Bloodbath update for December, as we await EOY data for 2010

The year 2010 turned out to be a massive bloodbath in smartphones, even more so than what I had expected. I have been doing periodic 'bloodbath updates' on this blog during 2010, and also giving quarterly final numbers as the final official numbers have come out. As we now await the quarterly results for the Christmas-period quarter for the major brands, lets catch up with many Bloodbath-related stories that you may have missed. I will go through them in order of the market share sizes.

NOKIA

So lets start with Nokia. The N8 has been receiving generally positive reviews in markets where it sells and there is gossip coming out of Finland, that some analyst has estimated Q4 sales for N8 to be between 3.5 and 4 million units. That would be 'nice' for Nokia but hardly setting the world on fire at those levels. Samsung sells more Galaxy S smartphones (4.2 million in Q4) and Apple sold 14.1 million iPhones (most of which would be iPhone 4's) in the previous quarter and definitely it will sell better than that for Christmas. Now, I am not saying N8 sold 4 million, it is pure gossip at this stage but it will be in the millions simply because of Nokia's reach (compare for example with Microsoft Phone 7 below)

There was quite strong speculation towards the end of the year, that Nokia might do smartphones with Microsoft and/or with Android. I blogged my strong protest about this, saying it is time to sell your Nokia shares if they do that, it would be an ultimately stupid move for Nokia in its current position and its current OS strategy with Symbian, MeeGo and Qt (and Ovi). Of course I don't know what happens inside the big brains of Nokia HQ but I honestly would be enormously stunned if they were to offer any smartphones on other OS's than their own.

On the Ovi store front, Nokia said they now are shipping 3.5 million items of content per day which is about 1.3 Billion downloads per year, putting Nokia solidly in the third-best performing app store behind the iPhone and Getjar. Near future there is a lot of anticipation for the E7 which is the 'non-Communicator' and has an expected ship date for early Q1.

APPLE

The race is real close for 2010 to see which is the second-biggest smartphone manufacturer in the world, RIM or Apple. In terms of current sales in the Christmas quarter, there is little doubt that currently Apple sells more, but the race for the full year will come down to a couple of hundred thousand handsets in the final analysis. I Tweeted that the 'magic number' for Apple was 17.2 million - a considerable ask, after Apple's dramatic Q3 where they jumped to 14.1 million, but they may do it. The current analysts are expecting iPhone to sell in the 15 million to 16 million range and my gut says their Christmas was better than those numbers and it will be down to a few hundred thousand, not a million units.

The victory would taste somewhat hollow, as Android will end up selling far more smartphones, so in terms of OS, the iOS which was 3rd biggest in 2009, will finish 2010 no better than 3rd biggest anyway. IDC gave numbers for Q3 European market share and the iPhone is becoming the darling smartphone of Europeans, with one in four smartphones sold on the continent now carrying the Apple logo, chasing Nokia now for the market lead on that continent.

And for those who 'are counting' - the math is still valid for Tomi's forecast about the iPhone peak, but we will not know final numbers until first the formal Q4 numbers come in from Apple, and then the Q4 total smartphone shipment numbers come from the four big smartphone makers. So we won't know if my peak forecast was right, until in early February or so. But that is coming soon..

RIM

The Blackberry managed a clever little PR spin with their Q4 numbers (RIM Q4 ended in November so we got their data already) and after Apple reported 14.1 million iPhones in Q3, and claimed the mantle of biggest smartphone maker of North America, taking the title from RIM, two months later RIM came back and reported 14.2 million sales of Blackberries and are once again the biggest smartphone maker of North America. And its all but certain that Apple will re-take that position after they report in a few weeks from now. And yes, my forecast for RIM was massively off for the year of the Bloodbath. For what its worth, if the smartphone market had grown as much as was the consensus by major analysts at the start of the year, my forecast would have been pretty much on the money. RIM did grow - strongly - in 2010, but the industry grew far faster than that, and because RIM didn't keep up with the industry, they lost market share. I wrote my apology on this blog already..

SAMSUNG

HTC used to be the fourth-biggest smartphone maker but now that is Samsung's place. Samsung has been generating tons of news and just about all of it most positive. They said they sold 10 million units of their premium Galaxy class smartphone, the Galaxy S. That was in about 7 months. They say they are selling 1.4 million Galaxy S devices per month so they will have sold 4.2 million in Q4. Thats good, but bear in mind, even if we add all Nokia N8 (assuming the 4M is correct) and all Galaxy S - Apple's iPhone will send just about exactly twice that level. Yes, good news over at Samsung but they are not yet in iPhone territory.

But the growth is strong. They are now the biggest Android device provider, taking over from HTC. Their Android based tablet PC has sold 1M units. And Bada? They reached 5 million sales of Bada OS, which makes Bada the fastest-selling new OS launch in smartphones ever. Yes, better than Android and better in the first 6 months than iPhone even. Samsung has announced their 1H target for 2011 is 10 million Bada phones and they have expanded the Wave series of phones to 3 models. Yes, Bada will be huge. (and who told you so haha). And meanwhile on a personal note, I love that Samsung Galaxy Beam smartphone (the one with the built-in pico projector) so much, I stuck it on the cover of my 10th book! And I mean 'love it' from a personal experience, I have the phone and the pico projector is the must-have feature for 2011, this is the future of top-line phones!

