Smartphone wars.. panic at Apple? Panic at Nokia? Google stumbles?

I am awaiting the final Q1 numbers from Gartner, and when I receive those, will do the first quarter full review of the 'smartphone bloodbath' covering all major smartphone brands and what they've been up to in this very volatile first quarter.

APPLE PANICS

But we see interesting tidbits for some of the big names. First a strange reaction by Apple. They seem to be rattled by Android rising. NPD released numbers of a very broad survey of US consumers and their phone habits, and found that Android has overtaken iPhone in the USA (Apple's best market) now becoming second biggest smartphone platform in the USA behind RIM's Blackberry. So Reuters runs the story where Apple spokeswoman Natalie Harrison has been rolled out to refute the NPD numbers and to spin the story.

First, this seems bizarre for Apple to react to such an end-user study. Its almost like they are delusional. Its clear the study was US based, and its very clear - and totally consistent with other news and data from other sources - that Android is growing very strongly in the US market where Apple is not growing (Apple's Q1 growth was in China, AT&T reported iPhone USA sales declined from Q4 by 14%)

But there is a sense of panic in the response. Some silliness in it - 150,000 survey size is ENORMOUS. For Apple to suggest that is not relevant is very poor form. When the survey is about smartphones - then iPhone is to be counted, but iPod Touch and iPad are not phones, and cannot be counted. Its like French carmaker Peugeot suddenly crying 'foul' and asking that its bicycle sales should be added to Peugeot car sales numbers haha.. And iPod is a media player and WiFi web device, it is not a smartphone. An iPad is a tablet PC, it is not a smartphone. There is no point is counting them when reporting smartphone numbers. The iPod and iPad are indeed of interest to Apple developers and Apple investors, but its silly to suggest NPD in a survey of smartphones should have then gone and measured microwave ovens and toasters and CD players and iPods and iPads.

Then there is also a dangerous point in what Natalie Harrison draws attention to - that Apple's iPhone still in Q1 outsells Android overseas (she does not dispute the fact that Android already outsells iPhone in the USA). Yes, thats true for Q1. But by the start of Q1, of the world's 6 largest handset makers, only one - Motorola - had launched its Android phones. SonyEricsson, Samsung, LG and ZTE - were in the process of launching their Android phones. And Motorola did so only in the US market, as Motorola is retreating from overseas markets. But combining full Q1 sales of Motorola Android phones in the USA, with HTC selling in the USA, and Google Nexus One selling in the USA, plus the introduction of Android phones by LG, Samsung, Dell etc to the US market - Android has grown bigger than iPhone in the US market.

Now consider the rest of the world. SonyEricsson's big market is not the USA, it is Europe and Japan. So as SonyEricsson now has its Android phones for Q2 available in Europe and Japan, they can take advantage of their sales channels, strong brand and marketing push for Android in those markets. Google had its troubles with its sales channel for Nexus One in the USA and underperformed, but is only now launching in Europe and Asia. HTC is gaining in Europe. LG and Samsung have very strong presences in far more markets than Apple has overseas. In China, ZTE and Huawei are domestic competitors with very large market shares, Motorola sells particularly well and Lenovo has already promised to sell 1 million Android phones just in China. Apple can expect in Q2 to see a similar Android invasion in most markets as it saw in Q1 in the US market. Except that Apple's best market is the USA where it sells about a third of all iPhones sold. So the Android vs iPhone battle is now in Q2 shifting from Apple's strong ground to Android's strong ground. And the 3GS model is already 9 months 'old' where almost all Android models are fresh current models. Expect the rest of the world see a bigger imbalance Android vs Apple in Q2..

But lastly, Apple is fudging with the numbers. They are pointing to cumulative sales. That is silly. No way are all 85 million iPhones plus iPod Touch's plus iPads in use. AT&T's numbers from late 2009 reveal that only 75% of all sold iPhones were in use. That proportion is declining every quarter. Apple know fully well that not all old iPhone 2G models are still in use, and even some early iPhone 3G models are being replaced as customers upgrade their contracts and get newer models with their contract renewals,. So its silly to suggest there are 85 million users of Apple iPhone compatible digital devices. If we use the 75% ratio from AT&T, the maximum is 64 million. In reality that is far below 60 million by now. Out of specifically iPhone models, out of 51 million sold so far, less than 38 million are in use (using same AT&T ratio). Yes, Natalie Harrison is truly spinning the story like the best of politicians after a disasterous defeat in the polls haha.

PS there always are those Apple fan-boys who claim Apple doesn't care about market share. Here we have official Apple spokesperson passionately arguing on Apple's behalf. Obviously Apple does care about market share haha.

NOKIA PANICS TOO

The more sad story comes from Nokia HQ. They really cannot catch a break. Out of the classic big 6 global phone makers (Nokia, Samsung, LG, ZTE, SonyEricsson and Motorola - this obviously before RIM crashed into Top 5 and kicked Motorola out of Top 6) - Nokia invented the smartphone space. It invited all its rivals to join to build a common smartphone OS platform (Symbian) which Nokia later turned into an open source foundation. Compared to the other classic Top 6 giant phone makers, only Nokia has pursued an aggressive smartphone strategy - and even today outsells the total smartphone output of the other classic Top 6 makers, Samsung, LG, ZTE, SonyEricsson and Motorola - combined - by 3 to 1. The classic Big 6 makers are not even viable rivals in smartphones where RIM and Apple are ranked number 2 and 3. Even there Nokia towers over its major smartphone rivals outselling RIM and Apple combined.

And how is Nokia's smartphone performance doing? For the past 6 months, two quarters, RIM's market share has been flat, Apple's market share has declined - and while Android has emerged to challenge all, Nokia's market share has grown. Currently Nokia's market share is between 39% (Canalys) and 40% (Strategy Analytics) - up from 38% six months ago.

Nokia has aggressively pursued a global domination plan for its smartphones - pushing very hard to bring smartphones to mass market customers at lower prices. Consistently, every single quarter ever - Nokia's smartphone market share has been better than its dumbphones market share. None of its classic big 6 dumbphone maker rivals has even for one quarter managed that - where its smartphone market share would be better than its dumbphone market share. But Nokia has done so, quarter after quarter, for more than a decade! It has never ceded its position as the world's largest smartphone maker.

And Nokia's handset unit - including smarpthones - has produced profits every single quarter since Nokia first made a smartphone. None of its Big 5 dumbphone maker rivals (Samsung, LG, SonyEricsson and Motorola - I have not been trackingn this measure for ZTE) - has produced profits every quarter in the past decade.

In my book, Nokia is FAR outperforming its true rivals, Samsung, LG, ZTE, SonyEricsson and Motorola. The new 'pure smartphone' makers like RIM, Apple and HTC play in a far smaller market and even there Nokia utterly dominates them. But that is not where Nokia's revenues, profits and markets are made. Nokia (mostly its dumbphones) is the world's most widely spread technology brand - of all time - by a huge margin.

