Brief Notes from Smartphone Bloodbath Battlefield in Year Three: Digital Jamboree

A few quick notes that relate to the smartphone bloodbath years, that are now starting to come to a close. As I've indicated Samsung won the manufacturer wars (rather easily) and Android totally dominates the platform wars. But we have some odds and ends to report, so lets get to those

DELL QUITS SMARTPHONES

So, Dell the big PC maker who saw that the future of personal computing is the smartphone, tried its hand at making and selling Dell branded smartphones. It didn't build the dealer relationships with the carriers. It struggled and never got meaningful market share in smartphones, now it announces it will quit that business. Dell will still continue making tablet PCs which are closer to its traditional businesses of desktop and laptop PCs, also sold through the same channels and methods as traditional PCs.

FIRST RUSSIAN BRAND? YOTA

So while some big names of the smartphone space exit (HP, Ericsson, Dell) or are bought out (Palm, Motorola) we still see newcomers (like Finnish start-up Jolla) and now the first-ever Russian made smartphone brand is set to debut, called Yota. They plan a dual screen smartphone, one screen traditional touch screen for inputs and outputs, but the other, an electronic paper screen that can be used to read ebooks and such publications without major drain to the battery life. And interesting play as a hybrid. Lets see how it fares. First phones expected around Q3 of 2013. Good luck Yota.

And PS, as of the BRICs already China, India and Russia have their own smartphone domestic manufacturers, where is the Brazilian domestic smartphone maker? Cannot be far behind I think.

SCREEN RACES - NOW SIX INCHES

So mine is bigger than yours? After the Samsung Galaxy Note, now Sony is upping the ante and will introduce a massive 6 inch screen smartphone in the Xperia line. It will have full 1080 display resolution ie 1920 x 1080 pixels for supersharp display. It'll be run by a Quad-core CPU and feature a 13mp camera, 32GB of internal storage and - of course - a microSD expansion card slot for more memory storage.

HUAWEI EVEN BIGGER

And if 6 inches is not big enuf for ya, the world's third biggest smartphone maker, Huawei, is rumored to soon release a smartphone with a 6.1 inch screen.. 

HOW MANY NOKIA LUMIA 920 SOLD?

For those still interested in the former smartphone giant called Nokia, who has fallen to 10th in the Top 10 of smartphones (being number 1 only 24 months ago, and at the time, twice as big as its nearest rival) - there is rampant speculation of what the newest Lumia series, now with Windows Phone 8, might be doing in terms of sales. There is typical over-hype by Nokia and Microsoft executives promising ridiculous levels of sales success, but as this is the first quarter the new handsets are out, we don't have data to go by. Until the first tidbit came out a few days ago. An outfit called AdDuplex has mapped out the top 10 most used Windows Phone based smartphones. I have never heard of these guys before and can't say anything about their credibility but the overall numbers do look reasonable for Windows Phone 8 installed base and its distribution.

AdDuplex finds 7 out of the top 10 devices in use today to be made by Nokia, and two by Samsung and one by HTC. The only new Windows Phone 8 based Lumia is Lumia 920, which they find is used by 3% of all Windows Phone users worldwide. That would mean, that in the first month or so of its sales, Lumia 920 has achieved adoption by about 900,000 users globally. If we give it another month for the end of the Quarter, ie Q4 the Christmas Quarter of 2012, then Lumia 920 might be in the hands of about 1.8 million Nokia smartphone users worldwide. Nokia will have sold more than that 'into the channel' (meaning some are in stores waiting to be sold, or en route from factories to warehouses or  warehouses to stores) - then a total Lumia 920 sales level of maybe 2M to 2.2M is reasonable. Toss in some of the Lumia 820 sales, and total Q4 Nokia Lumia Windows Phone 8 based smartphone sales could be 2.5 million. 

If you think that is impressive, just remember, two years ago, when Nokia introduced the latest software version of Symbian, called S^3, it sold 5 million total units in the Christmas Quarter and 4 million of those were of the then-tops flagship phone, the N8. Since then the industry has grown in size by more than 2.5 times, so for the Lumia 920 to do 'reasonable' level of what Nokia brand and sales and distribution is capable of, it should sell 10 milllion units this quarter of Lumia 920 alone and another 2.5 million of the Lumia 820, for a total of 12.5 million new Windows Phone 8 based Lumia smartphones. That is what Elop should be doing even in his sleep, if he was competent as a CEO (not doing the stupid exclusive deals, not doing the idiotic design compromises, not offering top features that Nokia customers want, and pricing the range to be successful, etc etc etc)

Also a Piper Jaffray survey of 800 US consumers finds that the interest in all Windows Phone based smartphones in Microsoft's strongest market, the USA, is down almost a quarter from 8.7% of smartphone buyers interested in it in September to 6.5% now. Remember the USA accounts nowadays for only in in 5 smartphones sold (China is 50% bigger as a market than the USA) and this is Microsoft's backyard. The TREND is again WRONG WAY for Windows Phone. Do not expect Windows Phone miracles if its best market sees an erosion of demand as the new Windows Phone 8 devices appear on the market. This is not a good sign.

