Smartphone Markets Shares in 2012, some relevant illustrations to understand the Bloodbath

As I was preparing the TomiAhonen Mobile Forecast 2012-2015, I did some analysis and drew some pictures about market shares. The battle in smartphones is particularly interesting right now. So let me take a few of those forecasts, and only use the 2009-2012 part of the forecast (the document of course goes three years further, into 2015). I think you'll like these pictures, and for once, this is not 10,000 words long as a blog by me, haha.. Lets start with handset manufacturer market shares in smartphones:

TOP 4 SMARTPHONE MANUFACTURER MARKET SHARES



Source: TomiAhonen Mobile Forecast 2012-2015
This data and image may be freely shared and re-used


This picture looks at the four biggest smartphone manufacturers, and their past 3 years and a short-term forecast to the end of 2012. First, note a small mathematical anomaly, I had to create 104% as the size of the scale, so that all four it into the same picture, but now all actual market share are graphically accurate (the reason we go to 104% not 100% is that the peak market shares of these four companies, Apple and Samsung in 2012, and Nokia and RIM in 2009, add up to 104%. Don't worry about it, the individual graphs are accurate. I have just used this one picture to fit all four into one diagram so you see the scale of their growth or decline in this period)

First, obviously, Nokia collapse is dramatic. It is actually historically unprecedented for a global market share leader, in any industry, ever. No company lost 7 out of every 8 customers it had in a period of 3 years. But now compare to RIM. Yes, Blackberry is in deep trouble, but these two are not in any kind of scale. RIM is in trouble, Nokia is dead.

Then look at the two darlings. Apple's iPhone is growing - but notice how modest is its growth rate, when compared to Samsung. No wonder Samsung is increasingly the darling of the tech industry. What Apple needs very soon, is to split its model range or it will soon be an also-ran. Now lets look at the operating systems, and lets start with the three losers

THREE LOSERS IN OPERATING SYSTEMS

Source: TomiAhonen Mobile Forecast 2012-2015
This data and image may be freely shared and re-used

Here we see how Symbian, Blackberry and Windows Mobile have fallen over the past three years from their dominant 1-2-4 positions back in year 2009. Again, for all the complaints about RIM, Blackberry OS is not doing nearly as badly as Symbian and Windows Mobile. Lets now see the four growing OS platforms. 

FOUR GROWING SMARTPHONE OS PLATFORMS

Source: TomiAhonen Mobile Forecast 2012-2015
This data and image may be freely shared and re-used

The Android growth pace is breathtaking. Apple's iPhone has been relatively flat, only modest growth in the past three years. And Windows Phone? Yes, it has slight growth but notice how much more Samsung's bada has been growing in the same period. That will now be enhanced by Samsung's new Tizen OS that launches before the end of the year. So now, lets go look at Microsoft's situation. I liken it to a parasite.

MICROSOFT THE PARASITE SUCKING NOKIA DRY

I need to show the Microsoft Parasite situation in two graphs, which illustrate the same picture. On the picture on the left, we have Microsoft Windows Mobile transition to Windows Phone. The light green color is Windows Phone sales without Nokia. You can clearly see, that Microsoft was a dead OS without Nokia. The yellow part is Nokia smartphones on Windows Phone and you might think this is good news for Microsoft. They are getting a 'lifeline' and are not quite dead (yet). But then look at Parasite situation from the side of the dying patient, who is being cannibalized for the survival of Microsoft. How is Nokia taking it?




Source: TomiAhonen Mobile Forecast 2012-2015
This data and image may be freely shared and re-used 

The damage to Nokia is so enormous, that while Microsoft the Parasite sucks the life out of Nokia, Nokia will not survive this and will disappear. This is a certain road to death. Nokia's smartphone operations are far too heavy to live on this rapidly vanishing market share. I have drawn the Microsoft-Nokia death-waltz onto one more diagram for you, which has all the parts in one picture:

NOKIA-MICROSOFT DEATH-WALTZ IN ONE DIAGRAM




Source: TomiAhonen Mobile Forecast 2012-2015
This data and image may be freely shared and re-used 

This is why Nokia will not survive. Microsoft can forever continue with its PC based business which is very profitable. The smartphone business is a tiny slice of Microsoft's total business. But smartphones are the future of Nokia. They cannot survivce this carnage. Microsoft is sucking them dry. 

