Quick notes on phone market: Android/Google and SonyEricsson quarterly data

A few quick notes on the smartphones bloodbath, and the related 'dumbphones' market share battle. We are in the middle of the Quarterly results cycle, and I will post a full update when all major manufacturers have reported for April 2010. But last week we got the first two companies with quarterly data - Google and SonyEricsson. So lets do quick summary of what these mean.

First on the overall numbers. The January-March quarter usually reflects a significant decline in quarterly sales from the Christmas quarter before. I am modelling the Jan-Mar quarter in all mobile phone handsets to decline 10% (ie sell at 90% level from Oct-Dec 2009). The smartphones segment is hot and for that I also model a decline, but a smaller decline of 7%, ie am assuming smartphones sold 93% of the level in Jan-Mar quarter than they did for the Christmas quarter.

So for any handset maker, if they lost sales from the previous quarter by ten percent, they are fine, and held market share. Similarly any smartphone maker who lost sales of 7% is still 'holding steady'. Any maker who loses less than that is actually picking up market share, and only unit sales losses greater than that mean actual lost market share. So we have two major brands reporting opposite numbers.

Also please remember that from the beginning of 2010, we have 'pirated' phones included in the overall market size (they were excluded in all quarterly and annual data reported by major sources in 2009 including this blogsite). So we do have to adjust actual market share comparisons from 2009 with the pirated phones.

SonyEricsson back to profits but massive loss of market share

SonyEricsson reported its quarterly results and surprised analysts by reporting a modest profit, their first in seven quarters. That is of course good news, but we should expect any maker to report profits. We won't particularly celebrate that step. The bad news for SonyEricsson is that they told us they sold 10.5 million handsets. That is a drastic decline from 14.6 million handsets in Q4 of 2009. SonyEricsson unit sales are down by 28%. What it means is that their market share is now about 3.4% (down from reported 4.5% market share in Q4, and down from 'actual' ie pirates-included market share of 4.1%)

So, first, ZTE shot past SonyEricsson to take the title of 4th biggest mobile phone manufacturer of 2009. It could have been an anomaly for one quarter, and perhaps SonyEricsson had a particularly bad quarter for Christmas and ZTE a particularly good one.  But we hear from ZTE that their sales are so strong currently that they expect to sell 80 million unit sales in 2010. Counting for growth, that gives them between 14M and 17M for this first quarter. And SonyEricsson sales are dramatically down. So they 'lost' that 'place' in the rankings and are now solidly in fourth place.

Secondly, expect Motorola to report also a decline in sales, but if Moto manages to lose only 11% of its sales, Motorola would jump back into Top 5 and kick SonyEricsson out of the Top 5.

Meanwhile RIM is looming. We know RIM's 'unconventional' quarterly period results for Dec-Feb had sales of 10.5 million. To adjust for a harmonized sales quarter, I have it as 10.2 million for the current quarter. That means RIM is already breathing on SonyEricsson's neck and by next quarter if RIM continues to show strong Blackberry sales, they can pass SonyEricsson regardless of how Moto is doing. And obviously, if Moto sales are now down by 16%, then they'd fall to 7th place, sell 10.1 million handsets, and RIM would jump Moto for 6th biggest handset maker and biggest handset maker of North America. Its really running neck-to-neck. But those numbers depend on how Moto reports later in April.

Meanwhile at SonyEricsson we learned that Walkman branded musicphones (mid-priced feature phones) were 51% of all SonyEricsson phones sold (5.4 million units) and Cybershot phones sold a little under one million units ie 9% of SonyEricsson branded phones. Thus 60% of all SonyEricsson phones sold were featurephones or better, which helps explain why SonyEricsson's average selling prices are well above the industry average for big handset makers. Of SonyEricsson's smartphones the management refused to acknowledge an industry analyst's question about 2 million sales level, which to me says its under that. I am modelling SonyEricsson selling 1.5 million smartphones for the quarter, about half Symbian and half Android.

