A Look At the Handset Industry, Market and Installed Base in 2012

I have just completed the work on this year's edition to the TomiAhonen Phone Book 2012 and can share some data from it. Those who read this blog who are interested in the handsets side of the mobile industry may find this blog interesting and perhaps even a good resource worth bookmarking..

HANDSET INDUSTRY SIZE IS 250 BILLION DOLLARS

First the big picture. The mobile handset industry will sell about 1.75 Billion new handsets this year and generates revenues of 250 Billion dollars this year, which means that the average sales price of a handset has gone up and is now 143 dollars. No, that is not weird, the cost of basic 'dumbphones' has kept coming down and is now at 40 dollars, and so too, the average price of smartphones has come down and is now 289 dollars. How can the average price of phones go up if both individual phone type prices fell? Its because of the rapid shift from dumbphones to smartphones - the mix of phones is more of the expensive kind. What is the percentage of smartphones out of all phones sold this year? Last year it was 30%. This year the proportion of smartphones sold globally, out of all mobile handsets is.. 41% Yes, next year 2013, we will pass the point where half of all new phones sold will be smartphones globally. The handset market grew 9% in unit volume from last year, and 19% in total revenues. Nice business, eh?

How many mobile phones are there in the wild today? We are approaching the 'Mobile Moment' that I have been writing about, around New Year's (give or take a few weeks) we will hit the point where mobile phone accounts will reach the same number as all human beings alive on the planet - the first technology ever to be so widely spread - inspite of issues such as age, poverty, electricity and literacy. In reality not everyone on the planet will have a mobile account or prepaid subscription, some of us of course walk around with two or three (or even more) mobile phones and devices, or their SIM cards, in our pockets. Which brings us to the handset question. What is the total population of mobile phone handsets in use worldwide? It will be less than the total number of mobile accounts, obviously, because some people have a single phone and multiple accounts and switch between the accounts by switching SIM cards (many lower-cost phones today come with dual SIM card slots for this purpose, even triple-SIM card phones have appeared).

INSTALLED BASE IS 5.5 BILLION HANDSETS

Globally we are at 5.5 Billion mobile phones, actual handsets, in use worldwide. It is a number that has no comparison now. TV sets, PCs, DVD players don't even come close. Portable devices like PSPs, Gameboys, cameras, MP3 players don't match up. Even the total worldwide installed base of FM radios maxes out at 4.1 Billion units, but mobile phones, they now are at 5.5 Billion in use. The wristwatch industry has been overtaken years ago, and even now, the need for pencil and paper, mobile phones are in hands of illiterate adults too, so in a very real sense, mobile phones have more users than pens and pencils. We laughed at the stat last year, that more people use mobile phones than use a toothbrush...

So. 5.5 Billion. What can we learn about it? Out of that number about 1.2 Billion are smartphones at the end of this year, which is 22% of all phones in use, worldwide. Obviously the lead is in countries that are more affluent. In the more advanced handset markets like Hong Kong, Singapore, UAE and Australia, more than three out of every four phones in use are already smartphones. Western Europe is far past the mid-point and even the USA has arrived now to the point where half of phones in use are smartphones. The features of the installed base may be of interest, this is data that usually is hard to find.

PREVALENCE OF SELECTED FEATURES OF THE INSTALLED BASE 
SMS capable handsets . . . . . 100%
MMS capable handsets . . . . . . 85%
Cameraphones . . . . . . . . . . . . 81%
Bluetooth . . . . . . . . . . . . . . . . 79%
FM Radio . . . . . . . . . . . . . . . . 63%
3G or faster cellular . . . . . . . . . 41%
WiFi  . . . . . . . . . . . . . . . . . . . 25%
Touch screen interface . . . . . . 23%
Smartphone . . . . . . . . . . . . . . 22%
Dual SIM . . . . . . . . . . . . . . . . . 9%
Source: TomiAhonen Phone Book 2012
This data may be freely shared

So yeah, the planet has 4.4 Billion cameraphones in use (technically, at the end of this year 2012, not now in October). Compare that to 1.9 Billion TV sets and 1.4 Billion personal computers of all kinds, combined, including desktops, laptops and tablets. Every cameraphone obviously has a color screen and browser too. Or look at touch screen phones - yes, we all have them in our pockets, but of the global installed base of handsets, still more than 3 out of every 4 mobile phones used today does not do touch-screens. That is still the mass market out there, people with phones that are operated by the keypad. And that means, usually pretty tiny screens as well. And remember, not all smartphones are touch-screen enabled either, just start with the Blackberries to begin with..

