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« Emerging World Stories in Mobile, these should cheer you up | Main | Big Bloated Billions Blog - The Preview to Mobile Stats in Year 2012 (plus freebie gift) »

April 27, 2012



@Louis, the thing to remember about the US market is that the carriers shower everyone with minutes on our postpaid plan. For instance, on AT&T the typical smartphone plan is about $70/month and includes 450 weekday minutes, and 5000 night and weekend, and 3GB of data. Verizon's plan are roughly similar. Sprint is $10 more but is unlimited in talk, text, and data.

AT&T and Verizon use texting as a profit source. AT&T charges an extra $20 for a texting plan (again unlimited) - they no longer offer smaller packages (apart from $0.20/text). Similarly, tethering is an extra $20 (which increases the data plan to 5GB on AT&T).

So, given that most customers are on at least a $70/month plan, the $400 upfront subsidy on a 2-year plan isn't quite as big as it seems, particularly if the carrier can upsell SMS or tethering. Certainly the difference between a $300 subsidy on a Samsung and a $400 subsidy on an iPhone isn't that great. Thus, I'm skeptical that Apple really stands to lose out significantly in the future. Maybe if a carrier tried to switch to a European-style pricing system we'd see more of a difference, but T-Mobile tried that 2 years ago without much success (i.e. offering lower monthly prices in exchange for no subsidy on a no-contract plan). Granted, they didn't have the iPhone, but they have long had a good selection of Android phones.


iSuppli and several others are reporting that Samsung in fact only sold 32 million smartphones in Q1, so in fact AAPL still leads in smartphones



iSuppli is that firm which predicts for WP second place in mobile OS marketshare by 2015?



I never doubted the number or suggested Samsung was not #1. I just find it odd that despite being #1, Samsung refuses to report to similar level of detail as the other big players.

I know its not your fault Samsung does not explicitly report exact numbers, but are you telling me that the sole source of your numbers is extrapolating a quote (which was likely deliberately vague) from the Chairman?


@KPOM: The point is that this is all sleight of hand to reach a number that makes the up-front phone subsidy profitable. The giveaway is that AT&T got rid of the cheap texting plan when iMessage came out.

I'm actually American, and when I had AT&T my "rollover minutes" never decreased, and making no real effort to optimize data use, I always stayed right around 1G usage. The equivalent usage for me now is like €15/mo on an O2 off-brand. Accounting for tax, this should be like $15/mo in the US.

Tomi's comment that the subsidies are a distraction seems right, and to argue otherwise requires finding a reason the "no free lunch" principle breaks. Since Apple has huge retail/marketing reach by itself and switching carriers is easy, it would have to be a local monopoly kind of thing.

(As an aside, this is not how Tomi evaluates Nokia. I guess because Nokia doesn't have Apple's retail and marketing infrastructure?)


I've heard the argument that Apple may go the way of Sony now that Jobs is gone. Actually, to me, Samsung is the company that's closer to Sony than Apple. Samsung, like Sony, is a huge conglomerate of companies that don't really work together. Apple is a tightly integrated company that does its best to avoid silos.

What's interesting is how quickly both Samsung and Apple transformed themselves into mobile device companies, earning most of their profits from phones rather than their previous "core" businesses. As Nokia and RIMM have shown, there is a lot of risk there, but also a lot of reward. What remains to be seen is how long the two companies will remain at the top of the heap, and what they do next. Samsung is divesting itself of some of its unprofitable businesses (LCD panels is just the start), but still has a conglomerate corporate structure. Apple has leveraged the iPhone to build its iPad business. What comes next is the big question.


Tomi places too much emphasis on market share, IMO. I think profit share is a more important metric, since it is a better indicator of the products that are more desirable. Sure, it's great to have both high margins and the biggest market share (e.g. the iPad), but that combination is few and far between. Apple is in the top 5 of all phone manufacturers, and they sell nothing but high end premium devices. That's staggering.

More importantly, Apple has also been able to leverage its ecosystem. Samsung has been making tablets for nearly as long as Apple, but they haven't caught on. Apple is still the clear leader, and when it comes to alternatives, it is Amazon, not Samsung, who has the only product that even comes close (and they have a tiny percentage of the profit share because they sell the Kindle Fire at breakeven).

Compare Samsung's advertising to Apple's and it's easy to see which company is jealous of the other. Samsung mocks people who wait in lines, and makes other overt jabs at Apple customers. Apple doesn't even mention other companies or their products.


@Louis, the fragmentation of the US market also helps drive up prices. Unlike in Europe, where the carriers have long shared frequencies and wireless technology, we had the GSM/CDMA split, which made switching carriers a bit harder, and also makes it easier for the carriers to shut each other out of their networks, creating a barrier to entry.

Interestingly, Apple's decision to make the CDMA iPhone may start to change things. Most of the regional carriers in the US are CDMA. It will be a while before a single LTE voice standard emerges, and even longer before the carriers in the US establish interoperable LTE voice and data networks, if ever. In the meantime, by offering the CDMA version, Apple is throwing a lifeline to the C-Spires of the world. US Cellular is one of the last holdouts. If they and T-Mobile finally start offering the iPhone, we could see some much-needed competition.


44 million Samsung smartphones is a huge win for Android. Android is set to be the ubiquitous OS in phone as Windows is to PC's. Apple might be making a big splash in this, the start of mass smartphone adoption, but the iPhone losing marketshare to Android is eerilly similar to the Mac losing to Windows. This whole Android vs Apple cash-cow iPhone, just smells so much like Windows vs Mac. That ended pretty bad for Apple.


@Louis: "No, it's in the contract price. This is the mistake you keep making." - yes, it is in the contract price.

