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« Some Smartphone Snippets: Nokia Q4, HP is Back, Tizen Delayed Again (Updates with Nokia Lumia ASP etc) | Main | Google Sells Motorola Unit to Lenovo - I told you this would happen... »

January 27, 2014

Comments

Baron--9-5

@Winter - What does network effect for devices has to do with market share?

How do you explain the fact that with 4% Market share the Mac has plenty of apps and developer support?

How do you explain that in 2010 the iPhone with 15% share has more apps than Android with 80% share?

How do you explain that with 3% share Windows Phone has more apps and developer support than Symbian had with 40% share or RIM had with 20% share?

The ONLY relevant factor for network effect is - how much money do the users of a platform spend on content. I.e. the aggregate demand.

The demand can come from lots of users spending a little each. Or fewer customers spending a lot each.

So if you want to talk about Network effect for devices (as opposed to things like Facebook), you need to talk about the demand generated by each device.

And Apple, generates by far the greatest demand for mobile device content - songs, apps, ad revenue, etc. That is why it is the first target for app developers.

Winter

@Boron95
"How do you explain that in 2010 the iPhone with 15% share has more apps than Android with 80% share?"

You decry "market share" an empty, utterly useless, metric. And you replace it with, wait for it, .... number of apps in the app store!

That is right, number of people who use the OS is less important that the number of (flashlight and fart) apps.

With more than a hundred thousand apps, most apps will not even have a single user beyond their developers and next of kin. The average user has less than 100 apps installed. With 100 choices for each, a few tens of thousands of apps would cover more than anyone would be able to make a choice.

As usual, you are perfectly willing to go for the used-car salesman talk.

AndThisWillBeToo

> The average user has less than 100 apps installed. With 100 choices for each, a few tens of thousands of apps would cover more than anyone would be able to make a choice.

Well Microsoft will be fine with app offering of WP then.

foo

@Baron95

We both agree that Apple and Samsung play different games.

Samsung is Toyota, Apple is Aston Martin. Good comparison.

But there is one small problem in this analysis: the market is not static, and iOS is falling behind Android in terms of quality and experience.

Aston Martin would be in a deep problem if their cars weren't as good as Toyota's.

That said, we can make another car analogy: just remember how the USA was the center of the automotive world in the 70s, with the huge manufacture plants in Detroit, and was suddenly replaced by the much cheaper AND better Japanese cars.

The same is happening in the mobile world, but at a much faster pace.

Winter

@AndThisWillBeToo
"Well Microsoft will be fine with app offering of WP then."

If WP had a good selection of apps. However, they still struggle to get a decent selection for all the required categories.

Janne

@Huber

"The iPhone on the other hand is inferiour to any Android phone with its restricted walled garden OS - hell, you cannot even send an Email with an MP3-file as attachment!"

Mp3 can be sent as an attachment if it's on the device. To test this I downloaded an mp3 file from my dropbox to my phone and sent the actual file as an email attachment. A file can be opened with any app which is configured for the file type, and I used FileExplorer for this - it allows directory creation and file manipulation on the device - and an option to send the file as an email attachment. Maybe there's a similar share option in the default music player, but I haven't used that. I mostly stream music from my own server from home, or play the files I have on the iPhone.

Granted iPhone may not provide the same level of use as it is, but nonetheless I currently have multitude of productivity apps like FTP browser that allows an FTP connection back to iPhone too, SSH app, VNC, coding apps, etc + a couple of media players like VLC or GPlayer, which allow direct play from local or remote servers. In only a few seconds I can project the content on my MacBook with Airplay or if I'd have AppleTV device then on any screen to which it's attached.

I don't doubt a bit that the same apps are available on other devices; I've used Samsung SIII, Nokia 920 etc actively so it boils down to a personal choice, and this works for me. I like to be able to use the phone with only one hand and I like the design.

AndThisWillBeToo

Jolla has updated Sailfish OS. New release "Naamankajärvi" brings in exciting new features such as web browser that also works when phone is in landscape orientation and a security lock that does turn itself off when you connect USB cable to the phone.

https://lists.sailfishos.org/pipermail/devel/2014-January/003225.html

R

@RottenApple

I'm not saying that Landfill Android shouldn't be counted as the same market as iPhone. Though, from experience with my own Landfill Android (Motorola Defy XT), I think "90%" is a really high number for its functionality compared with an iPhone. I've had to uninstall programs to make sure everything fits in its 1GB flash memory (the OS takes most of it, and even when apps are moved to SD card, many of them leave multi-MB of data on internal memory), and everything it does has a hint of annoying (camera, multitasking, software compatibility). At best, I think Landfill Android and iPhone have overlapping functionality, with iPhone having more features that consumers actually like.

