Google from this path. They may find a device maker revolt and be forced to pull out. On the other hand, most of the Android partners have poor options right now - Windows Mobile 6.5 is not much of an option and going back to Symbian means supporting rival Nokia - Google may well be seen as the lesser of all evils (as opposed to 'do no evil')

MICROSOFT

Microsoft once had 30% of the smartphone market share. Yes thats true. Today they are vanishing fast. They have seen many Windows Mobile handset makers shift to Android and Samsung launch their own OS, so expect WinMo to keep losing market share. The worst news, one could say devastating news was that HTC decided to focus on Android for this year, as they won't do WinMo 6.5 devices and await WinMo 7. Microsoft has promised WinMo 7 will be released at the end of this year but so often in the past Microsoft's launch dates have slipped and the WinMo handset community and developer community have no reassurances that Microsoft has woken up to mobile and is taking it any more seriously now as it has in the many years of the past. (My open letter to them has been read widely at Microsoft HQ but they still don't get it).  

Microsoft has to expend a lot of resources to support WinMo 6.5 and develop 7, all while their market share seems to be cut in half quarter after quarter after quarter. One wonders why they bother, and there is a deathwatch for WinMo also at Forum Oxford already. There is no light in this tunnel and one wonders at what point MS simply decides to throw in the towel and not bother to fight for this dwindling opporunity, especially as the fight heats up so much this year with so many fresh new players and far more modern operating systems.

WHAT OF APPS STORES?

Haha, Apps stores are a total non-story. They do not matter one iota in the big battle for smartphones this year, but you will hear all kinds of silly stats and forecasts and billions of downloads. That will not determin the market success. I told you what decides market success globally in smartphones. I also told you the media's silly obsession with app stores is pointless. But I furthermore said that app stores are a good trend, and eventually, in many years from now, we may have real value out of app stores. Whenever you hear 'app store' mentioned in 2010 safely skip the story, it is meaningless to smartphone market success. Don't fall for the app store hype.

IN SUM

What will it look like after 2010 is done? I see Nokia in the 35 to 40 percent market share range. RIM will grow to the 22 - 25 percent market share. Apple may hold onto about 15-18 percent share depending on how 'awesome' the next June 2010 version of their iPhone is. Samsung is likely to grow at least past the others with Bada to fourth place and will certainly eventually overtake the iPhone, but that I see happening more in an 18 month scale than this year. Still they will be a solid number 4. I'd put them around 10% give or take a few points.

HTC will be the biggest of the smaller players due in large part to Google's Nexus and its brand. It will help sell any HTCs. I would say HTC grows but to something like 6% or 7%. At worst they hold fifth place at about 5%. Toshiba is going to push abroad, expect them to battle HTC. LG is a dark horse, depending on if they go full steam suddenly into smartphones or are happy to do touch screen feature phones.

The other brands will be in the roughly 1 percent or less range including Motorola. SonyEricsson, Palm, some other Japanese makers, Google's own brand (double-counted in HTC above), and Dell. Should SonyEricsson do a PSP phone (most likely then as a smarpthone) that would give SE a big boost. And I'm pretty sure we'll see more PC makers rushing to a smartphone near you, like Lenovo, Acer, HP, Toshiba etc.

It will be a bloodbath in 2010 and we will be keeping score in the media often. The only thing I urge you to keep in mind - the US market is totally not symptomatic of the rest of the world. Only one in 12 phones sold in the world is in America, so don't think the biggest battlefield will be on those shores. No, the big battles at the high end of the price range will be in Western Europe and the low end of the smartphone battle will be in Asia. Those are the markets where this war will be won or lost. But it will be an interesting year in mobile.

Addendum - someone commented asking me to explicitly mention my background, that I have been employed by Nokia in the past and that Nokia is still a customer of mine. That is true, and I say so countless times in my books and on this blog and when I speak in public; but perhaps it again needs to be repeated? I left Nokia HQ in 2001 and my last post with them was the Global Head of Business Consulting. Perhaps I should also state that earlier in my career I was employed by a company that was an Authorized Apple Reseller as one of their Apple/Mac trainers, so I probably also have a strong positive Apple bias. Since 2001 I have been an independent consultant. I do not disclose any customers of my consulting who do not first openly acknowledge their relationship with me. Nokia has been kind enough to do so, so yes, Nokia is one of my reference customers. Out of this list of handset makers, so too my reference customers include RIM, Motorola, SonyEricsson and LG. There are others on this list who have not yet disclosed in public that they have used me. Note that in this blog I am positive of some of 'my customers' (RIM and LG) and negative of others (SonyEricsson and Motorola) and am both positive and negative of Nokia. I am known for speaking the truth as I see it, even when this means that I am critical companies that have given me consulting work. The amazing thing is, they do respect that, and keep giving me more work. But yes, if you need to hear it, yes I am a Finn, I was employed by Nokia up to 2001 and they are still giving me consulting work, as do four other companies in this list.

PS - two items may be of further interest to visitors. A video of my presentation of the mobile industry - nicely showing my slides as well, side-by-side, entitled the next four billion (mobile phone subscriptions to the planet that has only 6.7 billion people and over 4 billion mobile phones) has been viewed over 3,000 times already and many seem to quite like it. Its at this link Tomi Ahonen keynote presentation from Picnic conference Amsterdam.

And for those who would like to read about some astonishing numbers of the mobile phone industry - more cameraphones than digital cameras, more alarm clocks used on phone than stand-alone alarm clocks etc, read my essay on The Nokia Decade.

UPDATE Feb 10, 2010  - The TomiAhonen Almanac has now been released, it has 180 pages, 84 charts and tables (13 more than the 2009 edition) including a whole chapter dedicated to phones and smartphones. See sample stats, first opinions and ordering info at this story TomiAhonen Almanac 2010 Released.

Comments

[cycnus]

@david

seeing your comment, made me must comment your comment. :)

First,
Yes, most user doesn't care about CPU speed and OS. Because that is irrelevant to them. I believe anyone who comment on this forum should be categorize as geek (count me in). But ordinary user (my mom, dad, wife, cousin, etc) doesn't really care if their phone CPU is Arm Cortex A8, or Snapdragon, or 600MHz Arm 11. They also don't care about Windows, Symbian, etc. They wouldn't even want to know the max speed of their car because they won't drive that fast. They just wanna use the phone. The looks and silly specs such as MP and color and brand/quality is what really mean a lot for them. and that's the way the market works.

Now,
when you said IT department doesn't want to support new tech and also phone carrier..... I believe you were american who lives in American. If you ever go to asia, you would know that the IT department and phone carrier is really EAGER when seeing new devices. My company have a bussiness with HK, Singapore, China, Taiwan, and most IT department in this country very eager to support new technologies such as new computer OS and new cell phone OS.

apple polished OS is only a skin deep, and their lack over meaningless tech specs is an anomaly/bubble and will cost them fortune, whereas nokia/SE/samsung did great with their digital camera and will set a mark on the history.

I also believe that iPhone will lost a great battle in the long run. phone is not just a beauty OS. the competitor will catch up with it. When it happened apple will really have a hard time maintaining their elites because at that time (that time is NOW) the real capability of the OS is what really matter.