So does it get respect for any of that? No. Nokia reported strong profits this past quarter (Motorola's handset unit did not, LG barely made a profit as for the first time in a long time did SonyEricsson, a miniscule profit. Palm continuned making losses and was bought by HP)
 
But most of Nokia's investors are in the USA. They see Nokia in the context of the US market. Before 2007, US investors never thought of smartphones as a consumer opportunity (before the iPhone) even though Nokia invented that space and was selling true superphones in the rest of the world at that time, like the N93. US investors felt that a business-oriented smartphone had to look like a Blackberry, not recognizing Nokia's E90 Communicator was another superphone, but aimed at the luxury end of the enterprise (and not sold in the USA). Having no experience with consumer smartphones, when US investors saw the iPhone, they of course felt this was the ultimate smartphone. When Google releases a Nexus One or Motorola its Droid, those look 'proper' to the US investors. They seem 'similar' to the iPhone and thus acceptable. Why can't Nokia do that.

The US investors remember the N95 from 2007 as the last major attempt by Nokia to do its own boxy slider form factor that seemed a reasonable rival to the iPhone. Then they remember the N97 failing in the US market. Now its time to panic. It seems that every maker from HTC to LG to Palm to Dell making 'correct' form factor (ie iPhone-like) touch screen smartphones and Nokia utterly failing to copy the iPhone. Nokia gets no respect that it outsells both Apple and RIM, and nearly matches the total sales of Apple, RIM and HTC combined. Because there is no iPhone clone, Nokia management are idiots and the Nokia share price takes hit after hit. Now Nokia's N8 is its clear step to show it too can make an iPhone clone, but because it is not selling in the USA today, Nokia's investors are very nervous.

The matter is far worse personally for 'OPK' ie Olli-Pekka Kallasvuo the new CEO of Nokia who replaced the long term well identified Jorma Ollila. When he took office, OPK promised to dedicate most of his time to re-establish Nokia's position in the US market. In his time in office, Nokia's market share in the US market has crashed - down to less than half what it was - and its even worse in the top end of the smartphones, where we find that pesky iPhone again. OPK has very clearly failed his biggest US specific promise, and he is doing this in the time when the US market itself has finally awoken to understand the smartphone (Europe had discovered this opportunity years earlier) and now major US tech brands like Apple, HP, Microsoft and Google are very strongly visible in the smartphones space. Even the walking dead Motorola is seeing a US surge in its smartphones. But Nokia singularily fails the US market.

So the US investors panic. And they were even suggesting OPK should resign. So what does management do in this kind of situation? It makes a big management reshuffle of course. Nokia is truly performing FAR and AWAY a better job than any other dumbphone maker, so for a second generation era mobile phone handset maker, who foresaw the emergence of smartphones - Nokia has executed its transition to smartphones better than any other rival who also comes from dumbphones. Now that ignorant US based investors insist on comparing Nokia to far smaller pure-smartphone manufacturers like Apple, RIM and HTC (whose combined annual sales of all of their products and services is dwarfed by Nokia) - luckily OPK and his team has not abandoned its strategic plans. But to satisfy investors, they reassigned Rick Simonson and gave Anssi Vanjoki the most visible post of leading the smartphone battle. Rick is not leaving the company, which to me also suggests this is mostly a cosmetic move.

But Nokia does reorganize to new business units, plays musical chairs with several top managers and it is already the second major reorganization in only a year. That suggests it is not a planned reorganization, but rather forced by the circumstances. Its thus a reaction to the investor panic.

The handset business is very much a function of 'how good is your latest handset'. We saw Motorola return with the Razr and then rapidly vanish with the same Razr. For Nokia it is very much now the question of how with the N8 do when it is released. I would expect Anssi with his long history in sales and knowing the distribution channel very well, will give the N8 every chance to become a market hit, sales support materials, big promotion push, distributor and in-store sales force incentives, etc. Using Nokia's strongest asset to support the iPhone clone device. Yet Anssi also remembers that the N-Gage failed most of all being a bad phone handset (as well as near-total rejection by the operators). The N8 has to be a good Nokia phone, in the style of say the original N95, rather than a rushed and disappointing phone like the N97.

It does pain me to see how totally divorced reality and facts are from how Wall Street reacts to various companies in our industry. So RIM grows unit sales and holds market share. Nokia grows unit sales in smartphones and takes market share. Both see dramatic decline in their stock market evaluation on these news. Then Apple reports flat unit sales and loses market share, but sees its stock market price shoot up dramatically. I am happy I am not in the investment analysis business and I do not envy those with top jobs in the handset business. Its a cruel world out there. But talking about cruel, lets move to Google.

GOOGLE BURNED AGAIN

So we hear from Google. Its Nexus One 'superphone' was supposed to be sold by Verizon and Sprint as well as direct sales by Google. Because it had more than one exclusive carrier deal, many pundits suggested Nexus One could outsell the first year performance of the iPhone (I did not think they'd do that well). So, first we heard that Verizon has decided to not offer the Nexus One, and sell an HTC Android phone instead. Now today we hear similar news from Sprint - also abandoning plans to sell Nexus One and they have their own HTC Android handset they prefer, HTC Evo.  

Google's plans to make Nexus One a big global hit are hurt very severely by this. HTC laughs, it wins either way (as it is the manufacturer of the Nexus One). I did tell you in the Bloodbath Preview that the likely winner out of Google's smartphone entry was HTC, not Google haha.

LENOVO IN CHINA

Meanwhile in this corner. Remember how we saw stunning smartphone sales explosion in Q1 in China due to gift-giving of the Lunar New Year, explaining surprising surges in smartphone sales specific to China Q1 for Apple, Nokia and Motorola? I estimated that about 1M extra iPhones were sold in Q1 in China above the normal rate of about 200,000 iPhones per quarter as Apple sold in Q4 in China.

Now Lenovo the Chinese maker who bought out IBM's PC division and the world's 4th largest PC maker, who has announced plans to launch Android based smartphones - is making its first statements of its intentions in actual numbers. They say their goal is to sell 1 million Lenovo Android smartphones this year in China alone. Note that Lenovo only now is launching their smartphone, so we are looking at the three remaning quarters. Lenovo initially sells on the China Unicom network (which is iPhones's exclusive dealer in China) but Lenovo also will release models compatible with both of the other two networks, China Mobile and China Telecom. Note that China Mobile is more than three times the size of China Unicom.