HTC

HTC is also having a great year but they are falling into the shadow of Samsung. They are growing consistently faster than the industry and threatening to crash into the Top 10 of the world's biggest mobile phone manufacturers. We have to see what the final numbers look like but they are knocking on that door which would be big celebrations over there in Taipei.

MOTOROLA

Motorola was just split into two parts, so the corporation is in that kind of organizational turmoil. The analysts expect a bad quarter for Moto, we'll see what comes. Samsung obviously this year has pushed Moto out of the Top 5 biggest smartphone makers for the first time. So much for the world-domination plans by what only four years ago was the world's second biggest handset maker.

SONY ERICSSON

We still are hearing gossip about an upcoming Playstation phone and SE has a hard time getting any press attention in smartphones as that story is on the horizon. I am modelling SE to hit about 2M smartphones sold, and expect that if they do, they will be celebrating that level (previously SE has said they specifically have not managed to sell 2 million in a quarter)

FUJITSU

The bigger Japanese smartphone maker has confirmed their year ended with 6.2 million smartphones sold which pretty much secures for them the 8th position. Sharp might challenge. Meanwhile looking into 2011, Fujitsu said they want to expand abroad and specifically enter China's smartphone market (who told you?).

SHARP

Sharp's big 2010 strategy failed when Microsoft suddenly killed the Kin phone project (Sharp was the manufacturer) so now most Sharp sales are from their domestic market in Japan. But out of Japan came the big 2011 strategy gadget for Sharp - the 3D display smartphone running on Android. Expect Sharp to bring it to many markets in 2011.

LG 

The tenth biggest smartphone maker in the world is LG which struggled severely in 2010 and fired its CEO.

GOOGLE

Oh, we thought Nexus was a dead series? Google revised the Nexus and now the new model is made by Samsung. It is getting good press, lets see what kind of sales levels of the smartphone formerly known as a superphone. Good to see you back in phones, Google! (when do we see sanity at Microsoft with Kin re-launch?)

HP (ie ex PALM)

Yeah, where is the news? There is none. HP has managed to take one of the hottest smartphones, in the biggest growth year of smartphones ever, and hidden it from any chance of the slightest market success. Very bizarre strategy by HP. Remember, its not like Palm was their first smartphone - HP had been selling small numbers of smartphones for most of the decade. Thinking of their smartphone strategy and management running it, what rhymes with 'blueless'..

SYMBIAN

Symbian is not only Nokia. Even as Samsung and SonyEricsson are deserting the platform, it is the OS of choice in Japan on the NTT DoCoMo network so domestic smartphones made by Fujitsu, Sharp etc run on Symbian. Symbian will easily end the year once again as the biggest smartphone OS platform. Nokia has been juggling a complex PR nightmare of explaining how Symbian will kind of migrate to MeeGo, with developers using one set of tools called Qt, and the store for both to be Ovi. Yeah, I know, it needs a powerpoint presentation just to understand haha..

ANDROID

Then on the other smartphone OS's which are not mentioned in the above, Android is reporting ever stronger sales and like I said, it will end up the year as the clear second biggest smartphone OS. The growth numbers have been dramatic for the year, and the long-shot possibility is there, that for Q4 Android might even pass Symbian (but not for the full year sales). I doubt it, I think Android will catch up to Symbian during next year, but the gap is closing month by month.. The folks over at Nokia must be praying that Microsoft's Phone 7 is strong, to take some of the growth away from Android (as most Phone 7 manufacturers also make Android devices). But that is not looking likely

PHONE 7

So we come to the newest OS, Microsoft launched Phone 7 in a stumbling transition where Windows Mobile was not going to be compatible, and was to be killed, then WinMo suddenly got more attention from MS and now there are plans to extend its life into 2012, to really confuse any remaining MS partners. And how amazingly did Phone 7 do in its first quarter? Phone 7 most underwhelmingly did not set the smartphones market on fire, and sold only 1.5 million smartphones in its first quarter. Well, its early going. Microsoft is good at playing the long game. Still, this is not looking good for Steve 'I will take personal control of smartphones' Ballmer.

MEEGO

Nokia's and Intel's collaboration is to release first smartphones in the first half of 2011. We'll see. There was some gossip Intel might release a smartphone under its own brand. The MeeGo family has a couple of dozen brands signed up to it, but no major handset makers other than Nokia obviously.

FINAL NUMBER

I am modelling the year now to end at 295 million smartphones. To reach that, the Q4 numbers need to hit pretty close to 100 million (up from record-setting Q3 when they sold 80 million). We'll know in February whether this number was reached, breached or not.

Thats the updates to the Bloodbath.

For all interested in smartphones and their operating systems, remember I have just released the TomiAhonen Phone Book 2010 with up-to-date stats on all the major phone handsets related data, including regional market shares, major manufacturer market focus areas, average sales prices by region, even national handset market sizes for the 60 biggest countries, the installed bases of features, touch screens, QWERTYs, etc etc etc. 90 tables and charts in a 171 page eBook released last week! And costs only 9.99 Euros, for immediate download, and formated to small screens of smartphones so you can carry all smartphone stats and facts in your pocket. This is the only web page where you can buy the eBook - TomiAhonen Phone Book 2010.

Comments

[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 :-)

[kevin]

@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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