Now, you saying that iphone and android were the innovator pack. It's a sad things, but only american really say this. In other part of the world, the 93%, Symbian is THE INNOVATOR. symbian innovate the easy of use and the one that bring most the first smartphone experience for mankind. Nokia seems loosing the battle if you read a lot of american journalist review on cell phone. But, nokia now laying the BEST foundation for their phone by acquiring QT trooltech. They made the it easy for linux program made with QT to be ported to Symbian/Maemo. This is priceless in term of computer software will be able to run on phone.

OK, that is a geek stuff, no real user will care about it. But nokia is not stand still to their competitor. They know, they've been lazy in the past 3 year, and they catch up in the gimmick (beautifull os). and competitor should also notice that nokia own the MOST stable OS with the RICHEST feature on this planet gaia.

1 more things.... my sister have an iphone, and she really hate while she's using skype and have an incoming call, the skype apps will be closed. This is the OS that you just categorized as innovators, while SymbianOS that can trully multitask doesn't have this problem. This is the underlaying strong OS that nokia have. The multitouch and good looking gimmick is easier to make rather than good/strong OS.

[Alex Birkhead]

Superb market primer for 2010, though I think a few areas could be reconsidered, at least for the medium-term:

Nokia appears now to be actively re-segmenting the top-end of the market around mobile computers. This could be a very smart move to sideline Apple in a fight with Maemo (which looks off to a promising start). This relegates smartphones and Symbian to featurephone-successors in the mid-market -- not a bad spot to be, if only Series 60 wasn't such a buggy beast (this weakness also endangers the enterprise credentials). I appreciate NOK is revamping the Symbian interface, presumably partly to address this, but this is going to be hard work as software problems have recently seemed endemic and non-enterprise developers appear now to avoid Symbian like the plague (Symbian hardware is nice, though, and that wasn't always the case in the past when it seemed systematically under-specified -- which shows NOK can fix weaknesses). If the market is segmented like this, Android straddles the segments, and I'm not sure if this is good or bad for it. BlackBerry looks like a featurephone (or 'netphone'), in this context, as do nearly all shipments from other players (excepting HTC and Palm).

Apps may be very important, at least at the top-end of the market, i.e. in the mobile computing segment (also, in the cross-over smartbook and other emerging segments). Also for end-user experience (but not much in revenue-terms for vendors or operators) -- Apps are key to the iPhone's success, despite the very low investment/income for Apple. Operators and Apple's rivals would be wise to chuck some sizeable sums at developers to neutralise the App Store as a competitive advantage (tens, if not hundreds, of millions of dollars). Longer-term, however, is there a battle between apps and web services, i.e. Google v Apple approach, or will they just co-exist? In the mass market, I would place Nokia more in the web camp, although its history and recently expanding ties with Microsoft give it pragmatic balance. Smartphones and featurephones could be perfectly happy with web services, as power/efficiency/connectivity continues to improve, especially if web browsers become more standardised and capable (big mobile operators want this...) -- this also nicely opens up cloud/web and device-independent computing.

Android -- someone has to make this prettier and more usable for ordinary folk...and I suspect they will soon. HTC or Sony-Ericsson, perhaps? If Google merges its Android and Chrome OS forks, as has been suggested, it could create the basis for a defacto mass-market consumer electronics OS, heralding an age of pile-it-high, sell-it-cheap (sub-$50/$100), WalMart-style computing across pretty much all imaginable formats. This could be very dangerous for other mass market mobile platforms. Sidetrack: I think Nokia should actively support Android in Maemo devices, if only for developers and hardcore users to retrofit, to demonstrate open-source Maemo hardware's power/potential, provide a Plan C, and give some internal competition (might freak out Google and others a bit, too!).

badu -- early information suggests this is severely limited, possibly crippled so that it can be overlaid across as many devices as possible, making it more of a traditional featurephone than smartphone platform. In part, I think Samsung has belatedly woken up to Nokia's strength in emerging markets where S40 plays to its strength as a terrific featurephone platform (but Samsung could now be caught out again, as NOK ditches the beloved S40 for an enhanced Symbian to reinvent the featurephone segment). Nokia also looks impressive in the emerging markets VAS space -- Microsoft and Google watch out, imo. Samsung is probably also sick of supporting, and paying for, other smartphone OS that don't really work out for it (PalmOS, Symbian, Windows Mobile. Linux, etc.).

RIM -- yes, they are doing better than expected, and partly for the reasons you outline, but probably mainly because the even more impressive/disruptive iPhone took them off the radar at rivals and mobile network operators; suddenly RIM didn't seem quite so greedy/dangerous after all; just as RIM succeeded Nokia as the operator's bogeyman before it. While short-term, I agree with you that RIM is doing remarkably well; mid-term, where is their mobile computing platform (in stealth, for all I know)? Additionally, their strength in enterprise is more to do with rivals weakness -- my bet is that Android will take them on fairly soon (backed by IT companies some of which you you flag), to support Google's Apps enterprise drive (BlackBerry is reliant on Microsoft's Exchange in the enterprise space). Maemo could also strengthen Nokia in the enterprise space. A shift to cloud/web computing might also change the game (possibly to RIM, Maemo and others' advantage).

Microsoft -- badly wrong-footed, indeed, but I think they are seriously attempting a comeback. Consider Vista > Windows 7, in terms of what they can do when they put their minds to it (Azure and Xbox are other recent examples). A bit of an outside bet, but how about a fundamental shake-up around Windows 8, converging their mobile, desktop, server, cloud, and other OSs (I've lost track of how many they have...). Late to the party, sure, but much more in tune with what Android, iPhone OS, Maemo are doing (all UNIX heritage, not coincidentally, with BSD/Linux and proprietary ingredients thrown in ...). Also, don't forget that LG is supposed to have a big batch of WinMo devices in the pipeline -- this doesn't fully make sense to me unless a stop-gap for WinMo 7 or even WinMo 8, and LG presumably has more incentive to play along than just a big co-marketing and R&D sweetener. Strange to say, but the market may need MS to offset the rise of Google...

Totally agree about the danger of US-myopia, but don't get too Europe-centric! Emerging markets are developing at remarkable pace. China is astonishing, while India, South-East Asia, and LatAm are also fascinating, and Africa very interesting. Your list of players pretty much overlooks China-specific and lesser-known Taiwanese players; they may be relatively small/invisible but they are also very busy and ambitious. Much of this action is VAS- and featurephone-oriented (plus Android in China), but this could actually be a grey area if smartphones are becoming the new featurephones, and with Nokia already a strong player on both these levels (its hidden jewel, imo, totally overlooked by iPhone/Android/US/Euro obsessives).

And, of course, there's also the fairly real possibilities that Palm and/or RIM get snapped up (MS rearguard?), plus Sony Ericsson and Motorola need to get fixed or subsumed.

@Hyoun Park

Totally agree that usability needs to be at the forefront, but I think Nokia is well aware of this, and could well be making 2010 its 'year of usability' for Symbian developers.

