A Week is a Long Time in Smartphone Bloodbath - AT&T, HTC, Microsoft

We had the quarterly results from Apple and Nokia which were the big news in the Smartphones bloodbath for last week. Both companies had further bad press, Apple around Antennagate on which I did some math about the real scale of Apple's numbers, and Nokia around rumors that the CEO may be replaced. But there was more news in the 2010 smartphones bloodbath.

AT&T

AT&T reported numbers that for Q2 there were 3.2M iPhones activated (which is up 19%) leaves only 5.2M for rest of world (which is down 14%). The big reason why the rest of the world is down in Q2 is that the new iPhone 4 was only launched in 5 countries, so the AT&T proportion will be more than normal. This is not a sign of problems for the iPhone abroad.

We also learned from Yankee Group that the average household income of iPhone owners is 100,000 dollar household vs 85,000 dollars for other smartphone owners (the US median household income is 52,000 dollars according to US Census Bureau). No big surprise that the iPhone has highest earners, but note that the Blackberry is by far the most common US employee phone smartphone, for mostly mid and senior management. They are well paid. So with that in mind, yes the iPhone is in a very high price bracket as a luxury good, and far from a mass market consumer device.

Death grip - Switzerland becomes second country to delay iPhone 4 launch until Antennagate is fixed. And IDC survey from Friday of Apple's Antennagate press conference reported that 2/3 of existing iPhone owners will delay iPhone 4 purchases until antenna is fixed. Bad news for Apple as most iPhone 4 sales were to existing customers. They still say all phones they can manufacture are sold, and there are week-long waiting periods, but that is temporary and now diminished. They might have had 3 week waiting periods through to October haha, now the waiting periods will soon subside as Apple ships its next batches to stores, if existing iPhone owners stay away. Meanwhile Apple continues to keep the Death Grip Antennagate in the news. After its press conference Apple added a Nokia and a Motorola smartphone to its video collection, which to me seems like a bad strategy of remining users of Antennagate and keeping it in the press.

(Personally I think Apple will bring a new variant of the iPhone 4 which will be called something clearly different, to try to move away from the Death Grip problem very soon and bring those customers back who are waiting).

Microsoft

Microsoft revealed the launch partner phone makers for its new OS, Phone 7. The phone makers are Samsung, LG, Dell, Acer and HTC. Only two of the five are major handset makers, as Samsung and LG are numbers 2 & 3 among the world's top 10 biggest dumbphone makers. The maker conspicuous in its absence is Motorola, which did provide Windows Mobile smartphones but has apparently abandoned the Microsoft family. Samsung, LG and HTC all provide Android phones already so it remains to be seen how eager they are to provide major support to Phone 7. As Samsung has its own Bada OS, don't expect huge effort by Samsung to support Phone 7. And HTC is the bestselling Android maker so it would seem they would put most their effort to retaining the lead on the fastest-growing smartphone OS platform. But it is also possible especially for LG to do a differentiation strategy against SonyEricsson, Motorola and ZTE, by focusing on Phone 7. We have to see and monitor the developments.

In other MS news, it was revealed (but not confirmed) that AT&T has committed to selling 8 million Phone 7 smartphones from Microsoft. But while that number may seem big, remember that AT&T sells more than 12 million iPhones annually, so it does not yet spell awesome success for Phone 7. 

HTC

HTC has said they will launch 6 more smartphones before the end of 2010.

RIM

Blackberry maker RIM Admitted it didn't see the kids coming.. That it took RIM by surprise to find all the youth around the world falling in love with the Blackberry.

That is the rest of the news in the smartphones space. We will keep monitoring the Bloodbath wars here at the Communities Dominate blog

Comments

[Jarmo Lahti]

Tomi, some discussion in Finnish after you previous blog here: http://www.qaiku.com/go/839d/

[Jarmo Lahti]

Re: http://twitter.com/tomiahonen/status/19607346904

In the discussion I mentioned is at the moment 40 comments, some really long.

[Brad]

Tom,

Not sure what are talking about?? All over the news today and Apple's press release:

"Beginning this Friday, customers can purchase iPhone 4 in Australia, Austria, Belgium, Canada, Denmark, Finland, Hong Kong, Ireland, Italy, Luxembourg, Netherlands, Norway, New Zealand, Singapore, Spain, Sweden and Switzerland. iPhone 4 will be available for purchase through Apple’s retail and online stores and Apple® Authorized Resellers."

It lists Switzerland as being released. D

[HCE]

Tomi,

Regarding Windows Phone 7, you write

> The phone makers are Samsung, LG, Dell, Acer and HTC. Only two of the five
> are major handset makers, as Samsung and LG are numbers 2 & 3 among the
> world's top 10 biggest dumbphone makers.

