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« Bloodbath Results of the Smaller Guys - LG and Nokia report Q3 | Main | My Thoughts On Nokia Handset Unit Sales to Microsoft - In Short: Is Bad WAY to Sell Something and thus gets you bad bargain »

October 29, 2013

Comments

Sander van der Wal

@E. Casais

I am interested in the apps part of the ecosystem, but that doesn't mean that I consider other bits of it unimportant. However, if there are no apps in the ecosystem, I don't bother with that particular ecosystem.

But Nokia had all those other bits of an ecosystem too. Not that that helped them in any way when they were going down.

Besides, if you subscribe to the notion that smartphones are primarily general-purpose computers, then you automatically subscribe to the notion that apps are a core part of an ecosystem.

RottenApple

Concerning App investment lock in:

Let's be serious. What does an app cost? $0.99 to $3.99 is the norm for paid apps. Granted, there's some more expensive stuff but if one would apply proper math here they'd come to the conclusion that this would only be a factor if a user had purchased hundreds of apps and plans to use them in the future.

Even if switching systems would incur a $100 loss in purchased apps, it could easily be made up by the saved money on the phone and contract in the future.

People who stuff their phone with apps worth hundreds of $$$ are a very small minority. Anyone with a clear had could take out a pocket calculator and find out quickly if the apps are worth the money they need to continuously spend on Apple products or not.

As for other media, music doesn't count. iTunes has no copy protection for music so it can all be easily transferred to another phone or PC.

Things look different for eBooks but even here ways exist, even if they might be a bit questionable.

Tomi T Ahonen

Hi Gang!

Great comments and tons of them, thanks. I've been v busy travelling but now having a bit more time, will do a bit of responses. I also noticed tons of spam, been cleaning that up, and obviously I'll remove those comments that break our established rules here, so just ignore the trolling when you see some haha..

Tomi Ahonen :-)

Tomi T Ahonen

Responses.. (from 29 Oct)

Earendil Star - good question. Lets if the simultaneous release in all those markets helps boost iPhone sales now into Q4 and also, will the early China release reduce the Q1 sales (while their gift-giving season is Q1 Chinese New Year, not our traditional Christmas). We have to monitor that

Gonzalo - on the Mercedes, Rolex etc listing.. Some do some don't. Daimler-Benz, the parent of Mercedes-Benz did try two ways to grab market share - through the merger with Chrysler and by launching the ultra-low cost Smart Car. So some luxury/premium brands stay in their luxury niches, others try to expand or buy themselves into bigger markets.

darwinphish - ok, I hear that argument a lot here over the years and on Twitter - that the current definition of smartphone is very imprecise and we should have a better measure. That an ultra-cheap 'smartphone' isn't the same as a top-end one, or that top-end featurephones (like Nokia Asha for example) should be considered smartphones etc. I hear you. I cannot help you. There IS NO other stats that are global for this industry (so far). The moment we have that, I will report it, you can be sure of it. We don't even get divisions of cameraphone vs non-cameraphone, or browser-phone vs non-browser, etc. I would love to have more detail, we do not even get public data on the PRICE levels of the global handset or global smartphone market. So we can't accurately measure the shares in given price ranges, premium phones vs regular etc.. I'm with you on that, we just don't have that data (yet) anywhere, globally. I truly wish we had..

Baron95 - I reported on the numbers and my honest expert opinion on the range of Q4 (Christmas) quarter for iPhone. It is VERY likely we have experienced Peak iPhone in market share. We will know soon. I am here to help, I share my best insights, I'm often right, I am also often wrong. You make the call..

khim - on the response to Baron95 with the math - FABULOUS, thanks buddy!

More replies coming, keep the conversation going

Tomi Ahonen :-)

Tomi T Ahonen

More replies (Oct 31)

Leebase - hey, thanks! (accepting the peak argument). Agree the market differences at price points, see my reply in above, we just don't have that data. Today at least 'smartphone vs dumbphone' is a good distinction, a bit like 'color TV vs black-and-white TV' was or say 'flat screen TV vs CRT TV' is now.. but yeah, we'd need better data and you know, the moment we have it, I'll be reporting it.