[cycnus]

@Alex Birkhead

I don't agree that Nokia should support Android. If Nokia support Android or Palm WebOS (as most US analyst suggest), it would DESTROY the symbian foundation. The enemy will spread more FUD to bring down nokia. It's a bad move/decision. What nokia did right now for the Symbian/Maemo is already the best. It's a pity that nokia symbian phone hardware is such a laughing matter. SE symbian and samsung symbian already use Arm cortex A8, but nokia N series top of the line only use 434MHz Arm 11 CPU, and E series top of the line only have 320x240 resolution. Not to mention the low C-drive problem on ALL nokia devices. This is like having a ferari with 140R13 tyre.

Furthermore, Nokia Maemo is **BETTER** than Google android. Many US analyst point out that android is the next big things because android seems cool. Somewhere in the web I read there were 2 ways to develop car. from inside out, or from outside in. Android were build from outside in, whereas Maemo is carefully build from Debian platform and have a better compatibility with Linux source than Android.

From my point of view, nokia build maemo foundation very strong, like building a 200 meter building but with a room to grow to 2000 meter. Whereas Android, they just randomly picking linux source code and change it here and there to be android. I bet my money on nokia/maemo, but this would be a very interesting things to be watch which one that would really work.

[Tomi Ahonen]

Wow, lots of comments over the weekend. As usual I will reply to each of you indivudally. I will split this reply posting into about 3 parts. So from my previous reply, here the first comments after that:

Hi Romain (before my reply), Jason, Richard, Philipp, mico and cygnus

Romain - I apparently missed you when we must have posted about at the same time. Sorry about that but happy you commented. We agree obviously and thank you Romain for answering Richard Spence directly. I agree with all of your points. I would add that yes, the N95 from Nokia prior to the original iPhone allowed unlimited access to the real internet yes, but the first mobile phone to do so was literally a decade earlier, also by Nokia the 9000 Communicator. Full unrestricted internet, except at snail-speeds of the early cellular 2G networks at that time. And Nokia brought WiFi connectivity to cellular mobile phones on a mass market phone with the N9500 Communicator around 2004, many many years prior to the iPhone. And you can't say that 9600 Communicator was not used as an internet browsing phone - on the real internet, not WAP - as it had the wide screen internet-optimized screen and certainly with WiFi was very capable as a high speed internet device.

Jason - great point about RIM, yes I would expect that aspect of browing stats also to keep growing with RIM. Note also, that their latest quarter they said that 80% of their new subscribers now come from residential users, not business users, so that also means more of the 'frivolous' surfing to pages that have advertising, so expect a continuous increasing use of Blackberries at those pages that the ad server networks support.

Richard (second posting) - Thank you for coming back. About first the role of the iPhone. Richard, I have written a very widely reported blog - 3 years ago - that the iPhone will so dramatically re-invent the whole mobile industry, that we will talk of two eras, the era before the iPhone and the era after the iPhone. So first, we agree on that point. Second, I have ALREADY said so, in a very long and detailed posting explaining why, and this posting of 2010 smartphones is long enough to double its length on what the iPhone has meant to the industry. But most importantly, that change has HAPPENED, it happened in 2007, it is not 'newsworthy' now in 2010. In 2010 Apple is not driving the industry. That change came out of 2007 and the App Store in 2008 but now we have nothing spectacular from them in nearly two years. The iPhone keeps getting better yes, but its now incremental changes not radical innovation.

Then of that focus you have on the apps and why they are so good with the iPhone and you claim nobody installs apps on other devices. Obviously there are a million downloads every day at the Nokia Ovi store, so obviously millions of people would disagree with you. But I want to also point out a specific point of detail. Most of the paid content on the iPhone are games (and second most downloaded content are now ebooks). So very concretely the iPhone is a 'toy' it is used for 'gaming' and by far the most of the money made by the iPhone to any developers is for 'videogaming'. I do not mean to dismiss the iPhone, but point out that its not some aeronautics calculations for the rocket engineers that the iPhone 'smartphone' is used for. It is used primarily as a gaming platform. Its nearest rival in terms of apps and an eco-system is the Sony PlayStation Portable (PSP). There would be many 'real' developers of software who might disagree with the iPhone being a 'serious' platform if most of its paid apps are in fact games. That then its more of a small Xbox or Wii than a replacement of a Lenovo or HP or Dell computer. But lets go with teh gaming.

Gaming content is fair game, eh? So what was the first smartphone - a purely consumer smartphone not used by any enterprises? Not the iPhone, it was the Nokia N-Gage. While it only sold a couple of million units and was deemed a market failure, it did introduce a whole eco-system of game developers, and the games had to be installed by users, so anyone who bought an N-Gage would then go and buy many games. And there was an independent Nokia N-Gage store where you could buy the games and download them (or side-load them). Certainly the same model as the iPhone App Store but years before it. If we want to give credit for creating a new eco-system for developer to launch games to phones, then that goes to Nokia not Apple.

Lastly on the 'real internet' access. You also seem to suggest Richard that if a phone is used to access the 'real internet' it is - or should be - considered a smartphone. That is not at all true. All modern Japanese phones can access the real internet, and over 80% of them do so. Most fo those are not smartphones. And access to the real internet preceedes the iPhone by ten years literally, as first enabled by the Nokia 9000 Communicator. There are over 2 Billion phones in use that have some kind of browser that can access the real internet (and almost twice that number if we count WAP browsers). But only 450 million smartphones. So if you want to look at the phones being used to access the internet - where the modern smartphone in the USA was often the first phone used this way - that is old tech for most of the world and nothing uniquely belonging to the domain of smartphones. Lets not bring 'internet enabled' phones into this picture to muddle it more. No major definition of smartphones includes this aspect. Sorry.

But most of all, Richard, I told you that 'my' definition of smarthponess is the one used by all the major analysts, and all of the major makers of smartphones (including Apple). Why would you not accept this commonly accepted definition. Richard, if you cannot answer me, why would I bother to answer your new complaints. Please address my point first. Thanks.

Philipp - good point and thank you. So you've read the blog before haha... No seriously, yes, that 'IT departments hate change' is indeed an element that will prolong Windows Mobile's lifespan. I think its a major reason why WinMo still sells in its modest levels today. But I do have to think WinMo is near its death. Not all operating systems can survive. Symbian, RIM and Apple are big enough to guarantee major markets for their developers into many years in the future. Android, Maemo and Bada all have good new aspects, suggesting they are the growth and future option. So the other older players which are also small - Palm, WinMo are easiest to face death. I do think they can't survive, not in this ever more competitve space.

mico - thanks. Good point also about OTA upgrades to OS.

cygnus - thank you for the detailed coment and very insightful details about the Indonesia market. I was not aware that there has recently been bad press with the Blackberry and in particular its roaming. Also yes, the arrogance of a company that has recently been growing strongly, is a dangerous habit and can turn many customers away. Meanwhile about Nokia, I hear you, and yes many have been saying the same about the internal memory fo the top end phones. Its a bit of a game for the developers, in optimizing the price points of declining cost of memory, and the present market requirements. You may be surprised to know, that in terms of usage, Indonesia is certainly among the world leaders, so you will be experiencing the limits of top end phones far more quickly than many other even European countries. So you are witnessing the limitations very early and I hope the Nokia designers are keeping close attention to the market there in INdonesia to help design better phones in the future.

I will return to give more comments to the rest of you soon. Thank you all for writing and please keep up the intelligent discussions here, I myself am learning a lot from the comments here.

