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« Recognizing How Significant is Apple's Achievement with iPhone making it a Top 5 handset maker | Main | When Life Surprises You With An Ultimate Treat - I Call It A James Bond Lifestyle Moment »

November 04, 2010



Wow! I might just be the first to comment on this article. Let's take the smartphone makers one by one.

1. RIM - If the iPhone does indeed come to Verizon in Q1 2011 (and perhaps also to T-Mobile), I don't think RIM will re-take the smartphone lead from Apple again. RIM will hang around as a major player for a long time because of its strength in the corporate sector but year-over-year, their market share will probably slowly decline.

2. Samsung - Mostly agree with your view but I am not completely confident of how quickly Samsung will overtake Apple - because of iPhone coming to Verizon. That will give Apple a boost in a couple of quarters that are usually quite weak for them. However, another year and unless Apple throws in some variety to their offerings, Samsung could well overtake them. Being Apple, you're not going to see much variety but for them to keep ahead of Samsung, you'll need some variety at least. Windows Phone 7 is a big unknown for them - a good debut for Windows Phone 7 and they might even overtake Apple in Q1 2011.

3. HTC - Not much to say I think. I think how well they do will depend on how the public responds to the Windows Phone 7 products. Android will, of course, continue to do well.

4. Motorola - Frankly, I don't see what you have against Motorola. Given the fact that they screwed up big time earlier this decade, I don't see what else they could have done to revive their company. At least, there is a chance that the company will be profitable going forward and they have a very good mix of products.

5. Sony Ericsson - No idea what these guys are doing. They took forever to move to Android 2.1 - they did it at the time when 2.3 is coming out. If their software is going to lag as much as this then they are not going to attract customers - no matter how good their hardware is. The so-called PSP phone is rather intriguing, though.

6. Palm - Too early to tell. I don't think you can blame HP for being lazy. The Palm deal was completed only 3 months or so ago. It takes time to come up with new hardware. They did release a new version of their OS - which is a good thing. Let us see what they have a year from now and then judge.

7. LG - No idea what these guys are doing. They seem pretty out of it as far as smartphones are concerned. They are going to be coming out with a lot of Windows Phone 7 devices, though, so they may yet make a comeback.


Johannes Peltola

Good article as usual.
Personally I think the winners will be Apple in the short term, Samsung in the mid-term and Nokia in the mid-long term.
Android competition intensifies and will drive the margins of Android-dependent makers down (especially Motorola and LG), which will cause them to focus more on Windows Phone 7.
Samsung will make good profits with Bada in mid-tier smartphones, competing directly with Symbian devices.
The iPhone loses hype as Android and WP7 gain market share, and will be driven into its own high margin premium niche by Android and MeeGo unless Apple is successful in innovating and diversifying its smartphone portfolio.
LG and Motorola just don't have any sustainable competitive advantage and will lose when the margins start falling.
I believe HTC will survive as a flexible but small player that is able to transform when the market requires it to.
RIM has run out of ideas, and is in a tight spot to come up with something new.
Nokia has the best long term strategy for global domination, now it just has to deliver.

That said, my prediction for the order of drop outs is:

-These opinions are based on facts and hunches. I own Nokia stocks, which might cloud my reasoning.

Matthew Artero

Thanks Tomi for your hardwork and sharing with us.

In these comments we keep seeing the Apple fan boys brag about Apple being the most profitable but they are comparing apples to oranges.

Except for the iPod Apple doesn't really have the issue of new phones canibalizing its existing products. I think Nokia and Samsung have the right idea of converting their users to their higher end products.

We have seen comments here where Apple fan boys insist that Nokia and others should follow Apple's example and forget about lower end phones. Tomi now shows us that Motorola failed miserably at doing what the Apple fan boys suggest.

Apple has the freedom of a new commer with no customers to lose. Yes, maintaining those customers are costing Nokia at the moment but eventually they all upgrade just like we all do with our cars, computers, and so on.

Dumping them like Motorola did would send them rushing to explore other brands. Then the cost of fighting to get them back may turn out to be even more expensive then nurturing them into a conversion.