On your point 'Android 4x bigger doesn't get 4x more developers' - this is ONLY a matter of time, and has been moving consistently in Android's favor. Two years ago the argument was that Android didn't have as many apps as iPhone, today it has more.. Only a matter of time. Scale rules. PS on peak iPhone in total market, you are right, its still growing but that peak will also, obviously, come soon..

E.Casais - thanks for making my point about the non-app services in this industry which are still 10x bigger than the total global apps market.

Winter - haha, 'parasite' was funny line. Unfortunately, in far more than half of the world, the operators/carriers take more than 30%. Only in some of the most enlightened, most mature mobile services markets like Japan, Korea, Scandinavia, do operators/carriers take less than 30% (Japan leads again, as usual, with 9%)

Leebase - on your point 'behavior is different' between top end smartphones and low cost smartphones - do you have ANY data on that? I don't. I see very similar behavior. Premium smartphone owners and low cost smartphone owners install Angry Birds, go to Facebook, watch YouTube videos and search on Google. Where is the difference? These are very consistent global numbers for smartphone users of premium and low-cost smartphones, in most affluent markets and the poorest markets.

Leebase - on your point that the 'superphone segment' or haha, Galaxy segment, is sold with contracts is not completely valid. It is in some countries where contracts are part of the business, more than half of the world has no contracts at all, those phones are sold full price ie without contract - yet they sell well.

Huber - good point and very much true in all of high tech consumer electronics, also PCs, TVs, etc.

Leebase - on the point of lets see the example from the PC business.. yeah, good analogy, however, I would argue, that after Apple, also Sony has been able to somewhat differentiate from rest of PC crowd and sell premium Sony laptops etc. It can be done even if you are not Apple, and Samsung has been taking a lot of lessons from Sony over the years..

Leebase - I trust you did not aim that 'making silly predictions that Apple is doomed' at me and this blog? I have never once suggested that Apple was doomed in any way, I have always admired Apple but I have often argued they are leaving awefully lot of profit on the table, they should capture more of it when they still have the chance. The opportunities in phones are dwinding to them now, not growing as fast as they were.

On the argument 'after iPhone phone prices fell in half and nobody can sell expensive phones anymore' factually untrue - Vertu. In practise, this is likely to be a short-term phenomenon, as the handset makers get past their iPhone-clone obsessions, they will discover market niches where super-premium phones (above 1,000 dollars) are worth pursuing and some of the top brands are likely to target specifically a phone range 'beyond price of iPhone'.. At least thats what I'd do if I was Lenovo or Sony or LG and wanted to try to establish my brand as 'stronger' than Apple and Samsung haha..

more comments coming

Tomi Ahonen :-)

Winter

There is a lot of talk about iPhone owners generating much more revenue than Android owners. But I am wondering. 40% of the iPhones are sold in the USA, while only 24% of all Smartphones are sold in the USA. Could this skew the revenues too?
(see, e.g.,
http://www.businessinsider.com/iphone-5-sales-by-area-around-the-world-2012-9
)

Consumers in the USA spend a lot more on mobile telecom than other people. I live outside the USA. The people I know that have an iPhone do not spend more on contracts or apps than those owning Android phones.

The question that comes to my mind is how much of these stellar revenues from iPhone users are made in North America?

Do iPhone users outside of the USA really generate do much more revenue? Or are these numbers skewed by over-spending of the US users?

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Winter

@Leebase
Funny, I have no idea how you use a feature phone. You probably mean that most Android phone users spend less money on in phone shoping?

Winter

@Leebase
"They make calls and they text. That's about it. They don't download apps whether free or not."

You might want to update your statistics. There seem to be precious few of such users:

The average global smartphone user has downloaded 26 apps
http://www.phonearena.com/news/The-average-global-smartphone-user-has-downloaded-26-apps_id47160

@Leebase
" So, Android sells 250 million phones in a year 100million actually compete for the kind of customers that Apple sells 150million units too."

As has been written before, why stop here? Apple has close to 100% market share with iPhone users. Just redefining your market to make it fit your sales is not helpful in understanding trends.

@Leebase
"The reality is that there are two smartphone markets."

Why only two? Why not 3, or 6?

Or you might mean there is an Android market and an iOS market?

But I assume it all boils down to a Luxury market and a Bulk (Cheapskate) market. But luxury markets are always unimportant. They feed off bulk consumer markets and status.

@Leebase
"However, we don't have to ANALYZE the numbers we do have as if all unit sales are equal. They are not."