Tomi Ahonen :-)

[haydn]

Tomi - full of great data. here's one quibble with the interpretation. There is a lot of pent up pressure for rapid change in the business market with major enterprise apps vendors persuading IT departments to let staff use their own phones. Part of the reasoning behind that is, as one of the vendors told me, the iPhone is causing an Y2K effect in business. That remark was made about the UK market. The fascination there I believe is that IT departments will not determine phone types and will take on a different role - to secure networks against a variety of risks in a variety of handsets. It could make the business market far more volatile.

[Tomi Ahonen]

Ok, more of my replies..

Hi James M, Brendan, Mr Swiss, Freem, Jason, Alexandre and JB. I will reply to each of you individually

James M - thanks. Good point about developers, Nokia has a history of hundreds of thousands of them from early in the decade so yes, thats very true. About the Symbian Foundation, yes good point, but I feel - perhaps am wrong - that the move by Nokia to spend one billion dollars and to buy out the partners, then to release Symbian on its Foundation, was to get it to be single-minded and be without influence (of Nokia's rivals). I think the 'desertion' of non-Nokia handset makers has clearly spoken this in loud volume, that increasingly Symbian is starting to be same as Nokia branded smartphone. It is not that yet, but essentially all of Symbian owners present or past have shifted smartphone production to other OS's. So while yes, in terms of exact ownershp and degree of control you are right, its a Foundation, I believe that Symbian is more now a Nokia OS than ever before, if perhaps a 'de facto' Nokia OS rather than 'de jure' one. I am sorry for not making another discussion about Symbian, so I did take some liberties on that part in the blog. I don't think it matters in who wins or loses... Fair? I grant you you're right, I just decided the blog was long enough to not go into the politics of it...

Brendan - thanks, and yes, same goes for you as James in the above, I did decide not to discuss the ownership issues of Symbian, as I don't think it really matters in who wins and who loses, and as it is nearing the moment when Symbian = A Nokia branded smartphone. Not there yet, but is nearing that already. Today less than 10% of Symbian phones are on all other brands combined and I expect that to diminish to about 5% by mid year of this year..

Mr Swiss - thanks for the hmmm colorful comments.. Lets not get too much upset in Richard Spence's case, he has a valid view and lets be tolerant of differing views here. But yes, thank you Mr Swiss for several great examples and historical cases, I totally agree with you on all of those of course.

Freem - so you think Nokia's current smartphones are all bad and their apps are bad. Fine, that is a fair evaluation in your opinion and there is supoort to many of your positions by others in the industry. It is however, that you are perhaps picking on tidbits of not real impact (in most cases). So if the QWERTY keyboard on the N97 is only 3 lines not four or five, and its space key is a bit weird - that is still MORE than you get on any full-touch screen phone. And even if its not the 'same' as real QWERTY, it is significantly better than T9 - meaning, that the user can both type on it 'blind' (not looking at the phone, ie with the phone hidden underneath the table or inside your pocket - and is better than either full touch screen phones or T9 phones. Only 'true' QWERTY phones would be better. This is not a 'bad' solution, it is only 'not the best' possible keyboard. It is significantly better than most rivals. Same of the calendar issues you identify on some Nokia business phones. Again, that is not anywhere near the majority of Nokia's smartphones and it is also something Nokia can relatively easily remedy into both existing phones and future phones. It is very typical Nokia philosophy to improve its existing software, so the next edition is a bit better, and the following one again a bit better. Like early cases of GPS discovery of the device. The first GPS were very slow but soon got much faster, etc.

I am not disagreeing with you that Nokia has a lot of individual issues in individual cases, but they have a broad range of phones and there will inevitably be better and less well developed phones. Same is true of RIM and Samsung etc etc etc. Some will be good, others not so good. But when you say that Nokia 'is in decline because they overslept the industry' then I think that is too harsh. Nokia saw all of these matters coming long before there was an iPhone. Nokia had touch screen phones, had an apps store etc long before June 2007. But they were not all perfectly implemented. As to the pricing, that is a tight rope that Nokia needs to walk very carefully, to be sure it generates some income, but that it won't infuriate its primary reseller chain - the operators/carriers. So there are times they charge quite high prices for services but I would say that is 'healthier' to have a paid business model, than giving everything for free and hoping for ad income... But yes, I agree with you there are problems and I would say Nokia has a good history of fixing them over time. So this is not something I would see as in any way crippling to Nokia, its 'business as usual' ie any given phone may have some issues upon launch, and then those should be addressed and fixed in subsequent versions.

Jason - I am not competent to comment on what you said, expressly because I don't personally value touch screens over QWERTY phones (am totally SMS addicted, I have had at least one QWERTY phone since 1999 and currently both of my phones are QWERTY phones). You may be right, and certainly all who compare the iPhone to any Nokia touch screen will usually start by exclaiming how much worse any Nokia touch screen is compared to the iPhone. But - so are most other touch screens by most other phone makers. I would ask you Jason, do you think there are any makers whose touch screens are as good as the iPhone? Then it becomes both an optimization game and a pricing game. If a customer can truly afford a 600 dollar phone and considers the iPhone 3GS or the Google Nexus or Nokia N97 or Blackberry Bold etc, they will pick based on what particular feature issues they like. If a good camera and flash are more important than the touch screen - sorry, they go N97 and not the iPhone. If the QWERTY is necesary, they go Bold without question. And so forth. And Nokia can certainly make its touch screens better and its UI better, but honestly, I do believe that Apple will always hold an unbreachable lead in this part of the UI - it is Apple's core competence and they have been so much better than any rivals in the PC space since 1984 when the first Mac was released, and in the MP3 player space since 2001 when the first iPod was released. This will continue to be Apple's core competence.

But having the best touch screen will not give you the world. In high-end phones there are many other features and abilities that customers expect and demand and Apple is only medicore in many of the other aspects (like the camera, flash and QWERTY as I mentioned). But more than that, the average smartphone sold in the world costs only 300 dollars, a price point where Apple has nothing to offer but Nokia has a range of smartphones including touch screens. If your budget can only get you 300 dollars, you won't be able to consider the iPhone. Its like looking at cars, sure you'd like the Ferrari but can't afford it, so you forget about supercars and go to the Toyota dealer instead... And while it is CERTAINLY not as good in touch screens as Apple, Nokia does offer very low cost smartphones, increasingly low cost touch screen smartphones. Apple can't enter that fight unless they do an 'iPhone Nano' for example..

Alexandre - very good points, thanks. On the point that Apple innovated with a 3G phone not capable of video calls, here I have to disagree, remember Nokia's first 3G mass market phone, the sad 7600 (the phone where the keyboard was on both sides of the display). That had no video calls and it was out I think around 2003. So this is not something Apple brought us haha... But otherwise, very good points, including hte issues with web browsing.

JB - you make a great point and yes, we could measure smartphone market by other criteria and get a different result. That is true. But having the best technology is no guarantee of market success, look at the Concorde and the 747 - launched at the same time and the Concorde was far superior in technology but sold only 14 copies, while the 747 has dominated the skies and sold over 1,000 planes. Same of the Betamax vs VHS, the Betamax video recorders were at every generation technically better than VHS rivals, yet Beta lost and VHS won the VCR wars. What I have done in this analysis is to focus expressly on that carrier/operator and market angle, because it is decisive in the sales of phones. You need to understand this, that two thirds of the global smartphone market is totally NOT open to free competition.

