Preview of Full Year 2013 Smartphone Final Market Shares - We know a lot by now

So don't we just love numbers? We are starting to see into what the full-year 2013 final smartphone market shares will look like. In the OS wars, there is no race anymore, Android won..  But for the handset brands, there were real races. We do know now that of the Top 10, there are 3 definite known 'final' rankings, and three races for the other seven slots. This is what it looks like:

THE THREE KNOWN POSITIONS

We know who won 2013. That be Sammy the Samster Samsung. We know who came in second, that is the smartphone of the i-variety, by a fruit-maker company called Apple. And one other ranking is known. Sony will finish 7th. But there is an honest real race for the Bronze medal. Third place is not a race between two or even three brands, no. Third place is contested by four, count them four, Asian brands. Huawei, Lenovo, LG and ZTE are in a tight race for that coveted third-largest smartphone maker in the world, title. So yes, it will be an Asian, but will it be Chinese or South Korean. 

As to the loser brackets.. There is a race between the oldest and youngest of this group. Nokia the inventor of the smartphone has tumbled. It was tied for 4th last year, led this industry from its inception and well into 2011. Nokia is now fighting for 8th ranking. It cannot finish out of the Top 10, in fact Nokia cannot finish lower than 9th. But yes. Who are they facing? The young whippersnapper start-up smartphone maker from China, so unknown, most of us even now have a hard time remembering exactly who is Coolpad, ie Yulong, ie China Wireless (not to be confused with China Mobile). But that is the race of 8th ranking.

And then there is the fight for who falls out of the Top 10. The fight of the 3-letter rivals. The former smarpthone giants. High Tech Computer of Taiwan, we know them better as simply HTC, and RIM, or the company until recently known as Research In Motion from Canada, who have changed their company name to be the same as their smartphone brand - Blackberry. One of these two will be kicked out of the Top 10 this year, and its really close. BTW just three years ago, at this very quarter, these two brands were ranked 3rd and 4th biggest smartphone makers in the world (and both reporting healthy profits and strong growth at the time). Yes. In 2012 Blackberry/RIM was still ranked 5th biggest and HTC seventh-biggest smartphone maker. One of them will stay in the top ten ranked 10th biggest, the other falls out this year for the first time.

Thats the brands. On the operating systems, Android won. iOS came second. Windows Phone is far far down in third in low single digits, and Blackberry OS is fourth. The other OS brands combined do not amount to 1% of all smartphones sold in 2013.

A few other notes. Now during Q4 Samsung will set a phenomenal record. This is the first quarter ever that any brand sells 1 million smartphones on average, every day of the Quarter. Yes, Samsung will easily clear 92 million smartphones sold this quarter. My preliminary projection has them at 99 million but they may well pass 100 million sold just this quarter, if they have a bit of luck in the Christmas season.

Apple? They will have indeed seen 'peak iPhone' in smartphone market share. Last year Apple's iPhone had a thin sliver under 20% market share. It has grown every year up to that time. This year, 2013, sees the first year ever, that Apple's iPhone smartphone market share falls. I project it to end in the 16% to 17% range. This still assumes a phenomenal growth Christmas iPhone quarter selling about 65 million or so iPhones. Of course Apple will report obscene profits and outrageous revenues, but some analysts will strike notes of caution, when they observe that the iPhone market share has turned into decline. Quite possibly terminal decline (I don't mean terminal as end to Apple, obviously, I mean terminal in that the gradual market share decline won't be reversed for several years.. that is an honest fear, and Apple's best bet to combat that, is to now lower the prices of its discount models, the C-series...)

Only one European smartphone maker remains in 2012. That won't be in 2013 when Nokia's handset business will belong to Microsoft. Only one US based smartphone maker of Top 10 size remains today (Apple) where just three years ago there were also Motorola and Palm. Three years ago there were no Chinese smartphone brands in the Top 10. Today there are four and one might be ranked as high as 3rd largest. Talk about taking a giant leap forward.