MARKET SHARES OF SMARTPHONES IN USE, BY OPERATING SYSTEM

We get the new sales of smartphones reported regularly by the major analyst houses. I collect that data and give more details and summaries here both Quarterly and Annually, both by handset manufacturer brand and by operating system. But that is new sales. What about the installed base? That is the really relevant number, how many Android or iOS or Blackberry etc devices are there in use, in the wild, today. This is really the 'bottom line' number if you are a software developer for example. This is the installed base of smartphones, by operating system, at the end of 2012:

INSTALLED BASE OF SMARTPHONE OPERATING SYSTEMS IN USE 2012
Android . . . . . 53%
iOS  . . . . . . . 20%
Symbian . . . . 11%
Blackberry  . . . 8%
bada  . . . . . . . 3% 
Windows  . . . . 2%
Others  . . . . . . 3%
Source: TomiAhonen Phone Book 2012
This data may be freely shared

Yes, how fast the mighty fall. Just a year ago, Symbian was still the biggest OS by installed base, and less than two years ago Blackberry was bigger than the iPhone by installed base. Of course Android has grown from nowhere to having more than half of the total installed base of all smartphones - and right now sells about two thirds of new smartphones so that lead only keeps increasing. And just a little peak into 2013 - by the end of next year, there will be more Android based devices in use, than the total installed base of any Microsoft Windows based devices, desktops, laptops, tablets and smartphones - combined. No wonder Microsoft is freaking out about how Windows Phone and Nokia's Lumia are failing now. They are quite literally seeing the race to the future of computing, being lost by their 'strategic partner'.

WHAT IS THE HANDSET PRICE PYRAMID LIKE

And then the really juicy stuff.. What of the price pyramid? This is how the handset market breaks down by price ranges in 2012:

HANDSET PRICE PYRAMID 2012
Premium Smartphones . . . over $450 . . . . 11%
Mid-price Smartphones . . . $150-$449 . . . 13%
Low-cost Smartphones . . . $80-$149 . . . . 17%
Featurephones . . . . . . . . . $40-$79 . . . . . 21%
Ultra Low-cost Phones  . . . under $39  . . . 38%
Source: TomiAhonen Phone Book 2012
This data may be freely shared

Yes, almost four out of every ten phones sold worldwide costs under 40 US dollars today. That is without contract, remember if you are an American reader, your iPhone 5 does not cost 199 dollars that you pay to AT&T, its real cost is 650 dollars that AT&T pays to Apple, you are just forced to pay the remaining 451 dollars as a forced payment plan to AT&T, with interest I might add, in your monthly fees during the next 24 months. So the iPhone belongs in the Premium Smartphone category, not the Mid-Price range, as also do most of its competitors like the Samsung Galaxy S3 and Nokia Lumia 920 etc. But they are all fighting for a price segment that only has 11% of the world's phone sales. It might make sense to introduce cheaper phones if you want to grow your market share - not unlike Samsung is doing aggressively..

Yes, all this is from the brand new TomiAhonen Phone Book 2012. The Phone Book has over 100 charts and tables just like these you have here, for market shares every which way, installed based, new sales, regional splits, you name it. If its handset data you want, the Phone Book 2012 has it for you. If you want to see more of the eBook that is formated for your smartphone screens, so you can carry all the data in your pocket every day, here is the link for more about the TomiAhonen Phone Book 2012 including table of contents, ordering info etc.

Comments

[Winter]

With hindsight, it seems the Nokia board, or controling share holders, "sold" their Symbian users to MS as WinPhone users. The price were a few billion $ plus support and MS stock etc.

Elop was hired to finish that job.

It failed due to the incompetence of MS and Elop, and obviously due to WinPhone.

Explains most facts to me.

[Juha]

If someone is interested: The story of Nokia MeeGo

http://taskumuro.com/artikkelit/nokia-meegon-tarina,10

[Decade]

Yes, that article was interesting. It confirmed everything that I suspected about MeeGo, in my position as a complete outsider, and added some more interesting details.

What I suspected:
1) Partnering with Intel was a mistake.
2) As the project became more important, it acquired more corporate overhead and slowed down.
3) From a Time to Market perspective, dumping GTK+ for Qt was a bad idea.
4) The Symbian people feared for their jobs and interfered. How ironic.
5) Qt was not ready on Symbian when it was put to that purpose.

What I learned:
1) Intel was supposed to be an equal software partner and major hardware supplier, and it was neither.
2) The UI went through 2 time-consuming redesigns as the executives shifted around. The first Harmattan UI was hideous.
3) Ironically, the Burning Platforms helped MeeGo to actually ship.
4) Elop actually did try executing at Nokia properly, before he did the burning platforms style execution.
5) The different Maemo and Symbian developments of Qt UI reminded me of the fiasco around Symbian, back when Symbian was supposed to be multi-vendor. How fitting that Nokia, which was a leader in destroying Symbian's original purpose, should succumb to the same practice, when applied internally.

[Gehan]

The data in this post was the basis for a rather poor Business Insider column which suggested that the 59% of people who buy feature phones and ultra-low-cost phones (cumulatively, phones under $80) would be unable to afford a smartphone. I don't think that's a correct analysis at all - there are already a bunch of Android smartphones available for under $80 and I think we'll see an explosion of devices that category in the next year. My guess is that in 2014, low-cost phone buyers will be spending the same amount they do now, but they phone they'll be getting will be a smartphone.

[As an aside, data is also a lot cheaper in the developing world than people think. In India and Sri Lanka, you can get a prepaid broadband package that costs about $1.50/month for 1GB of data]

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