Lenovo's handset is designed to match the iPhone 3G more or less feature-for-feature in specifications, add the typical Android and normal GSM smartphone abilities and features WiFi which is crippled from the China Unicom version of the iPhone. Lenovo is a well trusted domestic brand in China and its smartphone is priced to about half that of the iPhone. Can it match the sales level of the iPhone in China for the remaining 9 months of this year, I think so. So yes, another big player is now getting serious about the bloodbath. Lenovo aims to be in the top 10 by end of this year globally, and be one of the biggest smartphone makers of the Chinese market.

AND VERIZON ? CHARGES 70 DOLLARS PER MONTH FROM YOUTH FOR KIN

Oh, one really bad indicator of the greed in our industry. Remember the Microsoft Kin QWERTY phones (formerly known as their Pink project)? Youth oriented phones for texting mad addicted users? Now we hear that Verizon is going to charge 70 dollars per month for the two year contract to sell the Kin phones. That is abusive. I am really disappointed. I cannot believe that Microsoft would be happy about this either. I am thinking this very high cost of ownership will hurt the chances of Kin to take major market share - as it is clearly aimed at the youth segment. And yes, even for the very expensive US market (world's most expensive or second most expensive mobile market - Japan being the other. Yes, the US cellular industry, highest prices, worst value to customers, where average monthly contract per subscriber is about 50 dollars, ouch ouch ouch - this for the worst networks in the industrialized world, crippled phones, SIM-locked phones, domestic USA roaming fees, charges for incoming calls, charges for incoming messages, and all sorts of punitive charges etc - and the worlds' worst quality customer service etc. At least for their high monthly fees, the Japanese get to enjoy the best networks, fastest speeds, best phones, best quality of customer service, etc)

I am hoping sincrely that Verizon recalculate and find ways to offer the Kin phone for the youth with more reasonable price plans. 70 dollars per month, that is criminally abusive and greedy.

But yes, its getting ever tougher in this space of smartphones. I have the data from IDC, Canalys and Strategy Analytics on Q1 smartphone sales. I am waiting for Gartner to release their numbers and then will do full review of the bloodbath, per brand. Its a very intersting race indeed.

Comments

[Alex Birkhead]

Hi Tomi,

Not really news that Apple has an obsession with Android, and quite sensibly so, imo, but fun to see you expose their ridiculous PR spin. It does also seem to be ramming home your case that they are nuts to have only a single model and an annual sales cycle, and still no signs they've blinked here.

Are you sure you're not wearing rose-tinted specs when writing your Nokia segments? ;-) They are clearly in major transition, and you inadvertently dwell on their reliance on ASP-crashing dumbphones. To me, Symbian (and BlackBerry...) is now strategically positioned as S40's successor, effectively relegating it to a featurephone platform, and ASPs at this level seem still to be going through the floor. LG has for years made a nice living out of jazzy featurephones, but, as SE learnt a while ago, this can come to a painful end. Nokia is clearly still the US-unappreciated volume-daddy, but Apple looks far ahead in terms of profit and cash-conversion, which, like-it-or-not, are the ultimate yardsticks.

Surely, even you must accept that Nokia and Symbian are totally failing to play in the lucrative next-gen smartphone (mobile computer) segment, where iPhone and Android happily and richly dance, and into which PC-makers are now doing the lemming march. MeeGo is still nothing more than a geek plaything (it makes Android seem finished!), and based on Nokia and Intel's recent OS performance, will go nowhere far too slowly.

Two other big problems for Nokia right now are: can it pull off the promised and absolutely essential Symbian interface overhaul this year (personally, I still prefer S40 candybars because they're clean, simple, and just work, while admittedly envying S60 hardware...); and will the big mobile VAS plays (developed and emerging markets) come good? The strategy seems excellent, apart from failing to rebuff Apple-Android at the top, but the execution is unconvincing; my heart says 'yes', but my head remains dubious. Nokia needs a good smartphone play now (or more correctly, two years ago) and heads will surely roll if it doesn't come good very very soon; hence my repeated and ridiculed suggestions they should have an Android Plan C, if only to keep the insular R&D boys on their toes and investors sweet.

Investors don't rate volume in big, mature companies, they measure cash and margin; and being a big dumbphone/featurephone player in an ASP-plummeting market is not considered success or leadership when the likes of Apple and RIM (for now...) are raking it in at the top of the market. At this rate, Nokia could just end up sleepwalking into Apple's arms (they've got the cash...), when the latter comes to belatedly appreciate its strategic missteps along with the value of Nokia's broad product range, decent hardware/technology (not exactly the iPhone's strength!), strong operator distribution/relationships, a rich telco intellectual property warehouse (bring it on Android/HTC/trolls/Etc!), and the opportunities underpinning the clever but still immature featurephone-VAS play (delivering a dumb-/feature-phone iPhone Nano/Gaia on a plate...). I'm really willing the Nokia reboot: great talk, but will it walk?

[Dardano]

The solution for Apple to increase market share and become a heavyweight in the global smartphone market is by offering iPhones in different form factors. They need at least a mini version and a slide out QWERTY keyboard version and you'll see surge in market share to at least 30%.

Nokia's problem is not selling phones, it's making money on phones. Their profit margin is decreasing and that's why investors are punishing Nokia, not because it's doing bad in the US market, although that's another weak point from Nokia. The reason their profit margin has declined is because they offer shitty smartphones. They offer a vast amount of different form factors which is good but almost all of them have some major flaws, hence the reason for the delay of the N8 since they recognized that compared to the upcoming iPhone 4G (which we all saw on the web) it looks already out of date and it's not even out yet. Nokia needs to bring out some stunning designed phones, forget Symbian^3 (it's not compatible with Sym4), go straight to Symbian^4 and make a big impact on the UI and do it fast.

Google is Google and they aren't going away despite their failures, they have deep pockets and smart software developers, that's a great combination. They might even overtake the whole industry like MS did in the PC business. If I were Apple I would work overtime in bringing out different form factors and open to all carriers because Google is on a roll and if Apple won't stop them no one will.

[Tom Ross]

Tomi,

Look, Apple is not reacting to the original NPD study. They are reacting to the widespread misreporting of said study. There are 3 important caveats to it:

1. Not hard sales, but customer surveys.
2. US only
3. Consumers only, no enterprise. This pulls both RIM's and Apple's share down.

This is glossed over in the media coverage of this study. That's why Apple felt they had to make a statement. Of course they're scared when such a story breaks into the mainstream.

"by the start of Q1, of the world's 6 largest handset makers, only one - Motorola - had launched its Android phones. SonyEricsson, Samsung, LG and ZTE - were in the process of launching their Android phones. And Motorola did so only in the US market, as Motorola is retreating from overseas markets."

That's not quite right. Samsung Galaxy has been selling in Europe since the summer of 2009. Motorola Android phones, including the Milestone, are on sale worldwide, despite some supposed strategic directions that you've divined. I've seen TV commercial for Motorola Milestone on German Primetime TV. And I'm sure there was some uninspired LG in the class of 2009 as well. Wikipedia says there was one called EVE, released last November.