The year is well on track to break 1 Billion new smartphones sold this year. That is a huge number (for contrast about 350 million PCs will be sold). Over 780 million of those will have been Android-powered. Note, that is new sales of just smartphones this year. When we add tablets, Android will pass 1 Billion new sales this year and Android will become bigger by total users, than all forms of Windows based devices, desktop PCs and servers, laptops notebooks and netbooks, tablets, and smartphones - combined. Yes, already at the end of 2013, Android has become the world's largest computing platform and 'ecosystem' if you will. Congrats to the folks at Google..

Thats the kind of numbers and stories and rankings we will be looking at around early February and late January of 2014, in less than 3 months from now.. The year smartphones sold more than dumbphones. The year Android overtook Windows. And the quarter when Samsung started shipping a million new smartphones every single day, Saturdays, Sundays and holidays included... Quite an exciting time.

Stay tuned, I'll be bringing the updates as we get more data...

Comments

[RottenApple]

@Leebase:

If you want to downplay Android and praise WP, at least be consistent!

Most of WP's growth is in the same low end segment which you are downplaying for Android.

So low end growth for WP is good but low end growth for Android is irrelevant? Sorry, but that's just twisting numbers to fit your story, not the story told by the numbers.

[E.Casais]

"Apple is spreading the practice of phone subsidies."

Hem, no. That practice existed long before Apple came with the iPhone. Besides, this practice only works for high-income market segments, and is the only way Apple can truly distribute its devices: iPhones are sold to operators, that have to commit buying specific quantities of them. We should never forget how special (and shrewd) Apple's business model is.

"25 countries WP outsells the iPhone."

A very strange measure, since it is the Lumia 520, the lowest end WP model in the Nokia range, which is selling. And the comparison between iPhone and low-end has already been dismissed as irrelevant: "Apple will NOT do anything to compete with the bottom of the market which is where the growth is coming from."

"I think HTC has a much brighter future than Blackberry."

I would rather say that HTC has a somewhat less dark future than Blackberry.

It is quite surprising how fast HTC dropped. The firm was the darling up-and-coming smartphone vendor that had adopted the supposedly "right" recipe of betting on Android -- and is now fighting for survival.

In truth, HTC devices had always been dubiously engineered; I cannot think of any other smartphone vendor whose products have been so frequently affected by overheating problems. This must have contributed to the backlash on the market.

[John Fischer]

The real comparison won't be happening anytime soon around here, the real numbers are a bit different.

Compare the last 2 versions of android against the last 2 of iOS, forget the rest. Dead dinosaurs

Compare iphone 5s to its real competitors, stop including "get one free android phone if you buy 2 rolls of toilet paper"

Apple only competes in one segment, it would be really interesting to see the numbers if properly segmented, i guess is too difficult to get data out of samsung.

Comparing iOS7 to android 2.0 makes no sense or to any forked version in china

Comparing 5s to low end 50 us$ phones makes no sense

Comparing Porsche Macan to Kia cee'd makes no sense

Not recognising WP is growing and not dying as predicted makes no sense

[RottenApple]

@John Fischer:

Your post also makes no sense. This is the same selective numbers picking that some of the more annoying posters here are notorious for.

Either a smartphone is a smartphone, then all numbers need to be seen as one market, or the low end is irrelevant, then you also must ignore low end numbers that fit your agenda (e.g. WP 'growth' - which to me looks more like stuffing the channel below cost. Here's one bit of warning: Nokia could get away with it. Microsoft with all their money behind it will be far more closely watched!)

It's also quite nonsensical to view Apple as '5s only'. A significant quantity of Apple sales are lower spec versions, so please exclude those as well!

@E. Casais:

"In truth, HTC devices had always been dubiously engineered; I cannot think of any other smartphone vendor whose products have been so frequently affected by overheating problems. This must have contributed to the backlash on the market."

Sounds right. For all the praise the HTC One got for its design, it got severely trashed for being the 'least repairable phone ever'. Maybe it's just that most people look for more practical values in their phone aside from 'nice looking'...? I know, for me an SD card slot is important, as is a replaceable battery. HTC skipped on both.