Apple is just not in the same position as the older phone makers. The older makers have something to lose that is worth protecting. If they succeed with their conversions we will say they were right all along. If they fail to convert their users we will still say they were right to try.


Motorola had to dump its dumbphones quickly because it was losing money on each one that was sold. It was not a low-cost producer like Nokia, so when Nokia drove a price war, Motorola was toast. It didn't have the luxury of time to move them to smartphones since it didn't have any at the time. As it is, during this last quarter, only 42% of its units sold were Android-based smartphones.

Nokia (and Samsung), as low-cost high-volume dumbphone producer, continues to make profits on dumbphones, so it can keep selling them. Nokia has been offering smartphone upgrades to its users for a long time, but Apple upped the smartphone bar in 2008. Surveys have shown that Nokia has since lost lots of users to Apple and Android-based phones because its smartphones (including the N8) have not reached the new bar. But the good news is that there are still lots more Nokia dumbphone users who are converting to cheaper smartphones (such as the 523x and many E-series). Nokia has driven a price war on these cheaper smartphones as well, and that is putting a squeeze on RIM (who also doesn't have a good OS/UI at the iPhone/Android-level). Nokia still has time to offer a more expensive MeeGo/QT smartphone that reaches or exceeds the bar, but it really needs to execute, because each user lost to iPhone/Android today is one less for it to upgrade tomorrow.

As for Samsung, it's not clear to me that they have as much brand loyalty as Nokia, even though they have developed a decent reputation, so they can't count as much on blind user upgrades. But they do have distribution and low-cost production, so they should compete better, at any part of the smartphone price spectrum, than any of the other Android/Windows Phone 7 vendors.

LG's production costs are higher than those of Samsung and Nokia (but less than that of Motorola). Because Nokia drove dumbphone prices lower, LG started taking losses this year. In the conversion to smartphones, LG waited for MS Windows Phone 7 rather than go full-bore with Android, and that has taken longer than they wanted, which has left them behind the others.

Matthew Artero


Are you predicting the doom of the iPhone? Apple is not in a price war yet, but when it comes is it going to suffer the same fate as Motorola?

We know that when the price war starts Apple will not have the same high profits it has now. The older companies are already in a lean mode so when the price war starts they probably won’t be affected much if at all.

Saying that Apple will eventually have to deal with a price war is not an unreasonable thing to say seeing as how the iPod is no longer a big deal and Droid phones outsell the iPhone.

It’s only a matter of time for the other manufacturers to build up their war chests and position their manufacturing to target would be iPhone customers. If they can’t win at the same price of course they will try to win at a cut price. Thanks for the observation Kevin.

Here is a link to a news video showing cannibalized products. Something Tomi has been saying for a long time is continuing to happen. It even tells the percentage of dumbphone sells being replaced with smartphone sells in the USA; which means the time for the price war against the iPhone is getting closer.

Matthew Artero


Are your dangerous slides publicly available online? 'The future of money and payments: Mobile Payment Industry Perspectives'


Price wars are effective when an item is at or approaching commodity status. An item reaches that status when there are really no further innovations or improvements to the item that matter to the consumer at that price.

I think the top-end of the smartphone has a long ways to go before it reaches commodity status. There are lots of additional innovative capabilities that users want added to their always-connected-computer-that-is-always-with-you-in-your-pocket, especially if the price doesn't go up. There are obvious things like faster 4G connections, mobile payments/NFC, and live TV. And there are less obvious things like linking it together with your computers, tablets, and home TVs.

At the same time, Apple is rapidly becoming a low-cost producer. They get the best prices and priority on flash memory; they get great prices on 3.5" displays and other components; they make their own highly-efficient A4 CPU (and its design/ development cost is amortiZed over multiple high-volume products); their OS, apps & developer software are leveraged over both iOS and Mac products; they sell lots of their products in their own online and retail stores; they manufacture and assemble in low-cost China. They sold over 23 million iOS devices last quarter, and should top 30m this quarter, which is about the same level of sales as all of Nokia's converged devices.

So a price war at the high end is unlikely for at least until 2012. Nokia awaits MeeGo, Samsung is just starting to ramp up smartphones. These devices have more room for innovation.