And that you're mentioning ZTE and Gartner statistics in the same article... Well, let's just say that ZTE is not on Gartner's or IDC's or Canalys' lists for a reason. It seems like you're slowly building your own reality to prop up your arguments...?

Sure, Android distribution is getting wider and this will somewhat help Android's market share outside the US, which is really, really bad right now. But the same strategy that has helped Android in the US - positioning as an alternative to the iPhone - has been played in Europe before, largely using cheap HTC phones. It just didn't work. I don't believe there's a network in the world where Android has outsold iPhone.

Right now, carriers love Android. The problem is: What happens when the carriers become bored with Android and favor Bada or HP Palm instead (like Verizon favoured RIM for Christmas 2008)? Customers won't ask twice about what happend to the little green robot. Android just has very little consumer demand. It's a white label OS, except for the Google branding on some of the Androids.

"Google had its troubles with its sales channel for Nexus One in the USA and underperformed, but is only now launching in Europe and Asia."

Too funny. The Nexus One is dead in the water. Who wants a 5 months old Android phone?

"But lastly, Apple is fudging with the numbers."

Unlike, say, Google, who are releasing no numbers whatsoever and prefer to ride the hype. If Google was as open as they claim, they would release Android US sales figures for Q1—be they 2, 3 or 4 million—and we wouldn't have to argue.

"Except that Apple's best market is the USA where it sells about a third of all iPhones sold. So the Android vs iPhone battle is now in Q2 shifting from Apple's strong ground to Android's strong ground."

In terms of smartphone market share, Apple's best markets are in Western Europe.

"Expect the rest of the world see a bigger imbalance Android vs Apple in Q2."

...surely not based on cold, hard sales figures but some fuzzy online survey? By the way, we are in the middle of Q2, and I don't see anything happen in terms of carrier lineups and promotions. Maybe you would like to move your prediction to Q3 or Q4? I know you will, because you've done it before.

"AT&T's numbers from late 2009 reveal that only 75% of all sold iPhones were in use."

The rest could be in use on other networks in the US or abroad. There's a thriving worldwide second-hand market for iPhones.

Seing as 55 of the 85 million iPhones+iPod Touches were sold after March 2009, less than 10 million are more than 2 years old and all 85 million of them are supported by the latest iPhone OS, I find it quite likely that most are still in use, unless they're broken. On the other hand, there is a worrying speed of Android devices falling out of use because they are denied any OS updates after the sale.

"PS there always are those Apple fan-boys who claim Apple doesn't care about market share. Here we have official Apple spokesperson passionately arguing on Apple's behalf. Obviously Apple does care about market share haha."

Totally agree. Evidence: iPod.

[Anders S. Løvlie]

Tomi,
thanks for your valuable and interesting analysis! I very much appreciate reading your blog. However I would really like to see some more details about your installed user base figures. I agree with Tom, about the missing 25% of AT&T iphones: "The rest could be in use on other networks in the US or abroad." Here in Norway, for instance, some websites reported that iphones represented the biggest share of mobile traffic, even before iphones were for sale in Norway - indicating that a large number of people bought AT&T iphones and brought them home.

There is a very interesting table for installed user base for different OS's over the last years in your 2010 Almanac, but it is only graphic with no numbers. Is it possible to see the numbers somewhere? And ideally, get some idea about how they were calculated? I do academic research, so I need to be quite specific sometimes...

[sami]

Dardano, what do you thing Apple's marketshare is now? About 2-3%, it's not gonna jump to 30% by introducing some new form factors :) Beside, the heart of Iphone is it's form factor. You greatly exaggerate the potential they'd have with over priced copycat form factors with Apple logo on them. Besides, I think it's clear by now that Apple is trying to make content consumption products, not content production (QWERTY, great cam, great social media integration etc).

Speaking about financials, lets not forget that for Android to succeed in sustainable manner, the Android manufacturers need to start making money at some point. At the moment they are bloodily competing with each others driving the price of their products down, obsoleting the models before they manage to ramp-up the production, need to invest heavily in r&d, marketing and now on court cases! It's difficult to see how those manufacturers will be able to get to profitability.

Motorola bleeding and even the poster child HTC isn't exactly a money machine, Alex that's a huge hole the Android strategy you suggest Nokia to adopt. Android's NOT the answer.

What's happening on Android front seems very similar to the development that eventually killed the Windows Mobile platform. High early excitement ("it's gonna kill Nokia", seriously I remember reading such articles at the time, Windows Mobile and the chinese manufacturers), some relatively successful models but eventually there just was not sustainable financial case for WinMo and it got sidetracked.

[Reda]

I am kind of biased here because I am a very very upset NOK shareholder but I’ll vent my frustration on your statements :-)
By the way, these statements taken out of context:
“Because there is no iPhone clone, Nokia management are idiots and the Nokia share price takes hit after hit”
No, share took hit because (as people above already said) wall street doesn’t look just at market share or sales volumes. Cash, margins, revenue “engines” etc are the key here. I.e. Future business outlook and it’s not looking good for 2010 so why should they invest in NOK? Why don’t we wait until we see something more concrete.
“Now that ignorant US based investors insist on comparing Nokia to far smaller pure-smartphone manufacturers like Apple, RIM and HTC (whose combined annual sales of all of their products and services is dwarfed by Nokia) - luckily OPK and his team has not abandoned its strategic plans.”
I’m certainly not US based (I’m in UK), hopefully not too ignorant on this market and I’m not sure where you get the figures that most of the investors are US based and ignorant. The ignorance is actually in the assumption that NOK is purchased by ignorant US based investors. I’m not saying that the company is correctly priced on the market but it’s an extra input that you should use together with market share and other stats that you are measuring to make your conclusions in the “smartphone wars”.
“So the US investors panic. And they were even suggesting OPK should resign.”
If you as a company want to raise money in the stock market, then you should follow the shareholders' requests because they also become “the owners” of the company. If you are not happy with that, fund it with your own money or go to the bank. OPK does not own Nokia. Moreover, he promised to increase US market share and failed epically. How many decades do we need to wait for this? 2 reorg in a year + lay offs + another Finnish holiday (July) --> more confusion, stuff demoralised, slow time to market…I’m impressed, NOT

[HCE]

Apple's problem in the US is their boneheaded decision to stick with one carrier - AT&T. Android, by contrast is on all major US carriers. AT&T has a little over 30 percent of the smartphone market - which leaves close to 70 percent that they are not addressing at all. Android and WebOS, are IMO, the only other smartphone platforms that have the combination of polish, power and usability that the iPhone has - and WebOS until recently was saddled to a dying company and had rather uninspiring hardware to boot. No wonder people on other carriers are buying Android phones in large numbers. What makes it worse for Apple is that AT&T has by far the worst reputation for call quality of all the major carriers.

