Lets Understand the Mobile Phone Market, installed base and smartphones vs dumbphones

I have been doing a long-running series of annual reviews of the overall mobile telecoms market here on this blog. In it I have touched upon the handsets side of the industry (but most of the industry is in the services side of voice calls, SMS text messages, mobile internet services, etc). As this year heated up with the 'Smartphones Bloodbath' - many of my readers have asked for more details and analysis about the handsets market itself. I do track those stats too and my consultancy is used from time to time to analyze the handsets market (and smartphones and their operating systems). So I decided to put my best insights into the TomiAhonen Phone Book that I just announced earlier today, a 171 page statistical review of the handsets market, with over 90 charts and tables.

As is the style here on this blog, we then want to give you, our loyal readers, as much of that for free as is reasonable in a longish posting about that topic. So here we go. This is the 'definitive' blog posting about the handsets industry. And if this is of interest to you, please note, there will be a new free gift for you in it too, so read carefully haha.

MARKET SIZE 2010

The mobile phone handset market returned from the economic downturn, and grew strongly in 2010. A particularly hot area of the handset market in 2010 was smartphones. But first, we need to understand how exceptional this market is.

The PC industry sells a little over 300 million PCs this year. That includes all desktops, laptops, notebooks, netbooks and the tablet PCs like the iPad and Kindle. A little over 300 million sold per year. Similarly television sets sell in that scale, about 300 million per year. And DVD players sell in the 250 million range annually. These are the global giants in electronics, the others of our favorite gadgets, like videogaming consoles or digital cameras or MP3 players like the iPod, sell in far smaller numbers per year. Except for one gadget. The mobile phone. The world sees sales of 1.37 Billion mobile phones sold in just this past year! You see why I am so excited about this industry? Just smartphones alone will sell very close to 300 million units this year, and yes, next year more smartphones will be sold than all types of personal computers, combined.

While we are on those smartphones, this is a big milestone year for the smartphone. For the first time, in 2010, the total value of the smartphones sold, exceeded the value of dumbphones sold. And the market is tipping very lop-sidedly to the smartphones, due to both the incredible growth in smartphones this year - while the overall handset industry grew by 10% in units sold, the smartphone market sector grew by 71%. So today 60% of all handset sales revenues come from smartphones. yes, you have to sell more than 4 dumbphones to earn about the same as one smartphone.

But you do not need to have a smartphone to have a powerful gadget in your pocket. Only 22% of all phones sold this year were smartphones. The other 78% were what now is a bit dismissively grouped as 'dumbphones', which includes anything from very high-end featurephones (many non-smartphone featurephones in Japan and South Korea have more features and abilities than the best smartphones known in the rest of the world) to mid-priced phones to the ultra-cheap basic 'Africa phones'. Even the most simple basic phones do SMS text messaging, meaning every phone sold worldwide is capable of mobile messaging, and can be used for anything from advertising and coupons to news and games to TV-interactivity to mobile banking.

FEATURES OF INSTALLED BASE

While many developers obsess about the iPhone and its App Store, and think that the Android OS may be the next big thing to achieve mobile data success, the reality of the dumbphone installed base can be astonishing. Most phones in use worldwide today have a full HTML browser - even in the Emerging World, seven out of ten phones in use has an HTML browser. And if the developer can offer the intended service on a basic browsing experience, the more basic WAP browser is on more than nine phones out of ten worldwide.

Similarly MMS, not just a 'picture messaging' ability but a true 'multimedia messaging' platform, MMS allows pictures, videos, sounds and longer text content to be delivered to mobile phones. If you put your internet service on the PC based internet, you can reach 1.7 Billion people. But if you put that multimedia content on MMS, the world's installed base of MMS capable phones in use is 3.4 Billion handsets! Yes, twice as big as the total internet and yes, twice as many MMS capable handsets are in use globally, than television sets! No wonder MMS is growing so strongly, and being embraced by major media brands.

I want to mention a few other features. Memory cards. Two thirds of all phones in use worldwide now have a memory card slot. That is a lot of capability to swap data without worrying about cellular network charges. And yes, while WiFi is spreading (18% of all phones in use have WiFi), the far bigger wireless connectivity is of course Bluetooth - 64% of all phones in use have that ability. If you want to listen to music on a phone, or watch a video, you don't need a smartphone. Six out of ten phones globally has a media player. And of those apps? Try Java/Brew - more than half of the installed base of mobile phones support either Java or Brew (try 2.5 Billion handsets as an installed base today). Wow, these are huge numbers.

INPUTS BY TYPE

The battle of QWERTY and Touch-screen phone inputs is at the tipping point this year, with the Touch-screen phones now selling more than QWERTY phones, but the installed base still has more QWERTY inputs. 14% of the total installed base of mobile phones has some kind of special input, like QWERTY, Touch screen or hybrid input.