Google Android

The Google Quarterly results talked about their internet and advertising business, not much about the Android smartphone OS or its Google Nexus One handset sales. We did hear again the number that we first heard in February that Android handsets sell 60,000 per day or about 22 million units per year. I think its revealing that two months later in 2010, Google did not say '70,000 per day' (which would be 'Apple iPhone 2009 level' ie 25 million per year). Note that currently Android is the fastest-growing smartphone OS and family of smartphones. But even for Android, the Jan-Mar quarter means relatively flat sales compared to 2009 (remembering that is a good sign, when the quarter itself sees declining sales)

So for the Jan-Mar quarter we have over 20 actual Google Android smartphones already selling by a dozen manufacturers, with many more announced for delivery shortly. What do we know? Google won't confirm Nexus One sales levels which many analysts have said were disappointing. Google says they are satisfied with Nexux One sales. But if the total Android OS unit sales were 5.4 million units, we have significant insgihts. First, we know for sure that HTC sold 3.5 million units, most of those were Android. Google's Nexus One sales would form a part of that. Because of its vast distribution advantage (plus more smarthpone models, and lower prices) I have to assume most of those were sold under HTC or its partner labels, and a minority only as Google Nexus One models. At best, Google might have sold 1 million, more likely something like 500,000 units or so. I hope we get some insights to this later either from the analysts or perhaps when Google feels like announcing its 1 million level when it passes that milestone.

It also means we have about 2.4 million Android phones sold by all other makers. If we assume Motorola did well out of that, but also Samsung, LG and SonyEricsson sold well (and we can't forget half a dozen smaller makers) - if we divide 2.4 million evenly, we'd get 600,000 unit sales for each of the four maker who all have made very bullish goals for their smartphone sales. It seems that there is a ceiling of about 1.2 Million for Motorola to sell Android phones, and anything over 1 million would be very good bringing Moto to second place among Android makers.

Finally Palm. In my Bloodbath Preview in January, I suggested Palm might disappear this year. Now we know they have employed an investment bank to help sell the loss-making smartphone maker. The gossip is that the strongest suitors are HTC and Lenovo. I handicapped all major suitors in its own blog last week. 

Ok, thats the quick update. We are very eager to hear how Nokia did this period (analysts expect strong profits), Samsung (they recently upped their target of smartphone sales for 2010 from 18 million to 24 milllion - expect a second such upgrade to their target before the year is done). LG is expected to grow sales but perhaps at a cost to profits. Motorola is on the ropes, they desperately need to get back to profits, expect their unit sales to be slashed dramatically not unlike SonyEricsson, in their quest to return to profitability.

Among smartphone makers obviously we are waiting for hte Apple number - I am modelling it at 7.4 million units which would be only a modest decline in market share fom 17% in the Christmas Quarter to the Jan-Mar Quarter. (We know from Steve Jobs's statement its at least 6.8 million units). RIM won't be reporting again until after its Mar-May quarter ends when their numbers will be up significantly from their current 10.5 million level. As we know the HTC number and Google Android, the only other Smarrtphone makers (in addition to Nokia, Samsung etc) we want to hear about are Microsoft and Palm, both expected to report dramatically lowered sales from the Christmas quarter.

We will do brief updates as we hear from the major makers this week and next, and we'll do a full update to the 'Bloodbath' across all manufacturers when we have the major maker data in.  

Comments

[kevin]

Tomi, I may sound like a broken record, but you've written this at least twice and I've commented on it, and yet you never respond or fix your error. So here it is again.

"We know from Steve Jobs's statement its at least 6.8 million units."

That means you still think Apple shipped 43.2m iPhones by end of 4Q09. Show me how that is true, if summing the numbers from all of Apple's SEC filings show a total of 42.484m iPhones. Where are you getting your Apple stats from?

[kevin]

Tomi, Apple just reported 8.752m iPhone units in the Jan-Mar quarter with ASP of $622. That actually is higher than the 8.736m units in the Christmas quarter.

As I said in previous threads, Apple hadn't established a pattern yet because it's been launching in new countries, which matters greatly when working off of a small base.

I think it's time to revisit your touch-screen vs. QWERTY vs. featurephone thesis.

[Tomi T Ahonen]

Hi kevin

We have the Apple numbers, and as you point out they came out as 8.75M units, which is flat from the Christmas quarter. AS this blog posting was really about SonyEricsson and Google news, not Apple, and as I have now 2 Apple quarterly data related blogs - that you well know of - then lets discuss Apple performance there. If you kevin want to discuss SonyEricsson or Google or other relevant points from this blog in this thread, I'm happy to do so here. I know you often comment here on our blog, I would hate to have to remove any of your comments as not pertinent.

Tomi Ahonen :-)

[Polly]

If you kevin want to discuss SonyEricsson or Google or other relevant points from this blog in this thread, I'm happy to do so here. I know you often comment here on our blog, I would hate to have to remove any of your comments as not pertinent.

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