Apple had better address this or they will be left far behind in the US. And it won't be just Android that grows. RIM is coming out with Blackberry OS 6.0 this fall and that OS looks a lot better than their previous ones. They could get a boost as well. It is unclear what Apple intends to do about this situation. On the one hand, there are rumors that they will introduce the next generation iPhone on Verizon in September. On the other hand we have rumors that they are contractually obliged to give AT&T exclusive access to the iPhone for another 2 years. I guess we'll know in a few months.

- HCE

[Tomi T Ahonen]

Hi everybody

Great discussion and insightful well argued points. Thank you everybody! I will come back to respond to each a bit later when I have a bit of time. But keep the comments coming.

Tomi Ahonen :-)

[Matthew Artero]

Dardano, your wrong about Apple needing QWERTY. They need my iPhone Killer (appleiphonekiller.com).

I understand the point made in some of the other comments about Nokia, saying it is not about market share, it's about profit. The way I see it, without market share you won't be doing profit for long.

The fact that we see Nokia's market share fluctuating 1 or 2 points a quarter shows their products are priced right. For a long time Nokia has said that it is an evolutionary company not a revolutionary company. Nokia is for those investors who are in it for the long term results and a secure investment.

So somebody else comes out with a hit and makes a lot of money. All great technologies eventually become comoditized. Heck we even have nuclear weapons proliferation. Then the guys who scale better than anyone else are the ones left standing.

Everyone is looking at the iPhone as a no brainer, but the truth is there have been a lot of expensive failures along the way. Nokia is happy to let Motorola, Palm, and others pay the price of learning, and after it is figured out, Nokia comes in with its scale and ends the party.

The complaints against Nokia not doing well against the iPhone is like complaining about WalMart not being the best shopping experience you ever had. But WalMart continues to dominate anyway.

It's even been reported that "An ‘alliance’ of some of the world’s leading mobile phone operators such as AT&T, Telefonica, Orange, China Mobile, Sprint, Vodaphone and others is reported to be planning an open technology platform that will deliver apps to all mobile phone users...The alliance, which they called the Wholesale Applications Community, is believed to have access to more than three billion customers in the world." When that happens Apples app store will become a forgotten footnote in history, and who will be left? Those that have mastered the art of scale.

The smartphone bloodbath is simply the PC boom, or automobile boom, or pick your boom, all over again. In not very distant memory it wasn't possible to remember all the different PC brands.

If current Nokia investors are angry it is because they don't have the ability or the nerve to get into a flashy company like Apple. They can sell their stock and move on if they don't like the business strategy of scale and be the last man standing. But if they want to survive the bloodbath, scale is the safest bet one can make. A company that dominates in scale will find investors that are looking for that security.

[Marat]

Tomi, you must have intentionally written this post to incite the apple fanboys? :) By the way, their comments are mostly true and reasonable. Looking forward to your replies.

[kevin]

"AT&T's numbers from late 2009 reveal that only 75% of all sold iPhones were in use."

What numbers? Please provide a reference. I asked you this on an earlier post and got no response.

[Matthew Artero]

Kevin,

Many complained about the short battery life of the first iPhone. It only required a two year contract. It is now in its third year. So it makes perfect sense that many owners of the first iPhone would have upgraded.

Whether you agree with the 25% figure or not, it is ridiculous to think that every iPhone sold in the second or third year was to a new user of the iPhone. 25% seems pretty reasonable.

AT&T stats are important. iPhone is happy to say that they own “x” percent of the market, but AT&T is saying that units sales and sales of service plans are two different things. The number of service plans is what dictates the iPhone’s value to AT&T, not the unit sales which satisfies Wall Street.

Who cares if Tomi justifies this or that statement. How AT&T establishes the value of the iPhone is not going to change. Clearly it is understood that AT&T is speaking in the context of its own network and the value of the iPhone to AT&T.

If someone wants to argue those first generation iPhones are still ALL in use, that’s a much harder pill to swallow than anything Tomi has written. What ever the actual number, it is not going to be far off 25%. It may be exactly 25% if we learn that AT&T was referring to its active service plans and people who purchased a new iPhone to replace their existing one. We can expect those same numbers to translate worldwide. If that’s the case the worldwide number may be even higher.

AT&T is relying on the iPhone and it surely knows that it does not want to say anything that tarnishes the iPhone’s reputation. By saying 25% AT&T could be saying that Apple has done such a great job of improving the iPhone that owners of the first one are upgrading. Look at the timing of the release. Doesn’t it seem that AT&T wants its customers to come back in and get the new model and commit to AT&T for another two years?

Tomi is just the messenger; no need to shoot him. AT&T is just trying to drum up some repeat business. Because the actual number is going to be close to 25% anyway, knowing the actual number is not going to change our understanding of the big picture, and therefore it is not worth arguing about.

[Tom Ross]

Matthew,
The first iPhone generation was sold only 6 million times, so it's not such a big part of the 85 million anyway. Keep that in mind. Most iDevices are less than a year old.

By the way, the first iPhone had good battery life for a smartphone. It just didn't occur that way to first time smartphone owners who were used to charging their feature phone not more than once per week. Nowadays we are familiar with the fact that smartphones won't last a day on a single charge if you use them as they're meant to be used. (I do have a feeling though that the next iPhone might change that sentiment, as the spy shots revealed some pretty big battery inside.)

Tomi and everybody,
I believe the fundamental problem with Apple's reply is that they don't talk to the arguments that NPD and then the press made. In fact, the Apple press release is nothing more than a rehash of old Apple sound bytes relating to everything that is indeed good about the iPhone business, but not strictly relevant here.

There is not a single new piece of data or information in the press release. Such is the state of Apple's secrecy and stringent messaging that they did not feel it necessary to reveal any further proprietary information about their business. Of course, this way they cannot effectively refute NPD's claims.

With this background, the figure of 85 million is not a genuine reply to NPD's market share figures, but a reprise of a running tally Apple has introduced in March 2009 (when they announced 30 million iDevices sold) and updated several times since then, the last time on 8 April. Note that the tally wasn't even updated for the NPD incident, otherwise Apple surely would have announced 90 million, not 85 million (assuming the usual pace of sales).

Its most direct comparison are similar figures for video game consoles, and I believe that's how they were intended to be read, ie 85 million iDevices vs. 130 million Nintendo DS vs. 60 million Sony PlayStation Portable. When Nintendo and Sony announce those figures it is understood that there is always some attrition or inactivity among the platform's users. Nevertheless, the relative sizes are meaningful.

[Tomi T Ahonen]

(I will take the set of comments in short groups, as many of you left long detailed comments. So to first 4 comments...)