And then you suggest that if we ask consumers, they will not prefer Nokia and Samsung.. Well, in those markets where there is totally free competition, in smartphones, Apple says itself that they struggle while Nokia often has half of the total market share - plus a strong resale value (yes, there is a resale market in many countries for used phones). As to Samsung, I honestly don't know how popular their smartphones are because they have been such a small player so far, but their mainstream phones are very popular in these markets. So if we take your point, that we should let free markets decide, and the consumers will pick the best phones - sorry, the truth is out there, the evidence is overwhelming, that 'regular customers' in those markets that are not distorted, will prefer Nokia branded smartphones far above any others. Part is branding, part is pricing, part is distribution and tech support, part is design and usability (remember nearly half of Asians use MMS and iPhones for example did not do MMS until now), and part is marketing communications ie advertisingn and promotion. Regular marketing competence. Nokia totally rules on this and their ace is the distribution channel dominance. Even in villages in Africa where Coca Cola does not ship drinks - because there is no electricity - you find Nokia phones. So by your criterion, Nokia (and Samsung) still win. And I'd argue, so does RIM now.

Thank you all for writing. Will respond to the rest soon.

Tomi Ahonen :-)

[cycnus]

@Tomi

Thanks for replying, your blog is really great, it seems that most people that post here is an expert in mobile industry. :)

I wanna to make another comment again. I know that average user don't want to care about what inside the phone. I believe it would be safe to say 90% buy the phone because of 3 things: looks (size, color, model, weight), brand, price (prestige, budget consideration). But I don't think that nokia should make an excuse to fill their top of the line device with second grade or third grade material. It's like a ferari selling their car with a 3000cc engine because most of the buyer is a women who doesn't care about the engine power and won't drive more than 100mph and just care about the looks.

So, nokia should fill their N86/N97/N97mini/E72/X6 with the best CPU as of when it launched (at that time is Arm Cortex A8). These device have the same price as N900, why can't it have the same CPU and memory/RAM? After all, if someone would throw money to buy the MOST expensive phone in nokia lineup, one would expect the best of the best inside that phone.

What nokia did right now is like what the american car company did. I just hope nokia would realize this before it's going the motorola way.

[Davide Rota]

@ cycnus

Here I am! :-)

I would like to clarify two things:
First the "let me sum it up" part of my post was not my view of things but what I read and very roughly summarized of Tomi's blog posts.
Second I'm form Italy, born in Italy and I've never been to USA :-)

Now about IT departments and how people value features, as I said, it was not my vision but a discouraging vision (and I'm really happy you bring me proof that is not always that way)

About Symbian... a little of background: I used WinMobile when it was first called PcoketPC, then changed for Palm (Tungsten T1 and T3) because it was a great OS, simple snappy and with good quality apps. WinMo in comparison was slow, its interface was a smaller scale desktop interface, NOT a mobile interface, and quality of apps was very low.
Then I bought a Symbian S60 phone and fall in love! It had multitasking, lots of apps, a browser (webkit) and a mail client, all in a small package with the phone. It was limited by ram, cpu and some poor OS choices but it was good. Had some different Symbian phone, the last being the N95 8Gb, but in the end Nokia remained static for years without polishing the OS and the result was that the first iPhone (still limited in many ways) was way better!
Then Nokia continued to do nothing, and the iPhone got Apps and then became the 3GS.
Now Nokia is starting to react and I really hope they can make some great devices, competition is very welcome, but I feel that the Innovators of the last 2 years are Apple and Google-Android (also Palm with WebOS, but it's marketshare is tiny!).
N97 in my opinion, is another error: another pricey S60 phone, with a resistive touch screen??

I'm well aware (and not happy) of some of the stupid locks apple puts in their devices, like being unable to multitask 3rd party apps and I accept them because there's nothing better still. I played with Android out of curiosity and I think it's great for geeks to explore, I love it's notification system, but it's beta software next to iphoneOS!
Anyway, like me, a lot of iphone users think it could use some tweaks ( http://www.tuaw.com/2010/01/10/dear-apple-what-we-want-to-see-for-iphone-4-0-part-1/ ).

Also about Symbian I still remember my 6630 always shutting down Agile Messenger in the background to recover some RAM while I was using the browser! :-)

[cycnus]

@Davide

It seems that we were in the same boat :). Love the symbian & hate what nokia did in the last 2-3 years. They could do it better, but somehow, they do nothing :(

Android is cool to play, and it would surely dominate the market in the short term. It would be very interesting to see this device in the long term. I also anxious to know the real N900 number.

It seems to me that Asian like to play around with new gadget more than other part of the world :). Maybe this is a reason that Akihabara is well known for a place to see new gadget.

[Tin Brezicevic]

@Richard Spence
In regards to your comment about Nokia not producing a smartphone currently. What would you call the N900, then? According to your definition of a smartphone, considering it has a superior browser than the iPhone (flash capabilities) and an easier way to upgrade firmware (dont even have to connect the device to a pc), your comment seems quite silly - and thats not even touching the capabilities of a Linux OS on a mobile device, or the physical improvements.

@Tomi
First time reading your words, very interesting read.

[antonio]

So, iPhone only sells on the US? You know what was the best selling phone on France this Christmas. Hint: not a Nokia.

Also, the way you blatantly ignore the iPod Touch is a BIG piece in this equation is appaling. iPhone sales figures should ALWAYS be added with iPod touch sales, to realize the true dimention of this platform

You also say Apple is limited by only launching hardware in June. Well, please stay tunned to the 27th: iPhone OS 4.0 + yet another device for the iPhone + iPod touch ecosystem. What will you say after?

Some nice point though. If ever SE launches a PSP phone, they could be back in the game. And they do well in going full force with Android instead of s60, that i absolutely hate. SE killed the BEST symbian UI (UIQ3), and they will go nowhere with the current symbian

[Bala]

Hi Tomi T Ahonen,

I do agree with you that 2010 would be a tough year for smart phone makers.
I expect Nokia to be on the top of others because their strategy of low priced smart phones with rich features is going to work out.
All they have to do is to revamp their symbian series OS which I hope they will do.
I accept the fact that Touch Screen is no match to the normal QWERTY.
I have used several nokia phones in this decade : 8290, 6610, 3120b, 3320,5130, 5310, E61 & now 5800.
Only phones I used outside nokia territory is BB Curve 8320 & Samsung R225.
I realized after my experience with BB & Samsung,I can say Nokia phones are the far best, even though there is nothing wrong with BB (except some small glitches in web browsing) & Samsung phones.

At the end of the day , it is not the app stores going to do the wonder.
It is the quality/reliability/durability of the phone which satisfies or eases the needs of everyday work - NOKIA is the best in doing that successfully I believe.

My opinion may seem biased towards nokia but I am writing this based on my experience and everybody has their own story to tell.

-Bala.

[Tomi Ahonen]

(Am adding more replies..)