BUT. At the beginning(!) consumer should not pay it but the operators. Consumers do not have to pay it at once but in longer period. And it has influence on the decision they make. Quite many people would not buy an iPhone if they have no other option but paying the full price when they get the phone. Many would buy something cheaper - e.g. a Galaxy - especially outside of wealthy (Western) Europe...

But anyway, time will tell whether anybody will 'dethrone' Apple or not...


@Dan, the difference is that the market is so much bigger now. The volume of sales that iPhone has trumps even the peak volumes of the Mac. They sell twice as many iPhones per quarter as they do Macs per year. They don't need to be the number 1 to thrive. Look at the car companies. It's the biggest player (GM) who went bankrupt.

Also, as far as market share, iOS has been gaining on Android over the past two quarters, particularly in the US and other developed markets (Tomi's current quarter market share numbers are a bit suspect). On top of that, Apple, unlike Google, has had success using its smartphone OS to build up a tablet business. Android tablets haven't caught on, apart from the Kindle Fire, which is a breakeven product that is more a competitor to Google (even though it technically runs Android).


It is no wonder Samsung tops - it gives what the consumer ever wants in a product. Galaxy S2 has almost everything : OTG, removable battery, huge AMOLED+ screen, HDMI out, 1080p video recording, microSD card slot, light weight, thin, attractive case. What I don't understand is why the other manufacturers don't get it.

Sony's new xperia S: no microSD, non-removable battery
Motorola's Razr/Maxx : non-removable battery, no FM radio!
Nokia's Lumia: list is too long

On top of that, Samsung top-end phones will be moving to quad-cores while Nokia is still on 2010 single-core CPUs!


@Wayne, the other manufacturer are taking their design cues from Apple, which also sells a boatload and has none of those features. However, while Apple can pull it off, no one else seems to be able to. Samsung differentiates itself from Apple a bit better, and also leverages its supply chain advantages. Apple is master of the supply chain, and has an attractive design and a unique OS with a big following.



Apple doesn't have attractive design and unique OS.
Apple got Steve Jobs.

If you read about Steve Jobs learning the art of marketing from John Scully ("do you want to sell sugar water for the rest of your life...") and improve it, you'll know that Steve Jobs is the master of perception, thus he got a title of his ability "reality distortion field".

Now, without SJ, what apple can do is spread the rumors that i4S is not the last of SJ work. Designing a phone is more than 1 year, and iphone 5 would be the ultimate SJ work. This to prolong the SJ reality distortion field effect.

At the end, without SJ, Apple will crumble again.

or look at this way....
With a SJ ego, the rest of apple team is not ego maniac and maybe only a yes-man.
Without SJ, they're really nothing.


@zlutor: It's ok to just say "I was wrong" instead of saying "I really meant to say something totally different, which is equivalent to saying that consumers can only get financing from operators". Which is still wrong.

@cycnus: This kind of "false consciousness' was used by communists to explain why the proletariate didn't flock to repressive dictatorships.

@KPOM: Yes, the carriers in the US don't live in a truly competitive market. And, seeing as T and VZ seem dead set on not converging LTE frequencies, that could last for quite some time. It is odd that the "capitalist" US has less direct competition in the (new-ish) mobile telecom sector.



If you said that "..... used by communists .....", then I was wondering if I could say that Apple, Microsoft could be considered communists.

I think that Steve reality distortion field is more kind like religious thing, like a prophet.


@Louis: I say "I was wrong" if you wish, no problem with that. But how would you explain this:

"The companies also face the risk that an Apple-Google duopoly will erode carriers’ ability to distinguish themselves and will further squeeze their profit margins"...



The idea of Apple-Google duopoly and the need of the strong third savior for the operator were coined by Microsoft as their FUD for success. It's a total BS because there were no Apple-Google duopoly because Google didn't sell any smartphone and Google didn't make deal with carrier. The one that make the smartphone and make the deal were Samsung, LG, SONY, Motorola, HTC, Haier, ZTE, etc..... So Once again.... total BS by MS.

Furthermore, for the US, I think you need more carrier so they could be more competitive... Right now all US carrier were enjoying duopoly-tripoly-quadpoly-pentapoly :).


I know for a fact that Nokia's downfall started because mobile technology has become commonplace. Its phone-on-a-chip market today. Nokia's reputation is based on time when the technology wasn't common. You could not buy GSM-ON-SILICON solutions.

Now it is the software that counts.

And Nokia cannot do that. Nokia & Microsoft take in the arse every time $99 Lumia 900 is bought. Lumia 900's components & labour cost $275 apiece.



@cycnus, Apple still has Jony Ive, and Tim Cook, and Phil Schiller, and Scott Forstall, and Eddy Cue. Forstall is said to have similar charisma and drive as Jobs, and Jony Ivy was the one who came up with most of the iconic designs. Will Apple be the same without Jobs? No, but they should still be a driving force for some time.

@Louis, remember, businesses don't always like capitalism. Once they have an entrenched position, they don't mind if government sets up obstacles to competition. The FCC botched the whole auction for spectrum. Anyway, since the FCC blocked the merger with AT&T, it will be interesting to see what DT decides to do with T-Mobile. They are too big to be a regional carrier, but too small to present much of a threat to AT&T or Verizon. Merging with Sprint is fraught with issues (incompatible networks, incompatible frequencies), and Sprint's experience with Nextel is not very encouraging. T-Mobile claims they will start building out an LTE network next year, but that will put them 2 years behind AT&T and 3 years behind Verizon. Plus, I'm not sure DT is willing to make a big enough capital commitment to build out a meaningful network. Perhaps MetroPCS, Leap, or US Cellular could take them over in an LBO, but that would saddle them with debt just when they need to build out their own networks. Or perhaps DT could sell off parts of T-Mobile. The cable cos seem content not to further infringe upon the wireless carriers' turf provided the latter reciprocate.

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