This comes to the joke that when you combine two Turkeys, you do not get one Eagle. Nokia and its Symbian OS had 39% market share before Stephen Elop released his Burning Platforms memo. He has since admitted to the Nokia shareholders' meeting that yes, the memo did damage Nokia Symbian sales. Look at the picture. Its pretty obvious. Immediately after he did so, Nokia's Symbian partners jumped away. Those Symbian partners alone had 6% market share in smartphones in 2010 - more than all Microsoft makers combined! Now in 2012, the total non-Nokia Microsoft manufacturer 'partners' contribution to the Microsoft family will be under 1%.

Of its own market share, excluding Nokia's Symbian partners, Nokia traded 33% market share in year 2010, the last year before the Microsoft partnership was announced, for 5% now this year, at the end of 2012. That can now be obviously seen as a dead-end wrong choice of 'ecosystems' that CEO Stephen Elop selected in February of 2011. He would have been better off with Android, obviously. He would have been better off with Nokia's hot highly-desirable home-grown OS MeeGo (which in its first two quarters and only powering one smartphone for sale, has outsold all Nokia Lumia smartphones that run Windows Phone). Nokia would have been better off staying with Symbian, which was yes, declining share but only slowly, not the collapse that Windows Phone has been. Nokia's latest 808 PureView handset proves that Symbian is not yet dead and can do wonders that Windows Phone can only dream of. And Nokia would have - indeed - even been better off going with Blackberry (there were negotiations with RIM). Anything would have been better than Windows Phone.

As to Microsoft, it trades its 9% it had in market share with Windows Mobile, for the combined market share of Windows Mobile and Windows Phone at only 2% it had by the end of 2011, before Nokia came along. That it now artificially increases to a massive.. 4% for this year 2012. So Microsoft sucks all the blood out of Symbian, and torpedoes its own Windows Mobile environment, and ends with 4% for this year. This is not the third ecosystem. This is nothing like the third ecosystem. As Nokia CEO admitted to the Nokia shareholders meeting in May, Windows Phone smartphones are rejected by the carriers - because Microsoft bought Skype. Its not that the carriers won't allow Skype to their networks - the early Windows Phone smartphones don't even come with Skype preinstalled and many rival phones do - but its because the carriers hate Skype for threatening their business. This is what Elop also told the Nokia shareholders, that carriers explicitly don't like it that Skype steals operator revenues. We can see clearly in the picture what is the damage. The other Windows partners are bailing out of the Windows Phone world - look at Motorola, Sony, Dell and LG. And other Windows Phone partners are shifting emphasis away from it to other platforms like Samsung does for bada and Tizen, and HTC shifts to Android. The only partner left doing any heavy lifting at Windows is now Nokia, itself collapsing and desperately unprofitable.

When the Microsoft partnership was announced by Nokia CEO Stephen Elop on 11 February 2011, the combined partnership separately had 44% market share. Some overly optimistic 'analysts' promised this partnership would deliver over 20% market shares when together (that is hardly something worth celebrating, as it is halving what they had). But the reality is, that this year 2012 the partnership will be down to a combined market share of all of their operating systems and all of their partners - at 7%. From 44% to 7% in three years? That is a disaster.

For Nokia, they had 33% market share in year 2010 just before Elop announced the partnership. That is collapsing now to 5% for year 2012. That is a world record in destruction of any brand or company. It is yes, a world record in management incompetence.

For Microsoft, they had 9% market share before CEO Steve Ballmer started to meddle with the smartphone world and decided that they will have no migration path to Windows Phone. Today their market share is 2% combined, Windows Mobile and Windows Phone. By destroying Nokia, Microsoft can boost that back up to 4% for the year 2012.

And the 'failsafe' point. The partnership could have bailed out of the project at the end of 2011, when it was obvious the Nokia Lumia line was failing in the market and being rejected by consumers and witnessing Nokia's biggest return rates ever. For the year 2011, the partnership, Nokia and Microsoft combined, held a market share of 19%. If they had broken up their partnership and gone their separate ways, they might have held onto that roughly speaking. But two Turkeys do not an Eagle Make. This year this partnership will deliver a combined market share of only 7% counting all Nokia, Symbian (and MeeGo) plus all Windows Mobile and Windows Phone smartphones made by Nokia and any Symbian and Windows partners. From 19% separately to 7% together, in just one year. This was not the beginning of a wonderful friendship. It is sad.