I hope we'll see Kantar release new numbers in the next few weeks (their last numbers came out just before Lumia 920 had launched), that might give us a more familiar measure, but this AdDuplex outfit does suggest Lumia 920 has not taken the Windows Phone world by storm (so far) and is consistent with those who expect very poor total Nokia smartphone sales for Q4. Stay tuned, as more data comes in, I'll be reporting it..

BLACKBERRY 10 SHOWS HOPE

There are some good early signs for RIM. The large corporate clients are notoriously reluctant to ditch major IT investments on any temporary fads, ups and downs in smartphone fashions for example. Blackberry had done the hard work to land in over 80% of the largest US corporations and government entities, and that work is paying off. Now there are good signs that some US government agencies are pre-testing the Blackberry 10 OS and seem willing to continue using RIM's platform for their smartphones into 2013. A good example is the Immigration and Customs agency that will pilot BB 10 from January. Don't count Waterloo out of the smartphone races just yet.. 

FIFTY DOLLAR SMARTPHONE

The $50 US dollar smartphone is now a reality in Africa. In Kenya for example Huawei's lowest cost Android smartphones have sold 300,000 units. (And I have to make this point once again on unsubsidised price for American readers. Your iPhone 5 that you 'buy for 179 dollars' in reality costs 650 dollars, you are just paying a forced 24 month intallment payment plan on the remaining 471 dollars that AT&T collects for Apple on your behalf - plus interest, of course. The real cost of the iPhone 5 is 650 dollars. That is what I am talking about here, not the gimmick pretend-price of the up-front fee you are charged on a phone linked ot a contract. I mean unsubsidised price. Same for that 50 dollar Lumia 920 - its real cost that AT&T pays to Nokia is about 750 dollars, you the consumer are paying that full price hidden in your monthly payments of the contract price. I always talk 'real price' here on this blog, the unsubsidised price - and YES, there are true unsubsidised Android based smartphones that cost 50 dollars) 

Yes, Huawei (did I mention, the world's third largest smartphone maker already, by this time next year they will be bigger than Apple as the second biggest smartphone maker behind only Samsung) sells those 50 dollar ultra-cheap Android smartphones in Africa. Yes, in Kenya Huawei's lowest-cost phone has taken about 20% market share of the smartphone market already. Expect this pattern to rapidly spread to Nigeria, Uganda, Zambia, Tanzania etc..

AND MY PHONE BOOK 2012

For those who need more data and stats and facts about the handset industry from dumbphones to smartphones, market shares, operating systems, regional splits, features of the installed base, etc, see my TomiAhonen Phone Book 2012. 

Comments

[Winter]

A nice comparison:
"That would mean, that in the first month or so of its sales, Lumia 920 has achieved adoption by about 900,000 users globally."

"In Kenya for example Huawei's lowest cost Android smartphones have sold 300,000 units."

Yes, Huawei can get 30% of the worldwide handset sales of the WP8 Lumia 920 in KENYA alone. Huawei has still another billion to go in Africa.

[CN]

@Tomi

Something I don't understand and I guess you may have a typo there as the reason.

"Remember the USA accounts nowadays for only in in 5 smartphones sold (China is 50% bigger as a market than the USA) and this is Microsoft's backyard." The TREND is again WRONG WAY for Windows Phone. Do not expect Windows Phone miracles if its best market sees an erosion of demand as the new Windows Phone 8 devices appear on the market. This is not a good sign."

Even though USA can be seen as MS backyard but that it would be the best market for WP, is debatable, I guess. It is well known that China is today the largest single market for WP and if you look at what's been made available there, I feel the right choices are made: HTC's available for all three operators, 920T available for China Mobile and 920 for China Unicom, 620 coming soon (donät know to whom), MS partnership with China Unicom.

Could you Tomi please open up what's behind the statement. Thanks.