The bigger issue is whether the analysis is relevant. Back when smartphones were toys for executives, it was a small but profitable portion of the market, and it made sense to analyze it separately. Now, Landfill Android is really just an upgrade on dumbphones. Everybody has one. That would require some re-analysis, going back over some old numbers to see how iPhone and Galaxy fit into the larger market, but I think that makes more sense than saying that smartphones are decreasing in ASP just because a lot of "smart" phones are Landfill Android and Dumping Lumia.

I'm not convinced that Landfill Android increases the Android ecosystem in a commercially significant manner. I'd like to install more programs on my Landfill Android, but I can't because it lacks the space. Most Landfill Androids run Android 2.3 (which Tim Cook has compared to iOS 3, when they're now up to version 7), and some unknown large number of them don't even talk to the Google Play store. I don't see them as having network effects or brand loyalty, that a proper smartphone platform should have.

RottenApple

What you describe as 'landfill Android' is really just ancient hardware. I haven't seen a 2.3 device for sale in a long time. The Defy is still amazing it its outdatedness, though. Released in 2012 with 2010 hardware... No wonder, Motorola got into problems. I own a first generation HTC Desire, released in 2010, as a secondary device, which got roughly the same specs. But even despite that, for casual use (like being on vacation) it's still more than sufficient and I wouldn't get more out of an iPhone or modern Android because I wouldn't need those missing 10 (or considering the hardware's age) maybe 20% it can't do.

Things have changed a bit, though. My own experience has been that (at least in developed countries) nobody wants to buy such compromised hardware anymore, even for cheap, so they won't get released - stock clearance sales nonwithstanding. I haven't seen a 2.3 device on offer for quite some time now. These devices are also clearly not taking over the market as their market share is shrinking.

Oh, btw, what's the point of an iPhone? Its 16 GB variant even fails my most important task: store my music library which currently is about 12 MB in size. It'd leave no storage for other purposes. Here's where for me ANY device without SD card expansion utterly fails. My main use of my phone aside from calling and surfing the internet is listening to music, so for me storage availability for this is one of the most important criteria. (and that old, crusty Desire which today would fit perfectly into the definition of 'landfill Android' still does it nicely with a large enough SD card.)

Tomi T Ahonen

Hi Gang!

I've been on vacation, first day back today. Wow you guys have been busy with the comments and the early parts I read so far seem quite juicy. I'll do some replies. As to the holidays well some family, some friends, some excotic travel and some resting plus lots of writing to finish the Nokia/Elop book. Am closing on a major milestone in my quest to visit all countries of the planet before I die and in the more exciting James Bond country collection added agian a couple and have some nice 007 pictures also to post at some point. But now onto what was our topic again... Apple results. Ok. Lets do some replies...

Tomi Ahonen :-)

Tomi T Ahonen

Praveen - not as much as many analysts hope. The 'low-hanging fruit' of the China market have long since gone and Apple has its thin slice of those. The brand loyalty is obviously strong so the repeat business is there but growth, not that much left as the penetration rate is so high in relatively poor China (GDP per capita) that the growth market now of first-time smartphone buyers is in the rural markets and far less affluent buyers who will gravitate to 100 dollar Android clones not iPhones. Some good sales yes but not the scale of China Mobile's subscriber base by any means.

KPOM - on 'mass market' ie BMW etc. You are confusing the term mass with large and the marketing term 'mass market' as a market segment. Mass market is a very specific marketing term. Luxury goods are not ever mass market goods even if their individual markets might be large. They cannot be. Luxury goods are by definition niche markets with luxury goods economics etc. So yes, BMW can have a 'large' ie massive ie 'mass' sized market but BMW is a luxury categry car, while not very high-end luxury car haha not a Rolls Royce or Aston Martin but nonetheless Beemers are classfiied in the luxury car premium sector of the car industry - cars that many aspire to but most cannot really afford to buy. Brands where people are willing to pay extraordinarily great premiums just to get the luxury brand involved... So no, BMW sells a lot but its is not a 'mass market' brand of car.