You may freely use any of the graphs, the data in this blog and spread the stories involved. For those who are interested, I have one goodie.

TOMI AHONEN MOBILE FORECAST 2012-2015

I have just released the TomiAhonen Mobile Forecast 2012-2015. The data in this blog is based on that Forecast. I wrote here on this blog Monday an overview of Ten Massive Milestones that are coming in the next four years. You may find it interesting. But if you are really into the market shares of smartphones (and dumbphones) and operating systems/ecosystems - and would like to see how they progress over the next few years, or how they split across the continents/regions, or want to see some alternate scenarios if you don't like my 'base case' forecast - what if Microsoft's Windows 8 is a success for example, or Blackberry comes back, etc - please see TomiAhonen Mobile Forecast 2012-2015. 

PS anyone wondering, the website and email issues are back to normal. Thank you for the concerns.

Comments

[Tomi T Ahonen]

Tomifan, I didn't say Nokia was increasing market share, I said Nokia was increasing unit sales. The market share was in decline, as I have said many many times. But after Stephen Elop took charge of Nokia, in the last quarter of 2010 ie Q4, yes, the unit sales of Nokia branded smartphones stopped declining, they grew. Nokia average sales prices stopped declining, they grew. Nokia revenues of its smartphone unit stopped declining, they grew. And Nokia total profits of its smartphone unit stopped declining, they grew.

Thanks

Tomi Ahonen :-)

[cycnus]

Tomi,

You said RIM in trouble and Nokia is dead.
So, do you think Nokia will dead before RIM?
It seems to me that RIM would be dead before Nokia.

[john]

How about Windows 8? Microsoft will use it in everything from desktop pcs to cell phones. Some of those desktop are in fact just tablets. How will we distinguish the numbers from desktop sales from cell phones sales and other mobile devices?

[AI]

RIM will not die, it will get acquired, NOK will go out of business. Problem with Nokia is money losing NSN.

[john]

I think that you're under estimating the power of Microsoft as a criminal organization (they will do everything they can, including breaking the law) to win and the power of its brand among computer-and-electronic-gadgets ignorant people. For all purposes, all around the world, Windows=PCs (desktops, notebooks, laptops, netbooks) plus Office. Nothing else matters.

The ignorant and the fanatic (as fanatic as Apple's cult following but in much bigger numbers) are waiting for their "drug".

Microsoft will be as successful in that segment of the market as it was in the previous.

Linux had one year or more lead in netbook market, but as soon as Microsoft arrived they completely dominated the market and now Linux is nowhere to be seen.

Nokia might be dead, but Microsoft is not.

[CN]

IDC seems to agree with Tomi with that WP is not going to be the third ecosystem. It will be 2nd. ;-)

http://www.cbronline.com/news/report-nokia-windows-phone-to-be-number-2-smartphone-os-by-2016-06-06-2012

And they have also revised the former forecast. Not 21% in 2015, but 19% in 2016.

Seriously, how can opinions differ this much?

[ejvictor]

June 1st Comscore top mobile platforms 3 month avg. 3 month Jan 2012 vs. April 2012.
Total US Smartphone subscribers ages 13+
Microsoft
January -12 4.4%
April -12 4.0%
Point changes - .4

Lumia 900....Still not winning!

[CN]

@ejvictor

Don't blame Lumia 900 for that. It wasn't available in US until April.

[cycnus]

@AI

But nokia still have their dumb phone division... I mean feature phone division

[JustMe]

@CN
IDC seems to be on the pay-book of Micro$oft.
Check this one:
http://www.crn.in/Software-001Jun010-Will-2011-Be-The-Year-Windows-Phone-7-Booms.aspx

[khim]

It's not known if IDC is paid by Microsoft. What IS known is the fact that IDC changes it's articles when Microsoft asks for such changes.

See here, for example: http://iowa.gotthefacts.org/011607/9000/PX09275.pdf , note "IDC is more then willing to make any changes we suggest" line.

IDC can not be trusted WRT Microsoft, plain and simple.

[CN]

@ JustMe & khim

I'm only asking how can we have two such different opinions.

I read the email. Not sure if you have ever dealt with analysts, but somehow it looks to me you haven't. Just for the record, I had a meeting with IDC today, talking about industry related things. I find nothing strange in their behaviour. And then again, we don't know yet who's right, or what?