[John Phamlore]

The biggest change the past ten years is that Nokia went from owning all of the IP that went into making baseband chips to owning none of it, first blundering supporting WiMAX in its failed alliance with Intel, falling behind on LTE, and then selling off that part of its business. This year we see further consequences of this most disastrous failure of technological investment as Texas Instruments has pulled out of competing in the higher-end mobile ARM SoC business. It's fascinating how outsourcing risks has backfired for Nokia just as Sun's trying to outsource investment risk to TI backfired when TI decided it did not care to compete with Intel in the contract foundry business, resulting in Sun's being unable to timely introduce the massively multithreaded machines that were supposed to be the ultimate hardware fit for all of the investment Sun had made in Java.

Qualcomm completed in 2012 an almost unprecedented recovery from a position where misinformed analysts in 2008 had speculated that Qualcomm's IP would slowly lose all significence to where Qualcomm designed chips have replaced established suppliers at Apple and soon to be at RIM, let alone having a monopoly on Windows Phone and having full support on Android.

What Google did with Android was to very carefully separate out the interfaces to the Linux kernel so that hardware manufacturers, particularly in China, could safely bundle proprietary binary blobs without having to release source code. Anyone requesting source code to the software on their electronics can thus be pointed to stock Android source code and be told to pound sand about getting further information about the binary blobs.

We are about to enter an era of industry warfare whose sides are determined not by software as many believe, but by the hardware of the baseband chipsets. Samsung has their own LTE chipset, and not coincidentally they will be one of the longterm suppliers, whereas Nokia does not, and they will not survive. Right now Qualcomm is running wild, but what China wants to do is force a stalemate and then make their move the next generation of LTE deployment.

So what we are seeing is that the Chinese, just as their perceive the Americans as having done with Qualcomm and CDMA, are trying to leverage their own version of standards such as TD-LTE to give advantage to their own domestic companies such as Huawei. What the Chinese are doing is using their large market size to force industry leading companies such as Ericsson to give away their expertise to the Chinese in joint projects.

The recently launched Jolla's Sailfish OS claims to support "multiple chipset technologies," but what the one actual chipset I have read that will be in actual phones is an LTE chipset from ST-Ericsson, launched in of course China.

[vladkr]

Yota would be cool with Jolla... besides the phonetic near-match, it would be a new device with a new OS

[foo]

"interest in all Windows Phone based smartphones in Microsoft's strongest market, the USA, is down almost a quarter from 8.7% of smartphone buyers interested in it in September to 6.5% now."

Considering (optimistically) that 50% of the people "interested" in Windows Phone will buy one, that means we can expect Windows Phone to reach 3%.

"AdDuplex finds 7 out of the top 10 devices in use today to be made by Nokia"

If Windows Phone reaches 3% of market share, that means Lumia will have 2% -- in Microsoft's strongest market.

Way to go, Elop!

[chithanh]

@CN
Take for example gaming consoles: North America is where Microsoft is more successful than elsewhere, while Japan has seen Nintendo and Sony do better. Europe is mixed.

Other markets may be larger, but your backyard is where you should not fail. If you are beaten and insignificant on your home turf, what message will that send to your customers (both domestic and overseas)?

[CN]

@chithanh

"Do not expect Windows Phone miracles if its best market sees an erosion of demand as the new Windows Phone 8 devices appear on the market."

USA the best market of WP? That part I don't get.

[chithanh]

@CN
The best market means where Microsoft is strongest in comparison to the competition.

Global market share of Windows Phone in 2012Q3 was around 2%, while in the US it has been 3.3% according to Forbes.

[Felipe]

Hi from Brazil, Tomi.
About your PS, not going to happen.

Brazil does not have a strong consumer electronics background, we have no big in house TV/PC company.
People in Brazil do not like electronics from Brazilians companies, they are historically unreliable.
Brazil's high tax makes very hard for any company start against overseas companies.

We develop a few tablets though (that are unreliable, of course), because tablet industry has a tax break to incentivize production and consumption of those devices (we had it for PCs also). This tax break is the reason iPads are manufactured here, but not iPhones.

[Vernon]

"Remember the USA accounts nowadays for only in in 5 smartphones sold"

Probably should be
"Remember the USA accounts nowadays for only ONE in 5 smartphones sold"

Otherwise, really enjoy all your posts.

[cycnus]

Hi Tomi,

I was re-reading your article a couple year back, and I found that you state that in order for one company to success they must build their own OS.