Hi Hyoun, Davide, cygnus (again), Alex, cygnus (yet again) and haydn

thank you all. will reply to each

Hyoun - good points. First about RIM / enterprise. I am not in any way doubting that there aren't 'rogue' handsets out there. That is not the point - yes, there will be the random non-standard business phone. It is the bulk purchase. The enterprises won't go out buying Android or iPhone devices. The 'approved' platforms and devices will be the ones that sell thousands - even tens of thousands of units per enterprise per year. That is why RIM has such a solid 'lock' in units sold. It won't be 100% ever, and it is likely to gradually decline in market share in the USA but equally, because RIM is now the clear quality leader in enterprise phones, it will also mean that RIM will grow by far the strongest in non-American markets.

I do agree with you that all handset makers focused too much on the hardware and not enough on the UI, that was a huge contribution of Apple among many they made in 2007. Totally agree. And now the major handset makers are all attempting to improve their UI, some do it better, some not that well haha...

On HTC, I also agree and think that perhaps part of the reason they had to take more of a pro-active role in the UI and look-and-feel of the handset was because WinMo was so often delayed and under-delivered what had been promised. So HTC kind of 'had to' do 'something'. But they have certainly been the best of the rest, behind the three big brands of smartphones.

Davide - I hear your pain. I sense in you the typical 'perfectionist' approach to technology - please don't be offended Davide, I don't mean to accuse you, but often perfectionist technologists feel that because one tech is superior, it has to then dominate the market. And it never does. Concorde was the far superior technology to the basic boring 747, yet the Jumbo Jet took over the world and the Concorde never even broke even in operation nor as an aircraft to its manufactures. The betamax was for every generation a better VCR than the VHS family of video cassette recorders, yet Betamax lost and VHS won. Apple sees this in the Macintosh which has been for every generation the best operating system yet Microsoft's Windows a far worse OS rules the world and the Mac never had over 10% of the global PC market.

I do not disagree with you Davide at all, that there is passion and excellence in the iPhone (and all things Apple). I am not so sure about Android, I do think it has now the darling moment in its life, when everybody can wish it is the perfect OS before they have used it for a while, but it certainly may be one as well. And certainly most other OS's are not - and probably never will be - of such high quality especially in usability (as the iPhone specifically).

The sad truth in economics is, that having the best quality will not get you the world. BMW or Mercedes Benz or Audi or Cadillac in the US or Lexus brands sell far less cars than Fiat, Toyota, VW, Ford, Renault, Nissan etc. Quality will not bring you the world. But Apple know this, and are quite happy to not try to win the world (with the Mac) and know they can be far more profitable if they keep focusing on the excellence rather than total market domination. So I hear you, but I think you are hoping in vain... It will still be the market economics which will determine which smartphone sell in large numbers and which sell in 'niche' levels..

cygnus - thanks again, good stuff, we agree.. Good point about multitasking.

Alex - thank you very much. First, good point about the re-organizing of the market segmentation. Nokia seems definitely to be doing that with Maemo - I would argue that Google branding its Nexus as 'a superphone' plays into this game as well. And the more Nokia can isolate the iPhone only to the top end, it leaves the 'vulnerable' Symbian mid range phones more free to seek their customers. This comes back to my call for Apple to release its iPhone Nano soon, they can't let one model per year cycle to continue...

Good thinking on the apps/services angle. I do feel myself that the apps enthusiasm is short-lived, it is now particularly driven by Apple because the iPod Touch is a new generation PDA (a form factor that was all apps and no services back when we had no cellular connectivity and almost no WiFi). And the iPhone very happily borrows from that business model. As I have argued in my apps store rant, the apps stores are over-hyped and already today services earn what was it 800 times more (yes, nearly 1,000 times more) in revenues in 2009 than all apps sold to all smartphones not just Apple's App Store. So the services side utterly dominates, elephants to ants - and this is likely to expand as we go more to the cloud..

On Android I think you're a bit optimistic. Remember that the mobile phone biz is not an open competition, it is severely controlled by the distribution chain. Just making a nice cheap device will not get you any sales. You have to convince the carriers/operators of the world to carry your device. They are quite happy to take a 'sexy' brand like an Apple or Google (or perhaps Lenovo even or Dell) but they have to support all the phones and are very risk-averse. They will go for mass market phones from Samsung and Nokia and LG, not from newcomers. Not in a long while. So Android cheapo-devices, I don't see becoming relevant for many years to come (but eventually, all prices do come down thanks to Moore's law..).

And as to Nokia doing Android - I am sure that won't happen. No, as long as Nokia owns two of its own OS's (yeah yeah, Symbian Foundation, ok they 'control' two) they won't adopt another run by a competitor. Won't happen. If will be those makers who don't have their own OS's who will jump on Android and those like Samsung who support several OS's won't do more than a token Android device because they have their own Bada to support. No, the business strategy and market message would be suicide to their own OS. Won't happen.

On Bada - I've often said that Samsung has taken a 'we will defeat market number 1 by being better at everything than number 1' strategy. It could be simplified to say that with phones its 'Nokia envy'. Whatever Nokia has, Samsung will do or have. And if you look at their moves the past decade, very much of it can be said to be Nokia envy. Bada fits in that pattern.

Then on RIM, again you make a great observation that RIM was indeed treated with doubt by the operators/carriers, but as Apple came along with somewhat 'outrageous' demands (initially wanting to get part of traffic revenues, which they did extort out of AT&T and apparently a couple of their first European deals but now have abandoned) so yes, RIM was no longer feared as so 'dangerous'. But then what you suggest that it would lose to Android at the enterprise, here you are really totally wrong. I have worked there selling telecoms services for a carrier, to the large corporate accounts and it is totally not an open competition and I've been in those conversations where the IT guy just decides he does not want the hassle. Then the purchasing department has absolutely no clout to try to bargain in the internal politics. Won't happen. It took RIM five years to hit their first one million enterprise customers - this with the world's clearly best enterprise oriented solution. Android's solution won't be anywhere nearly 'superior' to RIM's and they definitley won't hit one million enterprise subscribers in five years. Won't happen. The dynamics of the market place totally inhibit that. Only WinMo or E-Series has the chance to cut into RIM, not Apple not Android. No way.

On Microsoft, yeah, anything is possible but they are so badly in trouble, really I see strong parallels to Motorola in basic phones. But specifically you mentioned LG. They have just announced at CES that while they support 4 OS's for smartphones, half of their smartphones this year will be Android devices. Again another nail into the coffin of WinMo.

I did not discuss the emerging markets much for the good reason that they form such a small portion of the total smartphones (new sales) market today. There is a big after market in particular of Nokia smartphones. But yes, even like you say, its featurephones more in China, India etc, not smartphones. So with the topic of this long blog, did not discuss featurephones..

cygnus once again - thanks for posting so many comments cygnus. You are almost doing my job for me haha.

haydn - again, you make a valid point but it is really miniscule in its effect. If we 'allow' employees to use their own phones, those will not suddeinly all be magically iPhones or Androids. They will conform to the overall market size - with a lag - of that country. But that won't stop the employers still giving employee phones - which will predominantly be Blackberries - to their staff. You don't have to accept it. But the only phones that get bought in the thousands and tens of thousands as emnployee phones (on a global scale) are RIM and E-series devices. Some misc Palm, WinMo, SonyEricsson etc random smartphones of established platforms will also be in the mix. But the bulk sale is what helps rule that segment, individual few employees bringing their own phones won't rock that boat meaningfully, not for many years to come.