But this is a technologically driven market. And technological markets are driven by scale. Without scale, no market development. And for scale all units are equal. That is why Apple Macs shifted to Wintel hardware.

So, your basic premises is false, the development of the handset markets are driven by scale and for scale all units count.

Winter

@Leebase
"@Winter - you can't divide all apps by total users and then make a conclusion about segmentation among phones and their use for apps."

But you have no data at all that there are many users who buy a Smartphone which is more expensive than a feature phone ant then do not download apps. I can figure out that and average of 26 downloaded apps for a billion or so users indicates a very long tail distribution. It is unlikely that a sizable fraction has no downloads at all.

@Leebase
"But why would Samsung analyze it's own sales into premium and non-premium (you did read the article, right?)."

Volkswagen does the same. That does not mean there are only Two Automobile Market". Volkswagen sells cars at a whole range of price-points (almost every price point). I see the "Premium" thing as a marketing gimmick to fool snobs. Just like "Exclusive".
http://www.volkswagenag.com/content/vwcorp/content/en/investor_relations/Warum_Volkswagen/Portfolio.html

@Leebase
"Folks have been predicting "xyz will happen" due to Androids then growing, and now dominate total marketshare position."

Prediction is very difficult, especially about the future. The only prediction that came true 100% is that Android would dominate the Smartphone sales.

@Leebase
"If you don't buy into the "two smartphone" markets...what have you to explain this?"

There are many markets, or one. It just depends on the detail you are looking at. In many markets iPhones compete just like other phones. In some, people seem to see the iPhone as a special status symbol.

To go back to cars, in most of Western Europe, Mercedes Benz is just a car. A high quality and expensive car, but just a car. Outside Europe, there are "markets" where a Mercedes Benz is a fashion/status statement. Around me, an iPhone is just a Smartphone. And expensive phone that some like more than others. But I do know about people who stand in line to get the latest iPhone. In other words, I do not buy your "Two Markets" idea.

E.Casais

@Leebase, @Winter

Guys, your discussion is going nowhere. Without hard statistical data about consumers and their spending and usage patterns, nothing conclusive can be stated on how many segments in the mobile phone market there are.

I suspect that at least telecom operators, big app-store owners, and device manufacturers have this information, but will not part with it easily.

Winter

@Leebase
"Then why make a distinction between smartphone and feature phone or even land line? They are all just phones?"

Because those who deliver the numbers do make this distinction. As Tomi discussed here:
Posted by: Tomi T Ahonen | November 07, 2013 at 02:10 PM
"Leebase - hey, thanks! (accepting the peak argument). Agree the market differences at price points, see my reply in above, we just don't have that data. Today at least 'smartphone vs dumbphone' is a good distinction, a bit like 'color TV vs black-and-white TV' was or say 'flat screen TV vs CRT TV' is now.. but yeah, we'd need better data and you know, the moment we have it, I'll be reporting it."


Looking at the numbers for all handsets shows that low end phones (another name for non-Smartphones) are on the way out and an almost total conversion to Smartphones is underway.

But all the trends Tomi has discussed here are also clearly visible if you combine all handset sales.

@E.Casals
"Without hard statistical data about consumers and their spending and usage patterns,..."

In other words, limiting our analysis to "iPhone is in a different market" is not helpful at the moment.

Winter

And here are the Smartphone results from IDC over 3Q2013

http://www.idc.com/getdoc.jsp?containerId=prUS24442013

Android 81%
iOS 12.9%
WP 3.6%

Also, the market for expensive Smartphones might be shrinking:

Market for expensive smartphones shrinking: Report
http://timesofindia.indiatimes.com/tech/tech-news/hardware/Market-for-expensive-smartphones-shrinking-Report/articleshow/24775793.cms

"The mobile phone market will continue to experience steady growth, but the opportunity for high average selling price (ASP) smartphones is now ending," Gartner said, while giving its global outlook for the PC, tablet and mobile phone shipments.

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Winter

And here are the numbers for 3Q2013 from Gartner

http://biztech2.in.com/news/telecom/smartphones-dominate-mobile-sales-55-3q-2013/167672/0

Android 81.9
iOS 12.1
WP 3.6

On total Smartphones sales of 250 million units

The comments to this entry are closed.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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