Samsung reported "cumulative" sales for Galaxy S and Wave. Both begun sales in third quarter so about 1m wave and 5m Galaxy S in 3Q.


Examples of Apple's low-cost prowess are the iPad, iPod touch, and the new AppleTV. The iPad was definitely helped by starting out only being sold in Apple's own retail stores, where Apple gets to keep the retail markup for itself, and where the costs of operating those stores are spread across all of Apple's products. And given the must-have-for-Christmas-gift popularity of Apple's products, you can be assured they get pretty good deals at Best Buy, Radio Shack, Target, and even Walmart. Apple has figured out how to turn it's intangible brand into real dollars.


Hi Tomi,

I don't think we've read the same reviews Of Symbian 3...
The ones i read weren't really positive
And from my own experience it us just an incremental improvement over S60 5th ed, with true touch controls rather than The quick and dirty touch awareness they added on top Of their touch unfriendly s60 ui


"Peter Chou, chief executive of HTC, had previously said he saw “little value” in HTC running its own application store. But he has also said that it was no longer enough for HTC to simply customise the standard Android user interface with its own “skin”: “It is not enough to be skin-deep. We need to go bone-deep.”"

Samsung taking the lead in Android-based smartphones (plus its low-cost producer status) seems to have caused HTC to plan to open its own app store and rethink what it's doing with Android and Sense UI. Altho still a bit cloudy, it looks like HTC may be planning to fork Android for its own purposes. Maybe even in combo with its just-arriving WP7 phones. See rest of article at

Brian S Hall

Great numbers as always!
On my site, I rank the Samsung Galaxy as the best smartphone that is not an iPhone. Still, these Samsung numbers are surprising.

John Carter

Android will surpass in my opinion all the other operating systems. Simply because of google's source is king ! :>

Johan R

Tomi, what's your view on the "missing" 77 million phones, i.e. Gartner reporting 77 million more phones sold than IDC. Also, Gartner seems to claim huge growth for "other" manufacturers than the top ten... Any comment?

Tomi Ahonen

(Thank you for the comments. I will respond to all individually)

Hi HCE, Johannes, Matthew and kevin

HCE - Ok.. Good stuff. On RIM, you are only thinking US market with VZ, remember RIM is taking world by storm, in youth segment. RIM's US market share has been in gradual decline for a long time. On Samsung, we tend to agree but your point again about VZ iPhone is US only, remember Samsung has 2nd widest reach of handset partners in the global carriers (behind only Nokia). So they are not particularly dependent on US market, but even so, Samsung is on all 4 carriers already with Galaxy.

On Motorola, haha ok, yeah, at this point what else an they do. But they messed it up badly before. Now they are lingering in 6th place smartphones.. See how quickly Samsung overtook them. LG could do the same if LG gets serious, meanwhile ZTE is gobbling up the abandoned ex-Moto markets and will become Android smartphone challenger to Moto soon as well.

Johannes - great forecast, thanks! We'll monitor it on the blog and do come back and we'll return to it when the flies start to drop haha..

Matthew - thanks, yes you put it very succinctly, thanks. That is exactly the point, a new 'only smartphones' maker does not have to migrate phones. Its not the same race, and long-term success will not be judged by the same metrics. Thanks

kevin - good points, thanks. I would disagree a bit on the Moto part, they had both smartphones and low-cost phones back in January of 2007 when the iPhone was launched, so if we use that time-frame as our evaluation point, the Moto management messed up on both counts, with expanding their smartphones reach at the time, and with migrating the dumbphone population. But other than that, I think we agree on much..

Thank you all for writing, I will return with more direct comments

Tomi Ahonen :-)

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I am excited about this electrically charged laptop challenge . I hope it works out. I like your blog. its very funy.
mayby you can cleck this:


I thank you for the reference. I usually don't like buying products without trying them first, if you have a light version I can try, I will and if it's any good, I'll buy it.

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mon commentaire ont été mangés. Quoi qu'il en soit, je voulais dire que c'est agréable de savoir que quelqu'un d'autre a également mentionné ce que j'ai eu du mal à trouver la même information ailleurs

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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