Thank you all for writing. I will return to answer more comments for hte others who have left comments

Tomi Ahonen :-)

[haydn]

Tomi - I am no advocate of the iPhone or RIm but I think you are underestimating the surge behind the iPhone as an enterprise device and the extent to which enterprises are and will opt for employee self-use policies.

[Jason Bowers]

Tomi - Your preference for phones with keyboards it the exact opposite of mine. I can't imaging having to live with a phone festooned with buttons. The wide expanse of a screen with soft buttons is the only acceptable format. I think the majority of people new to smartphones will prefer more screen over buttons as they don't have a need for buttons already. A big screen is more appealing than a small one or a fat phone.

[Tomi Ahonen]

More replies..

Hi Davide (welcome back), Cygnus, Tin, Piot, Antonio, Bala, haydn and Jason. I will reply to each individually

Davide - good points thanks. About that point, that 'innovation has shifted to iPhone and Android' - here I beg to differ. It is true that the iPhone was a transformational phone, the single most important mobile phone handset ever, even more important than the Motorola first handheld. And Google has recently been in the news with various Android phones. They have held the global IT media hype cycles for most of the past three years since the iPhone was announced in January 2007.

The iPhone had one major innovation, its user interface. Arguably that included or were separate items of multitouch screen and the accelerometers (for a phone). But the rest of what Apple did, was to do things better or more user-friendly over the past 3 years, not truly innovate. It has not been an innovator phone in terms of technology or contributoin to the industry, it has been a laggard phone with severely under-performing and often obsolete concepts that Apple has since gradually and often begrudgingly fixed like MMS now.

Now, for the US market, definitely the iPhone has woken up the industry and for many it showed amazing abilities. But the truth is that all the cool stuff of the iPhone such as touch screen, 3.5 inch screen, slim design, the app store etc - had existed long before the iPhone. We can't credit Apple for bringing those innovations. In most cases it was the Japanese who did it first.

Same for the Android now. I don't honestly see amazing contributions on Android devices, do you? I mean something that hadn't existed before. The Nexus is very much a Google clone of the iPhone, and many Android devices with QWERTY keyboards and touch screens seem copies of equivalent earlier Nokia phones etc. While not necessarily always best implemented, and at other times (the E90 Communicator for example) hideously over-priced, nonetheless, Nokia and the Japanese and Koreans have done most of the innovation in this industry and currently the iPhone and Android have not given me anything really to consider a valuable addition. So they do have the hype and thus the attention of the press but they did not come with the honest creativity and inventions for the industry.

cygnus - good point about Asians and gadgets

Tin - thank you very much. I hope you will return from time to time and find more value here

Piot - thanks, you've clearly been reading the blog for a while haha. Many points. First on Apple 43% in US vs Blackberry in US. Yes good point, except that BB was focused first only on enterprise and only North American market (and as I explain, it now gives them a 'lock' on that market). What Blackberry needs to grow is to break out of both the US market and the enterprise market. Their CEO said that 80% of their phones sold in the fourth quarter were to consumers. I do believe - but haven't now read the report to be totally sure - that the number you referred to was 'subscribers' not Blackberry smartphone sales. The subscribers will be far more enterprise than consumer obviously and their subscriber total count far lags the total phones shipped count suggesting many get the phone without being subscribers. So BB is executing a very difficult maneouver and doing it incredibly well. To me RIM has 'correctly' adjusted their product line to not lose US customers but to become desirable with overseas customers.

But Apple left US shores in 2007 with the aim of replicating the world success what they had in the US, and as Europe is twice the size of the US, that two years later they don't have more sales out of Europe, and then add another US sized smartphone market out of advanced parts of Asia - that is to me worrysome. To me it says that Apple is severely underperforming in the rest of the world, as it is a consumer device. It is far too 'American' for European and Asian tastes and still needs to 'grow up' a lot. And Apple's distribution strategy has been another poorly executed aspect which they now are addressing. Make sense?

On LG Prada - I was not talking of the Prada which was LG's commercial product but the industrial design winner. There were many phones in that rough form factor already in Japan and Korea at the time, long before the iPhone was announced. I did not suggest that Apple cloned the Prada in four weeks, but rather that its looks that so amazed the US media were actually not unusual in Asia. Maybe I was not clear.

On Samsung Bada, you are totally right, except that so too was the iPhone OS/X a new entry to phones as has since been Android. Its 'easier' to do a fresh new OS for smartphones today, knowing that they'll be used for video sharing rather than videocalling, for Picture Messaging rather than email etc etc etc. But yes, Samsung Bada success depends on execution and I'd put my money on the Koreans. Have you any idea how incredibly demanding are Korean domestic customers with the world' most advanced broadband digital internet and wireless society? Today 100 Megabit/s speed is standard and Gigabit broadband is the normal upgrade; the nation has the world's first nation-wide WiMax network; both CDMA2000 and WCDMA 3G networks go nationwide and Seoul has the world's largest WiFi cloud. How incredibly demanding are those customers? I would certainly put my bet on Samsung delivering a 'good' OS not a bad one haha..

The you say 'don't forget that it's North American companies that have been carving up the smart phone (OS) market.' Actually no. Only RIM and Apple have grown significant market share past 2 year and they have not carved up the world's market, they have cut up the market of Windows Mobile. Sorry you are patently wrong.

The Canalys numbers are generally good for the current period(s) and the recent trend has been growth in the US. How they predict is another story. The EU said that Europe will have 50% of all phones smartphones this year. Lets see how it turns out. But regardless, for smartphones, US is the small pond, the World is the big pond. And to be a global winner you have to succeed in the big pond not the small pond.

Then you make some nasty claims about me saying 'Market share figures appear to get mixed and matched to support your own arguments; There is the occasional bit of history revisionism' - now on these points, Piot - serious claims - you better back them up. Where have I done history revisionism without clearly stating I have changed my mind for X reason (the facts for example have come out on a previous hypothesis).

You also say 'You may display a little Nokia bias. Perhaps a little anti-Apple sentiment.,, but that's not the point. Despite claiming that there is a definite "after iPhone" era, your conclusions often appear to be based on "before iPhone" thinking.' I am sure I have bias in cases of knowledge vs not having knowledge. I do know Nokia well because I was employed by them, am a Finn so my Finnish news sources will regularly feature the company, I have a lot of info constantly coming in from past colleagues there etc. I do not know for example HTC very well, so I cannot always tell very accurately what they are up to, because I do not know. So if you mean by bias, that I talk a lot about them, certainly. If you mean that I try to color the stories in favor of Nokia, on that I have to disagree vehemently. I am openly critical of anyone who does dumb things in the industry. And while Nokia has done many things right they are not perfect. Just this past Autumn I was very critical of them with the announced netbooks project. I have also been openly critical of many of my other long-standing customers like Vodafone's entry to fixed landline business (was proven right) and Motorola's desperation move into smartphones.