Hi Alex, Dardano, Tom and Anders (first comments in case of multiple comments)

I will reply to each individually as usual here on this blog.

Alex - Good points. Thanks about the Apple related ones. About Nokia part and my rose-colored glasses haha, I am sure there is part of that - I am a Finn, I am an ex-Nokia executive and since I left Nokia 9 years ago, they have been a consistent reference customer for me and my consulting practise. I do know them very well.. And no doubt there is some degree of bias in my writing that I cannot avoid. I try to be honest and open with my opinions haha...

On the ASP falling - that is a universal trend like it is in personal computers, home electronics etc. It is an unstoppable economic force which rather ruthlessly shrinks the number of viable global competitors and the only way to survive that race is by being very efficient in production. One essential part of that (at the low end of the price points for any consumer electronics) is scale. Nokia has played that well, Motorola particularly poorly. While we look at smartphones in this series of blog stories about the 'smartphone bloodbath' - that is not Nokia's main business. Its not Google's main business either, nor is it Motorola's or Samsung's main business. Only Apple is a major (ie Fortune Global 500 sized) company whose primary business is smartphones - and even for Apple that transition has just happened. So while smartphones are important to Nokia - they would be foolish to abandon their massive lead and competitive advantage in dumbphones...

Meanwhile the dumbphone competence and scale gives Nokia a massive advantage in the smartphone business obviously - part of why Nokia's smartphone market share is bigger than Apple and RIM combined - is that Nokia has all those distribution deals for its dumbphones. There is almost no question at most carriers (outside of the USA) of whether the carrier 'should' carry a set of Nokia smartphones - as they already carry Nokia discount phones and Nokia featurephones, of course they'll carry at least some Nokia smartphones.. Only Samsung and LG have a similar synergy they could use (but have not used effectively so far)

Then you write "you must accept that Nokia and Symbian are totally failing to play in the lucrative next-gen smartphone (mobile computer) segment, where iPhone and Android happily and richly dance, and into which PC-makers are now doing the lemming march" - actually no. I did some deeper analysis (haha, as I always do) about the various phone makers and their markets. Nokia's US sales in smartphones this Q1 were in the scale of 1M to 1.5M. Apple sold 2.7M in the USA, RIM about 5M. Obviously in the US market, Apple and RIM totally crush Nokia. But - the US market is not a fair competition for best phone for real price in uncrippled phone with full phone manufacturer marketing. The US market is totally distorted by the carriers and almost all phones sold with enormous subsidies. While some other markets also are totally controlled by the carriers - like Japan - most of the rest of the world is not contract customers on post-paid contracts, most phones are not sold with subsidies and most subsidies are not as big as in the USA.

So when we exclude the US market, take the remaining world and take all iPhones and all Blackberries sold outside of the USA, and Nokia effectively matches that with just its N-Series and E-Series premium smartphone sales. So if you think there is a 'mobile computer' trend (invented by Nokia obviously) - then Nokia is doing a very respectable performance against its two biggest smartphone maker rivals - RIM and Apple - where the markets are not totally controlled by the carriers. So if price is really taken honestly and openly into consideration, and full marketing is used - ie distribution, promotion, branding, advertising etc - Nokia's premium divisions, N-Series and E-Series match pretty much exactly the non-US performance of iPhone (N-Series) and Blackberry (E-Series). So I'd say that Nokia is helping lead that transition, and the lemmings (Google, Lenovo, Dell etc) will have to fight hard for the crumbs left on the table...

What I think is particularly relevant, is that Nokia as 'we make any kind of phone' maker manages to perform as well in the (non US-)market as the ultimate focused e-mail/SMS/IM QWERTY maker RIM, and also perform as well in the (non US-)market as the ultimate internet/apps/media focused touch screen smartphone maker Apple. That I think says to me that Nokia is managing its 'multi front war' very well. Not perfectly of course, but very well. And yes, the USA is a total disaster for Nokia.

On Symbian overhaul - I agree but don't think the timing is as critical as you think. Remember Nokia's smarpthone market share is several points North of its dumbphones market share. Nokia is adding more loyal customers as it migrates customers from dumbphones to smartphones (Motorola was losing 10 dumbphone users for every one they converted to Droid). So while yes, Symbian needs a lot of work, and yes, it should be done soon and well, even a partial improvement this year buys Nokia a lot more time, and also - they won't stop improving it until they decide to end Symbian which won't happen for long into the decade haha..

On the last point of the investors - yeah, luckily I don't need to advise companies on where to invest, haha, it would be misery. But yes, it does seem totally unfair to me, where Nokia's primary business is dumbphones - and it utterly dominates that business - profitably - where its rivals all stumble - and then it has executed the transition to smartphones - BY FAR better than any dumbphone makers, by far better than Samsung, LG, SonyEricsson or Motorola - and in that process already dominates the smartphone space - and has done this with the best profits of the legacy dumbphone makers. And then to be compared to pure smartphone maker profitability of RIM or Apple - yeah, that to me seems unfair haha..

Dardano - good points and we mostly agree. I'd mention that yes, I totally have advocated that strategy for Apple - it needs to diversify to gain market share now - but it is obviously a corporate decision for Apple. They could decide to remain at the luxury niche end of phones, sell only one model per year, make a big event out of their phone launch, do their ancilliary products like iPad and Touch to support the iPhone and make great profits in that niche. But it means absolutely and definitely, that they'd be confined to a tiny corner of the market, perhaps lucky to hold 3% of global phone sales - as the phone market shifts from dumbphones to smartphones. It would be similar to their Mac market share today out of all PCs. But Apple can do far better as we see in iPods. Apple could move now - in 2010 - and yes, diversify the portfolio and grow their market share into something like RIM size, maybe even better (like I keep writing and you agree, the ultimate iPhone hit product would be a QWERTY slider iPhone). I am not sure if Apple investors will look kindly on the lost opportunity a few years from now, with plenty of hindsight haha. But this panic knee-jerk PR response to Android numbers does tell me Apple is hungry to get more than a token percent or few of total phone sales. They are dreaming big..

Tom - good points and arguments. On the Android models for sale globally - yes, I am sure there are a few given models that were available, but there are over 30 models now sold on the Android platform by a dozen manufacturers. There were only a couple of models at the start of Q4 of 2009, and most of those were in the USA. Clearly the US has so far been the only market where significant Android offering has been made available by the major brands. Those launches are spreading globally. Even Motorola's three smartphone models released in China were only released, in sequence, not simultanously, during Q1. But you are right, I was probably too extreme in my statement. Lets say 'on the whole' were available primarily only in the USA at the start of Q1 haha, and we should be in agreement?

You make a very good point that Android is now the flavor of the month. It may be last year's smartphone very easily a few quarters later.. Then you claim that Apple's best market share is Europe. I am very sure that is not the case, would you have any numbers or sources to support that claim?