On the 5 inch iPhone. If Apple releases that, it has to be priced as their flagship. They can't do the big screen iPhone as their lowest-price product as it would kill the more expensive but smaller-screen rivals.. (But I've argued for years on this blog as you'll remember that Apple should when it splits its product line - go HIGHER with the flagship to the near $1,000 price range and then go lower on the discount model. Make sure the top flagship then has a couple of ubercool must-have features like that big screen and toss in say a 20mp camera like the Xperia Z1 haha... there is fierce loyalty in the iPhone user base and there is a very large 'bling' luxury show-off factor to owning the newest iPhone so Apple can ride that to make many who 'reasonably' could settle for hte cheaper model don't want to be seen as having Apple's 'second best' iPhone now... haha. Thats what I'd do if I ran the Apple brand haha. Go higher with the top model, but also lower on the 5C and its follower models)

On Samsung's shipment number. Go back to read the article. That was not Samsung's number, it was an analyst number. Samsung didn't release their smartphone shipment number for Q4 (at least not yet).

about the 50-50 app revenue split. That won't last. What prolongs Apple's lead (and current parity position) is that iPhone buyers are the most affluent phone buyers on the planet. They can afford to buy tons more apps than they rally need. Android users are expanding into the ever less affluent demographics and thus each latest addition to Android dimnishes the average. But the overall trend is unstoppable, Android is far ahead in total reach and its lead is only increasing. The app store performances will reflect that over time, inevitably. Inevitably.

Baron 9-5 - on the mass market issue please see my comment to KPOM earlier that it is not 'mass' market as in massive market about mass in scale or size. 'Mass Market' is a very explicit marketing term. Under 10% is a 'niche market'. If you don't understand these terms - I do think you do - but if you don't, please just go google some basic marketing sites or read Wikipedia etc..

I never said Apple's days are marked. I EXPLICITLY said that Apple will see a gradual erosion of their market share until it settles into that range that the Macintosh has had for decades. Don't put words into my mouth. You know perfectly well that I love Apple and admire it and all it does. I only wish they would let more people in on the iMagic while they still have the chance. And I want people to deal with realities not fantasies. Apple's iPhone was never destined to be a mass market success in phones. It is a clear case of 'niche market' while a highly profitable and large niche at that.

on Windows and Kantar. Yes its one of my regularly monitored and often reported resources. I like them and trust their data to be very good and only lament the fact that they don't always report on the same markets. As to Windows in the 10% range in some markets. Sure. Markets where Nokia Symbian held from 40% to 70% market share. It has been a brutal massacre of the strong market positions to achieve 1 out of 4 or 1 out of 3 or 1 out of 5 conversion to Windows. And did you check against Kantar last month? As I report ALWAYS when discussing Kantar numbers here - you know this Baron 9-5 you've been here long enough to hear it many times - the way to read Kantar is not to use the year before stats. The relevant insights from Kantar is to compare this month to last month or the last quarter. THAT is what gives you the trend that you can read from Kantar. Their latest numbers if I now remember correctly is that Windows in Europe is flat but in China falling severely... So much for 'growth' in Windows. Nokia is most of Windows Phone and Nokia FELL while the industry jumped for Christmas sales. Not that Nokia market share fell (that did too) but in real terms Nokia Windows Phone sales FELL from Q3. No Kantar number on selected markets can fix that truth.... And China alone is more than twice the size of Europe. Nokia OWNED China's smartphone market with over 70% market share just before the Elop Effect in 2010. You know this, you've read it here a hundred times... The worst news out of Kantar is China collapse of Windows the moment Nokia's name was off the contract and its only the hated American brand Microsoft..

Tomi Ahonen :-)

Tomi T Ahonen

I deleted some comments that were inappropriate.. their posters know perfectly well why..

Tomi Ahonen :-)

Tomi T Ahonen

Baron 9-5 - on Samsung 'nasty place to be' - it is textbook marketing that the market leader faces the most competition at most market segments by most competitors. Before Samsung that was Nokia who faced the iPhone vs the N-Series, Blackberry vs its E-Series and the cheap Chinese makers vs its low-end dumbphones etc. That is normal. You say its a nasty place to be. Now if you went to any CEO of any Fortune 500 sized ie major global multinational corporation and asked would they want to be the market leader - they will all say yes. Being the biggest of your market gives you one asset that none of you competitors can match - scale. You get better terms on sourcing. You get larger volumes out of you production runs. You have more volume in the retail channel (ie 'shelf space') which means that you distributors treat you better than any competitors, other things being equal. Apple plays the niche play brilliantly against that - so they are just so desirable that people stand in line overnight to get their latest iToy. People fly to America to buy it there if hasn't launched in their countries yet - I've seen that many times personally. So back to Samsung. You are right that they are squeezed from many sides. Would they prefer then to be LG with a tiny slice of that market power while still competing on most segments in most countries? Of course not. If played well, a dominant market position is almost unassailable until a technology change causes a 'paradigm shift' (like shift to digital phones overthrew the reign of Motorola). Samsung have illustrated very smart business sense not just in phones but in seminconductors, flat screen TVs etc.. I think they will rather easily convert their current handset dominance into a decade-long run at least, but their true challenge is the next paradigm shift for the 'mobile phone' hardware industry - maybe wearables by the turn of the decade or so...

