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January 05, 2011


Bob Shaw

Apple is not going to have much of the one enabling component outside United States and that is carrier subsidy. Outside United States, the carriers work on relatively thin margins especially in emerging economies and carrier subsidy tends to be very limited. Also there is a much higher percentage of prepaid customers in these markets as compared to United States. Finally the average customer tends to be more price sensitive outside United States.

Due to the above reasons and also the fact that other smart phone vendors i.e. Nokia, RIMM and Android based vendors have had a chance to built some traction before the arrival of Apple in these markets, it will be difficult for Apple to grow outside of United States as much as in United States without reducing the ASM as well as profitability.

Within United States, one thing to watch for in 2011 is how much Apple is able to displace RIMM from the Enterprise Market.

Bob Shaw

Lee Most of the population of the world lives outside the United States. what we need to compare is what is the smart phone market share of Apple in United States to outside United States?

Bob Shaw

Lee - Just because 2/3rd of iphone sales are outside US, it is not an evidence that iPhone sells just fine without subsidies. Only if the market share of Apple in the subsidized and unsubsidized market for smart phones is the same than one can conclude that iPhone sells fine without subsidy.

If Apple was feeling that it was fighting with one arm behind its back, it would not have continued this exclusivity relationship for three years leaving the other three US carriers to its competitors and thus allowing its competitors to entrench themselves at these other carriers. Also I do not believe that the carrier loyalty is that strong in US that customers who very strongly wanted an iPhone would have not switched carriers. After all iPhone is subsidized by the carrier. I think Apple would gain some sales by making iPhone available on more carriers in US but not a whole lot.

Tomi Ahonen

More replies

Hi Mark, svensson, DSL, vvaz, Mark and Leebase

Mark - haha funny, yes we agree obviously non-phones are also not smartphones. Lets see N8 numbers, we'll see soon enough

svensson - About Ovi store, yeah, I believe you that its too slow and also evolving slowly - but again, remember, Nokia is approaching this differently from Apple and RIM and Android - and in typical Nokia fashion. They are building it not alone (easy, fast) but with the carriers (long term most viable, best for consumers)... It takes far more time and is slower and more bureaucratic, but if you're the market leader and intend to be a long-term winner rather than quick short term, that is the right way to do it. Nokia know Ovi is a long play for the decade, not short term for the next year or two.

DSL - haha, yeah, you're not the first to say that.. Thats pretty typical Nokia reliability. I remember the funniest one was the dog who ate a phone - it went all the way through, and after emerged a few days later, was still fully functional (although no doubt, must have smelled pretty bad haha). Dog was also fine..

vvaz - good point about openness

Mark - good point and yes, again shows the gradual but continuous progress

Leebase - you know this is not about digital device platforms like personal computers, gaming consoles or PDAs. This bloodbath analysis is ONLY about smartphones. Don't keep repeating that silly argument from long ago. It does not change the facts. Yes, the iOS is relevant to Apple as their platform, but Android sell into TV sets and tablets, they won't be counted in smartphones either. I don't care how many times you argue that point, a non-phone cannot be a smartphone. If you insist on repeating that nonsense, I will delete those comments and whatever valid comments you may have included. I am tired with having to spend my nights responding AGAIN to this same point. Stop it Leebase or you are off this blog.

When you ask about Nokia's declining market share, that is indeed a valid point. As they invented this space and started at 100%, of course they are going to see decline over time, that is natural for anyone who starts a new industry. But you are right, the decline is now in a worrysome scale, as Nokia's Symbian market share is for the first time threatened by a rival (Android) for 2011. That is a genuine concern.

Thank you all for commenting

Tomi Ahonen :-)


@Phil W: I don't think Baron95 mentioned video calls, he was talking about VoIP.

As for supply chain, Nokia's is great, but Apple's is equivalent or close to it for a high end smartphone - because they are the largest purchaser of flash RAM and because they provided capital to flash RAM and large high-resolution display makers and received long-term favorable pricing. It's also because they use of the same A4 CPU, GPU, OS, and "computer" design across iPod touch and iPad and AppleTV. OS development is also largely shared with Macs. Samsung's supply chain is likely in the same class but for different reasons.

Phil W

First I should apologize also to Tomi and Kevin as in trying to counter an expected response to my reply to RattyUK on one of these threads (can't remember which one), I may have triggered Kevin and others to open the debate on the banned subject. That wasn't my intention, but I must shoulder some of the blame. Thanks for your encouraging remarks Tomi.

@ Kevin, yes you are right, I wasn't thinking staright and muddled Skype with Video instead of VOIP, but I can and have done VOIP on my company E72, so although my answer was wrong the point still stands.

As to supply chain, I think you are right, but I got the impression that Baron95 was suggesting that Apple's supply chain management was better/cheaper/more efficient than Nokia's. I don't believe that is true, but that doesn't mean that I believe that Apple's is worse than Nokia's. Actually I'm less informed on that, but I had read about the RAM issue. I think you are right about Samsung, because they are manufacturers of some key components like AMOLED displays, which gives them a pricing advantage.

For point of reference I'm British & based in the UK.


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