Then you suggest I have moved my forecasts from one time frame to another to suit my forecasting accuracy. I have never done so. I have every single forecast I have ever made documented. The only times I have changed my mind I have done so in public - STATING - that I was changing my forecast. That is a sign of a professional forecaster. Please support your claim in your next reply to this thread, Tom Ross, (ie any comment after your May 16 comment) and either prove your claim or retract that accusation.

I will not respond to other Tom Ross comments in this thread until Tom gives the evidence of me changing my forecasting dates, or he retracts that accusation. And Tom, if your next comment does not address this matter, I will revoke your privileges to leave comments on this blog.

Anders - thank you. The AT&T numbers were from last June when AT&T announced it had passed the 10 million active iPhone subscriber level. It was quoted in the Wall Street Journal for example. Then taking the total reported new activations by AT&T up to that time (adding all their reported new additions every quarter up to and including Q2 of 2009) - we arrive at 13.3 million total ever activated on AT&T. Thus we get the number that after 2 years, 75% of original iPhone new activations on AT&T had an iPhone subscription active on AT&T. Thus 25% had been replacement iPhones to existing customers. Very simple math on that.. :-)

On the installed base, you know as you have my Almanac, that it is part of what TomiAhonen Consulting provides as numbers to those who want to buy my consulting services. So I can't really publish all the related numbers and analysis and the formulae for how we calculate phones still in use, second hand phones, multiple subscriptions, devices that are not phones (telematics, data cards etc) and the second phones. But yes, the best I can give you is that table in the Almanac. I am considering another electronic resource to give more phones-related details as there seems to be a hunger for it.

Ok, I will end here for now, I will come back to give more comments later. Please keep the discussion and dialogue going.

Tomi Ahonen :-)

[kevin]

Matthew,

25% of 50+ million is about 13+ million. Only about 6m original iPhones were sold (with maybe 4m in the US). Is it really believable that 7m+, or 35% of the 2nd year iPhone 3G are out of service throughout the world? A phone that runs the latest iPhone 3.1.x update, and 90%+ of all Apps, and that is still being sold by Apple worldwide today.

Regardless, Tomi said AT&T's numbers or comments imply that. I think I've followed every AT&T release and conference call and have seen nothing from them that imply that. So I just want to know what it is that I've missed so I don't miss it again.

[kevin]

Tomi, could you write a post on smartphone penetration in various countries (or even continents)? How far along is smartphone penetration in the US/North America relative to other countries/continents? Also, what percentage of all smartphones are sold in the US/NA? I think this would be interesting.

I'm willing to settle for Nokia's definition of smartphones since that's how smartphones are generally being counted.

[Tomi T Ahonen]

Ok, lets do another four replies

Hi sami, Reda, HCE and Matthew

sami - good points, and yes, extremely valid point about Android makers having to make a profit out of it too. Motorola, SonyEricsson and LG aren't exactly poster-children for generating profits out of phones haha.

And very interesting observation - I had not made that connection yet but you are very sharp to notice it - that Apple is focusing on content consumption devices, and not content creation devices. Very interesting. sami you should post that thought on Forum Oxford (I think you are a member, aren't you) and it should spark some good discussion about that, with for example Jouko Ahvenainen's thesis that the iPad is more of a 'lean back' device than a 'lean forward' device etc... But yeah, out of all smartphones, on a continuum, the iPhone is definitely at the 'least content creation' end ie consumption end. Good point!

Reda - good points. And yes, obviously Wall Street investors are very focused (often, not always) on the near term financial performance, and Nokia tends to give very 'consevative' estimates of the near term. Its very clear that the market for phones in general and smartphones in particular this Spring is the most competitive it has ever been, so Nokia's caution is based on very realistic market expectations. But yes, that will not give investors reason to cheer. I would wonder which (dumbphone) handset vendor is a better deal and yeah even which of the overall telecoms sector - including network vendors (thats a bottomless pit of losses as an industry sector) or network operator groups would be 'better' than Nokia currently haha... But yeah, they love the Apple..

On US investors.. Good point, I never anywhere established that as a fact. Sorry about that. So its something we learned way back when being prepared for media and investor relations at Nokia HQ. The Nokia shares are sold at three stock exchanges, the Helsinki, Stockholm and New York stock exchanges (NYSE, the 'big' global corporation exchange rather than NASDAQ where most tech stocks trade). And already in the 1990s, the majority of total Nokia ownership had shifted to the USA. This is no secret but its also so 'old news' its not really reported much haha..

About those US investors being 'ignorant' - its more of a recurring theme here at my blog and in my books, not specific to 'investors' but more of most US based experts and interested parties in cellular telecoms and mobile. They tend to be very ignorant of the global market. But I have no particular facts to support that haha, excepting for my near-daily tirades against various 'news items' that hit major US newspapers and periodicals, where they 'report' on often very obsolete information or trends in the USA which we've seen in Europe or Asia literally a decade ago. So I am sure you in the UK will not be in that category haha. You knew that SMS is used more than voice calls in the UK, that people carry two phones, that people abandon landlines and only use mobile, that phones can deliver advertising, media, customer service notices etc. Thats all normal to you, but thats still big news in the USA... That is what I mean by the igorance (even of their own market, far less what is happening abroad where 94% of all mobile phone subscribers reside)

Then finally on broken promises - that is one I really do not understand. If OPK makes a promise to raise Nokia market share in the USA, and knowing that is where the majority of US investors are, then yes, Nokia really should do 'whatever it takes' to turn sales in the USA back into an increase. One, release a couple of phones that are 'USA models' (like BMW did, like Mercedes Benz did, etc). Then to buy market share, use some of those profits to shink the margin of the USA phones (a tiny number in terms of unit sales out of Nokia globally, would barely register in Nokia bottom line). And go headhunt a VP level guy from each of Verizon, Sprint, AT&T and T-Mobile to really provide the service to those carriers that they want and deserve. They are still among the 50 largest carriers in the world, Verizon and AT&T rank in the top 25 globally. If Nokia was 'serious' about achieving market share growth in the USA (out of its pitiful levels today) ...but would of course mean Nokia would need to change their ways in the USA..

PS - I hear you as a Nokia share owner... I wish there was something I could say or do to ease the pain, seriously.

HCE - good points about the exclusivity deals with Apple. The same holds for many markets including recent additions in Asia of China, South Korea and Japan. Part of Apple's exclusivity deal is due to Apple insisting on receiving a revenue-share deal out of traffic - this is a non-starter for almost all mobile operators/carriers in the world. AT&T (as Cingular) was struggling back in 2006 and was willing to use the iPhone as their big rebranding tool (to AT&T) and trusted Apple's device would let them steal customers from rivals (as has proven to be true). So for AT&T it made sense. And Apple wanted to change the business of mobile (doesn't that sound familiar, everything from iTunes to now with the iPad etc). They insisted on the original exclusive iPhone deals and I know from first hand experiences in several major European markets, from friends/colleagues who actually sat in the negotiations, that Apple did insist on the revenue-sharing deal. It killed many negotiations. But Apple did get a series of early exclusive deals in Europe too, and the reports were that these included the same deal (and usually whispers were that Apple got very modest deals for only some incremental trafic parts, etc).