Why does a company have to make oodles of dumbphones to be considered a "major handset maker"? Given that we are talking about a smartphone OS here, I think HTC has far more right to be called a "major manufacturer" than any of the others on the list. Certainly, they make more smartphones than any of the others. I agree that a case can be made for calling Acer and Dell "minor" but I don't see how HTC does not qualify as major here.

- HCE

[kevin]

Tomi,
Some further clarification of your data:
1. The IDC survey was of IT professionals, who are not the type to ever recommend Apple products. And yet the survey also said "74% of those who do not own an iPhone, but plan to buy one, said that the antenna and reception problems would not delay their purchase plans." So 66% of those who have iPhones, will delay upgrades, but 74% of those without iPhones, said antenna problems won't delay their purchase plan.
2. AT&T's end-of-quarter was June 30. Apple's end-of-quarter was June 26. So AT&T's activation numbers include some iPhones that are not part of Apple's 8.4m. Possibly up to .5M more. But agreed, iPhone abroad not facing problems.
3. Do you have a reference for the Switzerland delay? Have not yet seen any story on the web.
4. My true story: My wife decided on Sunday she wanted an iPhone 4 (her 2-year old phone is turning off on its own); she's clueless about iPhone 4 demand. I called the local Burlington store on Sunday pm, sold out. She was at the store on Monday for my son's free Apple Camp workshop; they told her they had 16 units - just come by during the day, she didn't get one because it's my phone that is eligible for full subsidy upgrade so she called me later after she had left the store; I called at 5pm before heading to store, all gone. She's back at store on Tuesday for workshop day 2; they told her they had 2 phones, she called me to ask if the 16GB was okay, went back to counter, all gone. They told her they had 40 on Sunday, but sold out in an hour. At least in this part of the world, demand hasn't subsided.

[maipenrai]

The numbers speak for themselves, no point "customizing" the facts to fit the Apples way of seeing things.

I think several trends are clear. Android is taking more and more of Apples customers. Blackberry and all the Chinese copies here in Asia have suddenly become all the rage and are forcing Nokia to dump prices even on their best smartphones, such as E72. Teenagers are walking aroung with big BB Curves and putting even bigger bumbers on them. It looks silly but thats whats happening right now. And Samsung is in luck for throwing out the Wave so early. It's a hit.

[christexaport]

@ HCE,
"Why does a company have to make oodles of dumbphones to be considered a "major handset maker"? Given that we are talking about a smartphone OS here, I think HTC has far more right to be called a "major manufacturer" than any of the others on the list. Certainly, they make more smartphones than any of the others. I agree that a case can be made for calling Acer and Dell "minor" but I don't see how HTC does not qualify as major here."

Its just like comparing Anheiser-Busch brewers to small microbrewers. The microbrewer can only sell what he has the capacity to make. Apple doesn't even make their own devices, as far as I know, and pays an ODM. And by the way, that ODM is Foxconn, a member of the Symbian Foundation, so you know.

Because supply chain, logistics, and manufacturing capacity are the biggest factors to selling devices, the guys with all the factories and sales are the major players. Apple can be as popular as they wish, but until they build the manufacturing capacity to actually build dozens of millions of devices per quarter, they are physically incapable. That goes for HTC as well, though they are growing, just not in the same class as Nokia, SE, and Sammy.

[Tomi T Ahonen]

Hi Jarmo, Brad, HCE, kevin, maipenrai, christexport

Jarmo - thanks, I came there to comment in Finnish too. Thanks!

Brad - I reported what I saw. I read a Swiss newspaper (in German) earlier this week that said Switzerland was delaying. Maybe it ended up not, and the newspaper was wrong, or maybe Apple was wrong. I don't know, I live here in Hong Kong and report what I find.

HCE - that is a different market and it is measured and HTC is not in the Top 10 in that market. I have argued (please go read the market share blog of today) explaining why dumbphone performance is a signigicant but not deciding factor in how a smartphone maker will gain or lose market share.

kevin - the demand is down, that is what all the evidence says including the IDC survey. What you are saying, that even after the demand is down, still Apple is selling out the current stock and has waiting periods. That is all fine and good. But Apple's sales would be BETTER if its demand was not down.

maipenrai - thanks, yes the numbers help in these situations, but you know that some people have a hard time facing facts and will seek any way to prove that the truth is 'not out there' haha. I go by the numbers like you and report the facts as I see them. I then add my best insights into analyzing the numbers, where I think it adds value

christexport - thanks

Tomi Ahonen :-)

[yiwu market]

ng out the current stock and has waiting periods. That is all fine and good. But Apple's sales would be BETTER if its demand was not down.

maipenrai - thanks, yes the numbers

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