And on the camera resolutions, VGA cameras still are the biggest category, but 1 megapixel cameras are rapidly catching up, and almost one out of five phones in use has a camera resolution of 3 megapixels or better. How many is that? Try 800 million cameraphones, thats nearly 12% of the planet's population, who have such a good phone in their pocket, that it has a 3 megapixel camera on it, or better..

MARKET SHARES

First a few quick preliminary look at how the full year of 2010 will pan out for the Top 6 biggest handset makers in all phones, in smartphones, and in smartphone operating systems. Note, that this is a short-term projection by my company, based on the first 3 quarters of 2010, and making a projection for Q4 sales, We will know the final numbers during January and February (and will report here on this blog). So this is what it looks like:

Total handsets Top 6 for 2010
1 Nokia 32%
2 Samsung 21%
3 LG 9%
4-5-6 very close race between Apple, RIM and ZTE about 4% each

Smartphones Top 6 for 2010
1 Nokia 35%
2-3 very close race between RIM and Apple, about 15% each
4 Samsung 9%
5 HTC 6%
6 Motorola 5%

Smartphone OS's Top 6 for 2010
1 Nokia Symbian 39%
2 Google Android 21%
3-4 very close race between RIM/Blackberry and Apple iOS, about 15% each
5 Microsoft Windows Mobile and Phone 7 4%
6 Samsung Bada 2%

So then lets look at who are the big boys of this industry. The market shares are regularly reported - as units sold, so we know Nokia is the biggest dumbphone manufacturer and the biggest smartphone manufacturer. But selling tons of cheap phones does not make you a big company. The average price of the phones sold will determine who are the really big players, and by revenues, the big five of the handsets market are (as I reported earlier on this blog) - Nokia, Samsung, Apple, RIM and Motorola in that order.

Then it becomes interesting to see who is focusing on what region (I divide the world into 8 regions in my analysis, like I do in the Almanac, so its North America, West Europe, East Europe, Asia-Pacific Advanced, Asia Developing, Middle East, Africa and Latin America). The biggest region by far in unit volumes and revenues is Asia Developing (as it includes China, India and Indonesia 3 of the 4 most populous countries in the world). The West Europe and North America are running neck-to-neck.

Nokia's top 3 market regions (by unit sales) are Asia Developing, West Europe and Middle East
Samsung's top 3 market regions are Asia Developing, North America and West Europe
Apple's top 3 market regions are North America, West Europe and APAC-Advanced
RIM's top 3 market regions are North America, West Europe and Latin America
Motorola's top 3 market regions are North America, Latin America and East Europe

OS WARS

And then those OS wars for smartphones. While Android got most of the news in 2010, and it had very strong gains in North America, the world giant has been, is, and continues to be Symbian, powering Nokia smartphones and about half of smartphones in Japan (being the OS of preference for NTT DoCoMo, Japan's biggest mobile operator/carrier). A regional analysis of smartphone OS's is more revealing.

In North America the installed base of smartphone OS's reflects the recent rapid growth of smartphones, so while Microsoft's Windows Mobile and Hewlett-Packard's Palm used to have major shares in North America, the battle is now between three OS's of almost identical market share - RIM/Blackberry, Apple iPhone iOS and Google Android.

In Western Europe, Nokia's Symbian has a dominant role, and interestingly, the second biggest OS, Apple's iOS, has not taken significant market share from Symbian, but has decimated that of Windows Mobile. RIM runs a distant third with Android rising.

In the Advanced Asia-Pacific market, Symbian's strong market dominance is very stable, the battle on the fringes has seen iOS and Android eating into Windows Mobile and Linux Mobile.

In the Asia Developing market, Symbian rules, with RIM a distant second and Android rising.

In Latin America the battle is between Symbian and RIM, both gobbling up what share Windows Mobile and Palm used to have.

In Eastern Europe not surprisingly Symbian dominates but RIM is growing strong as a distant number two.

Africa is almost exclusively Symbian with some Blackberry. The Middle East has more Blackberry but is also strong dominance by Symbian.

While the pundits love spinning the fable that the iPhone is stealing Nokia's market, the truth is, that when examining the eight regions, Symbian has been very stable and most gains that Apple has been able to make, have been at the expense of Windows Mobile and Palm, not Symbian. Where Symbian has taken major losses, has been more at the expense of Blackberry and now Android. What confuses the pundits, is that North America is both the worst market for Nokia and for Symbian, so the analysts there do not see the real performance of the world's biggest handset maker, smartphone maker and smartphone OS.

I do want to make a mention about Bada (something I have said on this blog before, but it bears repeating). If you are impressed by how strongly Apple has grown from never having made a mobile phone to now challenging for 4th biggest mobile phone maker globally, or how strongly Google's Android has stormed the market, today selling on one out of every five smartphones sold worldwide - consider Bada. In its first 6 months of sales this year, Samsung's Bada has sold more smartphones than Apple iPhone managed in its first 6 months, or how many smartphones were sold in the first 6 months of Google's Android. Do not discount Bada. It achieved 2% smartphone market share in only 6 months. That is a world record. Expect Samsung's Bada to be one of the big stories of 2011.