[Thomas]

So we now have a market where, broadly speaking, the software is free and branded and provided by the US west coast, while the hardware is cheap and branded and sold by Asians. Sic transit gloria europa, but the next stage of the game looks about to begin.

[E.Casais]

@RottenApple

Everything you say jibes. Cool design is (for whatever reason) associated to ultra-thin devices, which HTC liked to produce. To achieve ultra-thin cases, sacrificing removable battery snaps and microSD cards is one easy way to go. It also implies tightly packing electronics together -- which makes heat dissipation more difficult. And if electronics are not well balanced, then some components will run at maximum rate in order to keep up with performance requirements -- generating even more heat. After a bit more than one year of being constantly submitted to thermal stress, your nice-looking but less than ideally practical device dies and a repair is too difficult (hence expensive).

Does anybody remember when HTC was the king of Windows Mobile smartphones and PDAs? Those devices looked cool too, but they never had exactly a stellar reputation.

[E.Casais]

"broadly speaking, the software is free"

What? Neither WP nor iOS are free. And the discussion showed that Android cannot be construed as free either. On the PC, neither Windows nor OSX are free. Only linux is -- but it cannot be construed as coming from the "US West Coast".

"the next stage of the game looks about to begin."

Meaning what?

[Thomas]

Broadly speaking, the OS market is now dominated by Android, which is free. It looks like the only competitor iOS will become increasingly niche, Mercedes-style. I think WP can be ignored as a rounding error. The PC market is not germane.

The next stage of the game is about to begin because what we might call the Pacific situation doesn't look like an equilibrium either.

[RottenApple]

@Leebase:

"You have six more months of "Apple is breaking records" before you can return to your regularly scheduled "Apple sales declining" for the two following quarters. It's a yearly cycle. Each year better than the last. Except in "smartphone market share"."

You are again ignoring that Tomi uses a 4 quarter moving average to come to this conclusion. Apple's growth in absolute numbers is slowing down. So I have my doubts about 'ever growing'. If growth slows down it'll go down to zero eventually. Right now Apple still has the advantage to flood a few previously untapped markets but once these are done, we'll see.

[Pekka Perkeles]

"This quarter we will see Apple sell more phones than anyone but Samsung and Nokia....more mobile phones including feature phones. 3rd largest mobile phone company in the world. Who would have guessed that when the iPhone was introduced? Get ready to see world record making sales revenue and world record setting profits."

Someone may wonder why all this would or could happen without iPhone Mini.

Haha?

[Winter]

@Leebase
"What next? Watch India's response to subsidized iPhones."

Only some 30 million Indians (3.1%) owns a laptop with Internet. The "middle class" in India is people who spend between $2-$20 per day. In short, the average middle class Indian is not your typical iPhone buyer.

It is a nice market for the iPhone, but not a global market share breakthrough.

http://www.dailymail.co.uk/indiahome/indianews/article-2327182/The-myth-great-Indian-Middle-class-Roughly-30-Indias-population-lives-poverty-line.html

[Winter]

@Leebase
"China is just as poor...and just as rich."

No, the Chinese are quite a lot richer than the Indians.

http://www.ey.com/GL/en/Issues/Driving-growth/Middle-class-growth-in-emerging-markets---China-and-India-tomorrow-s-middle-classes

[AndThisWillBeToo]

@Pekka Perkeles
You clearly have not followed Tomi at all. He told already in 2007 that Apple needs to go to lower price points if they plan to be profitable.

and yes, haha.

[N9]

I am still curious about your opinion about Blackberry. While sales of the new devices have been described as a complete desaster, at least according to statcounter (gs.statcounter.com) they seem to have stopped the erosion of their user base - even gaining a lot of users in the US. And does anybody know what is meant with the Linux graph which appears if you select China and mobile OS?

[E.Casais]

"They probably can do that now. An iPhone 4 in a plastic body with non-retina screen can probably already be made and sold for $200 brand new and still run all the apps."

That I strongly doubt. A firm that has been designing, producing, and distributing high-price, high-margin products since the very beginning is simply not organized to deal with genuinely low-cost, low-price products. It would most probably fail at it because

1) It does not like it: this means forgoing high-margins and all the lavish development resources it can devote to its activities.