1. I was wondering if you still considering this is a need to survive in year 2013 and so on.
2. Do you think that google/android have play they part very good that phone manufacture don't need to build their own OS? (i.e Yota able to create a dual screen phone with android, and no need their own OS, and maybe if nokia use android, they could also create a pureview phone easily compared to using WP8 as their platform), do you see any flaw in google/android execution?
3. Do you think RIM/BB will be better if they use android as their platform compared on continuing using QNX?

I also have one comment on iphone Mini. In the past you were suggesting that iphone should do the mini version. It seems to me that the gigantic 4.7"-5" screen now is a trend, do you think that apple should do iphone Max (with big screen) instead of iphone Mini now?

[chithanh]

There is one more data point from ZDNet Germany now:
http://www.zdnet.de/88136184/marktanteil-2012-windows-verliert-android-gewinnt/

Android now has 28.42% of their total page impressions, up from 2.4% in January. (This is not a typo.)
In the same time, iOS went from 4.89% to 8.13%, however it had a peak of 11.26% and is declining since.
Windows Phone is at 0.25%, up from 0.18%, but it is basically flat since March.

Altogether, the mobile OSes account for 36.85% of page impressions (up from 7.62%) while Desktops declined to 63.15% (from 92.38%). All in just one year.

ZDNet has a rather technical audience so the absolute numbers cannot be transferred to other sites. The trends however can be.

[newbie reader]

Among the current Apple iPhone 4/4S users, /in china/ only 12% said they will buy the iPhone 5

http://www.valuewalk.com/2012/12/apple-inc-aapl-iphone-5-not-popular-in-china-beijing-firm/

[newbie reader]

@chithanh

Very impressive graphs in your link.

Windoze lost about 25% this year, and most of it went to Android.

[Kenny]

This is the real Lumia sales outlook:
http://www.valuewalk.com/2012/12/nokia-corporation-adr-nysenok-lumia-sales-poor-pacific-crest/

[KenAdams]

To add insult to injury Google has also announced that it does not plan to build apps for Windows Phone or Windows 8:

"We are very careful about where we invest and will go where the users are but they are not on Windows Phone or Windows 8," says Google Apps product management director Clay Bavor.

http://www.theverge.com/2012/12/14/3768274/google-gmail-activesync-windows-phone

[cycnus]

@KenAdams,

It seems the battle between Google and Microsoft at public is just start...
Microsoft start it with their Scroogled campaign

http://www.nytimes.com/2012/12/15/technology/microsoft-battles-google-by-hiring-political-brawler-mark-penn.html?_r=0

"........ Microsoft has long attacked Google from the shadows, whispering to regulators, journalists and anyone else who would listen that Google was a privacy-violating, anticompetitive bully. The fruits of its recent work in this area could come next week, when the Federal Trade Commission is expected to announce the results of its antitrust investigation of Google, a case that echoes Microsoft’s own antitrust suit in the 1990s. A similar investigation by the European Union is also wrapping up. A bad outcome for Google in either one would be a victory for Microsoft. .............."

Here is Google ending support for Microsoft Exchange Server
http://support.google.com/a/bin/answer.py?hl=en&answer=2716936
With this move, Google will save money. Because they don't have to pay for Microsoft product anymore, and user still able to use Google mail because they use open standard (POP3, IMAP) and CalDav for address book.

[KenAdams]

@cycnus, you are right. Nothing new in MS' dirty and salient war on competition. Here is a good article about MS vs. Google. Gates saw what was gonna happen and left, Ballmer is just a crazy monkey who does not know how to behave in a market not monopolistically ruled by MS. http://techstew.blogspot.com/2012/10/why-windows-8-will-not-save-microsoft.html

[cycnus]

(apparently, i cut and paste the wrong part of article in the previous post)
it should be this
"........ The campaigns by Mr. Penn, 58, a longtime political operative known for his brusque personality and scorched-earth tactics, are part of a broader effort at Microsoft to give its marketing the nimbleness of a political campaign, where a candidate can turn an opponent’s gaffe into a damaging commercial within hours. They are also a sign of the company’s mounting frustration with Google after losing billions of dollars a year on its search efforts, while losing ground to Google in the browser and smartphones markets and other areas. ......."

talking about crazy monkey...
here is balmer the salesman
http://www.youtube.com/watch?v=tGvHNNOLnCk
http://www.youtube.com/watch?v=8To-6VIJZRE

[Spawn]

@Kenny

500.000 sold Lumia 920 in December only? That is the month after lunch of the new product-line, with huge marketing $ investment, initial run and all the buze created? Au, that's far more worse then any of my worst predictions. Can we calculate how much quarters Nokia has left till its done based on this number? More then Q1 and Q2 2013?