Now, if Apple earns from traffic - and we see what phenomenal traffic levels the iPhone generates - you can be pretty sure they don't want to kill this goose that lays the golden eggs. But equally, in some markets there are no contracts for subsidised phones (like Italy) and we have seen a continuous spreading of the iPhone from one exclusive carrier to several like in France and the UK. So there is a spreading of carriers.

The big problem is the CDMA standard. Its easy for Apple to sell to those opeators/carriers in all countries of the world who cover 85% of all mobile subscribers who are on GSM. But North America is the only continent (technically, USA and Canada only, but if we count Mexico too, then even that is no longer true) where CDMA subscribers outnumber GSM subscribers. So the 'lets make a Verizon version' strategy would be 'very' expensive, as very few other countries would significantly gain from this idea. In many countries like Australia, South Korea, India, Mexico, etc - the carriers have abandoned or are in the process of extinguishing CDMA networks in favor of GSM (and its 3G+ evolution) technology. There is not one carrier on the planet going the other way. And the world's biggest market, China, has re-organized its networks so that CDMA is now given to the former fixed telecoms operator, China Telecom, as their first network. China Mobile with over 500 million subscribers is on China's domestic 3G standard and China Unicom (iPhone exclusive dealer) received the GSM-standard 3G licence.

So for Apple to do a 'Verizon version' iPhone would give them Verion and Sprint, and some Canadian carriers, a few in some Latin American nations. No Western European networks, no African networks, no Oceanian networks and precious few, usually smaller Asian networks. So while the development costs of GSM versions can be spread across theoretically 500 carriers/operators, the development costs of CDMA versions would need to be recovered out of only a handful of carriers. This is the biggest complaint among CDMA carriers, that most handset makers won't bother to make 'good phones' for them. Like the iPhone haha, only a GSM version.

Matthew - great comments, loved the WalMart analogy. Yes totally true.

Thank you all for writing, please come back and we'll continue the dialogue

Tomi Ahonen :-)

[kevin]

Based on your reply to Anders, I went back and looked through the AT&T reports and transcripts. In the post-2Q09 conference call, AT&T said they had "just under 9m iPhone customers". Having sold 8.3m iPhone 3G over the previous year, that means likely around .7m are the original iPhone. So odds are that almost all of the original iPhones have been replaced as a phone (most are still in use as an "iPod touch"). But I suspect that this rapid replacement was unique to the original iPhone (due to the lack of 3G and GPS as you said), and doesn't apply to the iPhone 3G or iPod touch. (BTW, AT&T had an incentive to move everyone off that iPhone as that was the only iPhone that had revenue-share for the data revenue.)

In your response to HCE, you mention Apple still having revenue-share deals. The revenue-share deals only applied to the original iPhone, and continued exclusivity (or single carrier in a region) doesn't imply continued revenue-share (as evidenced by AT&T).

I've said before that Apple is focused on the "PLATFORM" because they think platform will provide a sustainable advantage that will give them a share of the market that will allow them to survive and thrive. As Piot said, that's why Apple's response to the NPD study was about platform; they were primarily addressing developers. You can call it panic; Apple was just reminding their developers to have the correct perspective (PLATFORM) amidst the US blogger orgy.

A platform is more than just a common OS. It includes common UI items/gestures, common Apps, continued OS upgrades, common SDK (and continued SDK upgrades), common peripherals, common product naming, etc. Google is also trying to build a platform, but by giving freedom to each hardware mfr to add a different UI, and freedom to each carrier to not provide OS upgrades and refuse basic apps, and by having a second different OS/SDK for tablets, Android is a much more fragmented platform. (Here's a research topic: How much fragmentation can a platform withstand before it loses most of its benefits?) RIM also has a "platform" but their platform is really split by having keyboard-based phones, and touchscreen-based phones. And their touchscreen-based product (Storm) and SDK are poor. Nokia is building multiple platforms, and by moving to a new UI for Symbian^3 and the new MeeGo, they will for the most part, be starting again. HP recognizes the importance of platform and that's why they just bought Palm. But they have much work to do. With regard to building a platform, Apple is ahead and continuing to move further forward.

[HCE`]

Tomi,

You said

> This is the biggest complaint among CDMA carriers, that most handset
> makers won't bother to make 'good phones' for them.

Let me just point out that the news item I was reacting to was about Android's sales in the US. Now your above point about CDMA might well be true in general but it certainly does not apply right now to Android in the US. The most exciting Android phones right now (Motorola Droid, HTC Incredible, HTC Evo) are on CDMA carriers.

- HCE

[Tom Ross]

Tomi,

Let's get this out of the way first.

"Then you suggest I have moved my forecasts from one time frame to another to suit my forecasting accuracy. I have never done so. I have every single forecast I have ever made documented. The only times I have changed my mind I have done so in public - STATING - that I was changing my forecast. That is a sign of a professional forecaster. Please support your claim in your next reply to this thread, Tom Ross, (ie any comment after your May 16 comment) and either prove your claim or retract that accusation.

I will not respond to other Tom Ross comments in this thread until Tom gives the evidence of me changing my forecasting dates, or he retracts that accusation. And Tom, if your next comment does not address this matter, I will revoke your privileges to leave comments on this blog."

I was of course referring to your prediction that Apple would start to go down in Q1 2010, which did not happen. You then said it was because of this or that holiday and that it would happen later. That's how I read it, and that's why I said you moved your prediction (of course I didn't suggest that you were doing so quietly or sneakily).

I don't think it matters to discuss the Chinese Holiday calender. I just see that Apple did not shrink last quarter, unless you
- focus on smartphone marketshare while discounting total mobile phone share and revenue share and
- focus on quarter-over-quarter while discounting year-over-year.
As far as I read it, you moved your prediction of the iPhone's downfall to the future. Now you've predicted (if I read it right) that in Q2 Android will already be ahead worldwide of iPhone OS, and even more so than suggested by the US NPD study for Q1. In other words that Android will be more than 8 points ahead of iPhone by the end of June. I find this statement overly bold, just like your previous eulogy on the iPhone was overly bold.

Hence my sharp-tongued reaction which of course some may say is not appriopriate in any situation.

It's okay if you do not want me to post here anymore should you find my statement insulting. Sorry if I stepped over the line. It's my opinion, and it's your blog and you've shown more than reasonable hospitality so far. So do what you must!