Mao Franklin - the past years have been an anomaly in mobile, because of the contemporaneous massive collapses of Nokia and RIM/Blackberry. That created a 'void' for the fastest-mover(s) to capitalize and grow by leaps and bounds. That was obviously Samsung which I believe - I haven't yet done the final analysis - has had the fastest growth in the handset industry history. It was because of the Nokia (and Blackberry) collapses. Normally a given player only grows a couple of points per year. They may fall faster but the growth is contested by so many that it is slow. Now that Sammy has the scale they can be expected to hold rather 'easily' the 27% - 31% type of share with minor fluctiation from one quarter to the next. The launch of the new Galaxy will boost sales now into Q2 but generally that is what I would expect. Samsung are VERY hungry and competitive but I think they will - again following the old Nokia playbook for their strategy step-by-step - soon announce they don't intend to grow into the 50% plus range - for all sorts of reasons like the punitive laws against players who have 'market power' (if you're too big the regulators start to punish you). So Sammy would be wise to warn investors they will stop growing market share - and focus on - increasing profits instead. If you are more than twice the size of your nearest rival - and Samsung will be that probably already this summer - then you have a massive buffer against market surprises and you should then focus on profits and high customer loyalty and brand, not just fighting to grow some more points of market share....

Tomi Ahonen :-)

Tomi T Ahonen

Rotten Apple - on reporting below expectations and possible smartphone craze reaching its peak. First, I agree those are alarming issues and I noted them exactly as that on Twitter when I did the quick commentary about the results from both Nokia and Apple. If you remember Samsung disappointment was about the profits, they did not release their smartphone unit sales number. But yeah. I too said that if more companies (also like Blackberry BTW) reported such disappointing results, our total Q4 number might be signicantly lower and my earlier projection that we would breach the 1 Billion smartphones sold per year in 2013 was in jeopardy. Well that is right on the cusp. Strategy Analytics reported the year ended on 990 million smartphones. IDC counted just over a Billion at 1.004B while Canalys came out 2 million shy of the big B at 998 million. Gartner's final count will decide. The magic number ie the number Gartner has to announce for the average of the 4 to hit 1 Billion is 1.008B anything below that means that we didn't quite hit the Billion for the industry. Now. About that 'craze being over' haha we also had strong growth by other players like Lenovo, Sony, LG etc. And the market overall grew 39% from 2012 according to Strategy Analytics. IDC agreed. Canalys counted the industry to have grown 46% from 2012. That is still not strong growth. That is still hypergrowth. The smartphone 'craze' is VERY far from over. Now we are starting to see full conversion from dumbphones to smartphones as exhibited by Sony and Motorola. That is soon a source of embarrassmnet to other legacy manufactuers like Samsung, LG, Huawei etc who will also want to brag that now their total portfolio has been migrated. Smartphones is where most of the profits are made. So the craze is likely to continue for a couple more years still...

R - I hear you about 'combining' the two markets of dumbphones and smartphones. You miss the point of this blog. I am here to share info for anyone interested in success in mobile. My 12 books and university courses and literally hundreds of public speaking seminars have all covered that topic, not the issue of which smartphone brand happens to be winning in the horse race. The reason I've devoted so much time to the smartphone race on this blog is that it is the biggest digital platform of this decade. The PLATFORM is the race. If you have a dumbphone you can do SMS and WAP and perhaps MMS and possibly Java and HTML but you can't deploy an Android app onto the dumbphones. Neither can you do an iPhone app nor a Blackberry or Windows app. They are a different PLATFORM. You may be interested in the horse race aspect of the total handset market - I occasionally report on that too - but I report separately on the relevant PLATFORMS on the total handset market - the relevant metric - how many people use SMS, how many use MMS, how many surf the internet etc. THAT is the relevant metric again for the developers who come to my blog for insights into how to succeed in this industry.

So if you call that a weakness on this blog and you can't see the value of the free statistical info on this blog that nobody else has then feel free to go away and never come back haha...

Tomi Ahonen :-)

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