PRICE PYRAMID

What else can I tell you? The average sales price of dumbphones sold in 2010 was 61 dollars, and for smartphones was 332 dollars. That is of course the 'unsubsidised' or 'SIM-free' price (so don't think the iPhone 4 offered by AT&T for the nominal price of 199 dollars, is really a 199 dollar phone - Apple tells us they are paid 600 dollars for it - so AT&t hides the remaining 401 dollar price into your 2 year contract..)

I calculated the price pyramid for the global phone market and found the following price breaks:

Premium smartphones costing over $450 = 5%
Standard smartphones costing between $250 - $449 = 9%
Low-cost smartphones and premium featurephones costing $100 - $249 = 17%
Low-cost featurephones costing between $50 - $99 = 24%
Ultra low-cost basic phones costing under $50 = 45%

There you go, that is a view into the market of mobile phone handsets, the most prevalent technology on the planet, yes more people today have a mobile phone than have a wristwatch or even a basic FM radio. Now about that freebie surprise gift I promised? Yes, if you would like a two-page pdf document with all the major stats and facts about the handset industry, I have that for you! If you send me an email to tomi (at) tomiahonen (dot) com, I will send you the brand-new two-page 'Cheat Sheet' about the handset Industry by return email. Please write into the email header 'Cheat Sheet' for rapid delivery of the pdf file.

And for those who already know they need more data, if you liked this blog story, but would want to see more than 90 tables, charts and diagrams about the mobile handset industry, including all of the above, but obviously many many more, I now have my 11th book, the TomiAhonen Phone Book 2010, which runs 171 pages and is formated for the small screen so you can save it to your smartphone and have all the handset industry stats and facts in your pocket with you every day. The eBook costs only 9.99 Euros. There are free sample pages from the TomiAhonen Phone Book both at the ordering page, and in the new Insider's Guide to Mobile. So take a look and for under ten Euros, this is the best bargain in stats and facts about the global handset and smartphones industry. See more at TomiAhonen Phone Book 2010. 

Comments

[Tomi Ahonen]

More replies

Hi kdt, Timo, Tim, Stephanie, Alex

kdt - This blog article was clearly about the phones market. There are very many other portable devices, like the iPod Touch and iPad that you mention, and other portable devices like the Playstation Portable, digital cameras, laptop computers, etc. This is NOT about portable devices (which are 'mobile' as in movable). This blog is about 'mobile' devices ie those where the used SERVICE itself is mobile, ie served via the cellular service AND permanently connected. A laptop or iPad with a 3G connection is portable but not mobile.

But if you feel the world of 'mobile' by your definition, what I call portable, is the elephant - you are sadly mistaken in the numbers. Lets take the specifics you mention. The iPad and iPod Touch sold what, about 30 million in 2010? Even if they sold 40 million. The mobile phone handset market sold far in excess of 1.3 Billion. The elephant is the mobile phone, the ant is the other iOS devices. The are so small, they are utterly irrelevant in the sales of digital units, lost in the rounding off error of the total market size, when compared to total phones. Of the world's total population, less than 1% have any kind of non iPhone device that has the iOS operating system. Less than one percent. But 61% of the planet has a mobile phone. Please understand the total difference in scale. What you are interested in, is of course of interest to Apple and Apple fanatics, but in the world of digital convergence, neither iPod Touch nor iPad is nowhere in the scale of generting any interest, except for US based tech pundits who love Apple products..

Timo - good points and I see a lot of merit there, thinking from the start-up point of view. My argument is in return, if the development costs are 1/10th the size (WAP vs App) and all operators already have WAP portals of some kind, where there is FAR LESS congestion than on the app stores with hundreds of thousands of choices - I would think the start-up has far better chances on mobile web than doing an app. What the app store environment DOES provide (as a very long-shot opportunity) is the free app method of getting some visibility. But that to me is still better done on free mobile web rather than free app. But we have to see as the numbers pan out and we get more comparative data.

Tim - thanks! And I appreciate it that you took the time to write. I am 'mature' enough to understand that for every comment left here, there are 10 or more who liked it too but didn't leave a comment, so I am always happy to see the visitors (I see the stats on the blog metrics) and then to see what kind of comments have been left, except occasionally when some leave inappropriate comments haha..

Stephanie - haha, boy you are precise... :-) But yes, I did mean, that XHTML is counted, as is normal HTML and yes, I am happy Opera releases pretty good numbers and they are included already in the stats.

Alex - hey, thanks for the statistics update! Very good numbers.. :-)

Thank you all for the comments

Tomi Ahonen :-)

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So how many is the 'unique' user count? That is 3.7 billion people. It is already over half of the total population of the planet - and considering most of the planet lives in very poor conditions, mobile phones are by a very wide margin the most widely spread technology on the planet. Yes, 54% of all people alive on the planet have a mobile phone.