The line about pre-iPhone thinking is cute. I would challenge you to find me evidence of it - where was I in any way 'more' of a pre-iPhone thinker than any of my contemporaries at that time. I would argue that I've foreseen this change in the industry very early and very well. But it is change that is happening, so you cannot accuse me of having said something 'obsolete' two years ago, if all others of my peers also said so at the time.

antonio - we agree on some points (PSP etc) and disagree on others. The one point I have to address is the iPod Touch. No, you CANNOT cont the iPod Touch in any discussion about 'smartphones' because it is not a smartphone. It is a PDA. Now, if you are a software developer for apps, then yes, the OS/X of the iPhone and Touch are the same, so that platform has more users. But smartphones, you cannot count those non-cellular PDAs. They are not smartphones. By nobody's definition are they smart 'phones' because they do not have cellular connectivity.

Bala - thank you for your views. It is part of the beauty of this industry now, that we all can have individually appealing devices.

haydn - Totally not true. The enterprise 'surge' of iPhones cannot be huge, because 1, many iPhones are with non enterprise type of consumers, housewives, kids etc who do not have a 'corporate job'. Of the business users, some will have iPhone they do not want their company IT department to 'mess with'. And of the rest, yes, some will then go fight for the right to have the iPhone as their company phone, and yes, if you are reasonably high up in the organization like a VP, you can get it. Most who ask will not get permission.

We are looking at a tiny fraction of one percent of all phones now. A tiny tiny fraction. Meanwhile RIM sells tens of thousands of phones to corporate clients per client per year. Its totally a non-contest. There will be some - but Apple's own numbers said less than one percent of ALL iPhones in use are with enterprise customers. This is totally not happening. They are the rare exception, in some media industries in America, thats it. Don't kid yourself haydn.

Jason - you write a bit like you came from a North American market (that kind of view is common there). If yes, your first smartphone is now in 2009 or 2010, and you are not addicted to SMS, then you find no real value out of the QWERTY. But did you know Jason that in the Philippines they average 25 SMS sent per person per day. Average. Heavy users in South Korea and Britain send 100 SMS per day on average. If you are addicted to SMS - 3.4 Billion people on the planet already use it and Americans have discovered it recently - even Punxetawny Phil will send his weather forecast via SMS - then the game changes.

If you are not addicted to messaging on the phone, then you have no issue with it, and thats fine. The majority fo the world is not like you. The Australian and Belgian studies on SMS addiction said SMS is as addictive as cigarrette smoking - and far more addictive than internet browsing. Others are like me on this, they can't consider a phone without a QWERTY.. But not everybody is like that, for sure.

Thank you all for writing. We should be up-to-date now with all replies up to this one.

Tomi Ahonen :-)

[Davide Rota]

@Tomi
Thank you for your reply, as always very complete and with good points.

I agree that Iphone is nothing new when you consider form-factor or hardware specs but my view is that hardware per-se is not an innovation: everyone can buy the latest ARM chip or oled display and build a phone/pda/tablet. Thus having only the hardware is useless. HTC HD2 for example is beautiful technology brick wrapped in a nice package (sense interface).

Innovation is to use a known technology in a new way or market: for example the iphone was the first important device to use a capacitive TS and doing so it made all resistive TS obsolete (stylus included)! Another example is the unibody design in Macbooks, they used decades old CNC machining technology to carve a notebook, where competitor used only crap plastic.
Also important is design that makes devices with similar HW specs feel completely different.

And last but even more important (and you know very well) is the software that moves the hardware: the best example is the safari browser. We had tens of mobile browsers but I think that the Apple one is so much more snappy, usable and complete that it just stands in another class. On my nokia I never really tried to open an un-optimized page because it was so awkard it just wasn't worth the hassle. SafariMobile gave us the full internet, meaning it was not desktop experience but at least was acceptable.
Apps are a similar example: sure there were mobile apps, but the price was absurd, the quality very low and the number of good software houses even lower.

So to sum up I think you're right when you say that iPhone was no revolution hardware-wise, even lacked some old features (like MMS, that I never used BTW), but Apple innovated where there was more need to: control paradigm (multi-touch, finger, gestures etc..), UI and software.
Android was the first and still only mobile player to acknowledge this and to try to catch up with comparable quality OS, UI, browser etc.. They are not doing nothing revolutionary, but are innovating with some Google services (g.voice, maps+navigation, mail). Also they are pushing the limits software-wise (multi-tasking) and hardware-wise (snapdragon CPU, highres OLED display). Some competition for Apple!

In comparison I feel that RIM, Microsoft and Nokia are ignoring these changes (see N97 or BB 9700) and this is incredible after 3 years. I'm beginning to think that Steve Jobs was right when he told us that iPhone was 5 years ahead of competition! :-D

Ok this reply is long enough! It's always good to speak with educate and knowledgeable people!

[JB]

Tomi, I'd argue that the majority of global SMS is done on T9 so a transistion to soft keys will not be a deal breaker. I also know you'll tell me if I'm wrong. I admit to suffering through the US cellular system but I truly believe screens will beat buttons.

[cycnus]

@David Rota

I think what I'm gonna said here might be categorize into the 3rd world vs. USA using pattern on cellphone. We (the person in the 3rd world) is really care about MMS. I'm more on the e-mail than MMS, but my service provider give me 1000 free MMS each month last year, so I use it anyway. But my domestic helper that who's salary were bellow US$80/month were onto MMS (and SMS) in a big way. It's the only way she could sent her photo to her family in her village easily because none on her family could operate computer thus can't use email.

2nd. I believe the web browser in Nokia were also based on the same webkit that iPhone have. Therefore web pages optimize on iphone would also benefit for Nokia. Furthermore, nokia have the flash plugin supported on their phone. I can see youtube, and hundreds of youtube like pages right from the phone. Where's on the iphone I could only watch youtube with a dedicated player, and not a homepage with embedded youtube video in it.

@JB
If you live in the SMS addiction society, you would now that the veteran user of texter don't look at the phone nor using T9 just like a good secretary when typing on the keyboard. Therefore having a soft keyboard might slow down typing speed.

[Davide Rota]

@cycnus

Here in Italy sending mail from the iphone is free (within the data bundle) while MMS can cost as much as 0,7 - 1,4 USD so it was a technology doomed to fail due to its high price. I can fully understand that if the price is lower or even free it can be quite useful: non everyone reads email and few read email on the phone.

Yes Nokia browser is also based on webkit and I don't know why but as fare as my experience browsing full pages on my N80 or N95 is just so bad it's worthless trying.
It's true that flash isn't supported and there are some flash-only sites but it's also true that flash on mobile is again so slow that it's useless, as good as not having it at all (Again tried on Nokia phones).
Regarding youtube and similar flash based video sites I think Apple solution is best: instead of letting unoptimized flash engine decode the video we get a fullscreen streaming video that is decoded in hardware by an optimized engine.
Also I don't see the advantage of watching a video embedded in a web page on a small mobile screen: everything will be small!

Just as a Atom netbook: if you watch a HD video decoded with HW acceleration it's fluid and perfect, if you watch the same video in youtube HD (flash) the CPU will go to 100% and video will stutter!
Even on a full MAC/PC computer the HD flash video (Youtube, Vimeo etc..) will use hte CPU much much more than a properly decoded MP4/AVC stream.