[bl0wf1sh]

@JustMe, I am really unsure where IDC get their projections from... they seem to be made only of hot air. Only if WP8 were radically different from WP7 (more appealing and functional, as opposed to ugly and restricted), which by the looks of it won't be the case.

[Kenny]

Here's an interesting article on the current low value of Nokia stock on the NYSE.

Pain Unites Nokia and Green Mountain Coffee Roasters Shareholders
http://www.smallcapnetwork.com/Pain-Unites-Nokia-and-Green-Mountain-Coffee-Roasters-Shareholders-GMCR-F-NOK/s/via/3420/article/view/p/mid/1/id/913/

Essentially the author says that Nokia's stock price is low because small cap investors can see how its product (Lumia 900) is selling at retail outlets.

Couldn't agree more. Lumia 900 is not selling well in U.S. and suffers from extremely high return rates due to manufacturing and firmware defects. Interest in Lumia has fallen off in Europe, it has failed to gain traction in Russia, China, India and the rest of Asia, sales in the Southern hemisphere including Oz and NZ is negligible so where else can Lumia succeed? The U.S. is really Nokia's Last Stand and it's game over.

[zlutor]

@LeeBase: "But they don't, they never have had anything like Apple's cash." - true. But Nokia has 'something like Microsoft's cash" in the worst case... :-)

M$ just will not let Nokia die. At least until WP platform gets some traction - otherwise their dreams in mobile segment is over. WP would be threated like plague then.

Anyway, the Nokia we have known it - gone. It is a different company...

[RobDK]

I for one will be cheering as Microsofts mobile strategy fails miserably. It is a shame that Nokia got dragged down by it. Good riddance to Microsoft - 30 years of illegal business practices is at last unravelling. No one 'wants' Windows. It was stuffed down our throats by employers. In the consumer market, 'Windows' equates with 'virus', 'infections', 'non-user friendly', etc, etc. Of course no one is going to buy a Windows phone with these connotations!

[Louis]

@Tomi: "What Apple needs very soon, is to split its model range or it will soon be an also-ran."

Apple continues to grow market share (slowly), unit sales (quickly), and profit (crazy fast). Do you have any justification for this statement at all?

Apple is even moving the iPhone into the US prepaid market http://www.forbes.com/sites/ericsavitz/2012/05/31/leap-wireless-unit-to-offer-pre-paid-apple-iphone-june-22/ which seems to blow up the theory that it is overly dependent on operators. (The truth is the other way around.)

[Louis]

@CN: "Seriously, how can opinions differ this much?"

Either they are high at IDC, trolling, or they have a model that says something like "In its equilibrium state, the market has Windows and Nokia as volume leaders, so over time it will revert to this state." I have no idea why anybody would think this.

However, it is not far off from: "What Apple needs very soon, is to split its model range or it will soon be an also-ran."

This also has a model, which is that all the profit naturally accumulates to the operators, who are also nice enough to reward the volume-leading "terminal" manufacturer. I am not sure why anybody thinks this is true any more either.

[Alex]

Thank you Tomi for the charts. If Symbian was considered a burning platform by Elop, what kind of platform is Windows phone now if the same criteria are used? I am lacking words for this. Today in an Austrian Newspaper (though nothing official, unnamed sources from Microsoft and Nokia): no update for current Windows phone to 8.0.

http://blog.wiwo.de/look-at-it/2012/06/06/exklusiv-microsoft-plant-losung-fur-update-problem-bei-windows-phone/

If this is true and official, I am pretty sure you can lower your even low forcasts for Nokia for end 2012. Nokia is doomed, I cannot see a turning point for them anymore.

Best,
Alex

[P910i ...]

The most interesting question to me is if Bada/Tizen (pushed by Samsung and Intel) can establish itself as a "3rd ecosystem"?

Not sure if RIM can re-invent itself to "appeal" to a smaller (again more business oriented?) target market?

Symbian still has the potential to remain "relevant" beyond 2016, but this would require a radical change in strategy at Nokia. This is something they probably would only try as a last ditch effort to save the company after having ditched Elop. This window of opportunity seems to be closing fast, however. By the end of 2012 it might be way to late to reverse the course.

WP with MS's marketing muscle behind seems to be "on track" to gain marketshare in certain key markets (US, Germany, ...) but at a high financial cost (i.e. the return-on-investment for everyone involved might remain negative for several more years).