2) It does not want it: low-cost -- and for phones this means less than $200 new and unlocked -- means competing directly with the Huawei and ZTE of the world, not having operators committing to buy loads of devices, and having a much more difficult time touting some unique selling proposition.

3) It does not know how to do it: forget about those fancy designs, custom materials, special-purpose machine-tools just to implement unique designs, and top-of-the-line lavish electronics. Do not think for a second that "all apps will work" without considerable exertions from the software side; do you really think that a full-fledged iOS and current versions of apps can run unchanged and smoothly on some low-end CPU&GPU with restricted RAM, slowest 3G&WLAN, and limited flash memory? And forget about upscale Apple stores with genius bars for low-cost devices.

Refurbishing a three-years old design is a nice tactic, but then the original BOM for the iPhone 4 was estimated at $187.51 (for iPhone 5* it is $199), and even after shaving some costs (the retina display itself was $28.50) it will have to cover other expenses such as development, marketing, distribution, etc, and compete with _modern_ devices such as the Motorola G (at $179) or the Lumia 520 (at $155). Scaling down works only to some extent -- to truly cut costs, you must design for low-cost right from the beginning (which is still a competence of Nokia, for better and for worse).

No, Apple is simply not organized for the low-cost. It actually never was.

It is companies that live by doing low-end that move upmarket. The converse is quite rare, because it is so difficult.

Tomi can clamour for a low-cost iPhone -- it will not happen.

[N9]

@LeeBase
Statcounter. But I don't know what they are measuring exactly (web traffic presumably). I just found it interesting.

[Winter]

@Leebase
"Just like Google is really about selling ads, the iPhone is really about selling data services and long term contracts"

But these are going the way of the Dodo. Telecom is going towards more competition and lower margins.

[RottenApple]

@Baron95:

I can tell you where those 200000 apps come from: Massive bribes (a.k.a. 'sponsoring') by Microsoft to develop apps for the system.

I know because the company I work for just made such a deal itself. So we get covered:

- all development costs for the app
- a 5 year subscription to MSDN for free, including access to all development tools and Windows versions for that time.

No good businessperson can refuse such an offer. Without that deal our interest would have been rather low.
But so, we are guaranteed to get our investment back and learn at the same time to develop for yet another platform. Whether the app becomes successful is irrelevant for us. It's a no-risk deal as long as we deliver the finished product.

You see, the iOS and Android app ecosystems are self sustaining. WP, just like on the hardware side, only lives because Microsoft is pumping insane amounts of money into it to keep it alive. But yet again, this well known fact is conveniently ignored to make a point that has no merit.

It's also quite irrelevant that WP is faster growing than iOS and Android in their infancy. Back then this was a new market. This still has to be compared with the competitor's state today, not 4 or 5 years ago.

Last but not least, how does this work with your claim that low end users don't participate in the app ecosystem?`WP is primarily a low end platform so since there's interest in apps it can't possibly be that low end users don't use their smartphone as a smartphone. So many, many thanks for proving your main arguing point against Android wrong.

[N9]

@Baron95
So instagram finally arrived for Windows Phone. Only it is missing essential functionality. Did Microsoft not pay enough?

[Spawn]

BB10, SailfishOS and Tizen run Android apps. That's the point: Android, its APIs amd frameworks, are all open source, can be easily integrated, define the standards cause they are de facto standard.

The only ones fighting that are iOS and Microsoft and they lost there "war of ecosystems" (as Elop, the call me the 21 million General Failure, named it). Its past, its done.

And while past and future success of the Android ecosystem accelerates and expands far beyond Smartphones and Tablets those that try to fight rather then accept, incoperate and uild up on are those hit most. Looking at you Microsoft. Its going to be a very hard time next years. Elop's public statements to shutdown bing and xbox are only the first visible cuts. Everything that isn't profitable but eats billions of Microsoft $ will be killed. Guess in whay category Windows Phone, Surface, RT are?