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January 28, 2015

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Tomi T Ahonen

Maggan

You are very correct and I DO acknowledge the share Apple has of all phones too - usually none of the other analysts count that, check out all the stories right now, nobody talks of Apple's share of all phones but what did I tell you in the blog about Apple final year 2014 numbers? That the share of all phones has hit 10%. So yes, good detective work, and yes, that is one good way to consider Apple's performance in the total handset market. It is what a consumer considers part of the same market anyway, because when they walk into a store, the same store sells dumbphones and smartphones and usually many from same brands. Very valid way to look at it. And I've said from 2007 that I believe 10% is the ceiling of where iPhone can grow out of all phones, because that was the ceiling what the Mac was able to do, globally, in PCs, never passing 10%. I belive the Mac as a PC is a good analogy for where Apple's premium offering has its ceiling and now the iPhone has achieved that level - after 7 years. I do believe that is about the most it can do.

BUT - why not count it and report it that way. My readership is INTERESTED in smartphones far more than dumbphones because they often are developers and companies working in the mobile services and apps space. This is not a mobile phone blog, or smartphone blog (while it may often seem that way). This is a blog about the digital converged industry with a focus on mobile. I decided in late 2009 that year 2010 will see a bloodbath in smartphones, and I started a series about quarterly 'horse race' results about smartphones - because my readers valued that and I happened to have very good tools to monitor that race. So this series is 5 years old, but once Nokia decided to collapse and Motorola was sold and Blackberry collapsed and Windows started to die, this became almost the obsession on the blog. Exactly as I predicted, it was indeed a bloodbath the past 4 years but far far more news emerged about it, that it kept me incredibly busy trying to cover it all. And I'd say, from the market share angle, this is the website where you find the deepest analysis of the smartphone wars for the past 4-5 years, and all for free obviously. And added to that - by FAR the best discussion - while at times heated haha - in the comments. I learn something absolutely every day from my readers here.

But back to your thesis, yes, of all phones, iPhone has kept growing. Good job. I do recognize it when I do my reviews. BUT it is not of interest to most of my readers who DO want to know how is that ecosystem battle among the smartphone platforms and should they bother to do custom solutions for Samsung or Sony or Apple etc also as phone brands. Thats why my focus is the market share among smartphones but I do also give the share of all phones.

Tomi Ahonen :-)

AndThisWillBeToo

@Lullz
"Will Apple be able to maintain the growth QoQ or YoY? That's the relevant part and I haven't seen you commenting on that. if you think Apple managed to pull a miracle, why are you not giving estimates of the future sales?"

Well that's simple. I expect Apple to continue doing exactly what they have been doing year over year for now:
They will sell huge sales in calendar Q4, have drop to Q1, even more from to Q2, slight QoQ growth on Q3 and again a huge spike at Q4. And if you compare Apple sales YoY (full year or quarter-per quarter) they will sell more than they did on previous year.
This they will do.

How much more? Enough to increase their market share on all phones (dumb and smart). They had last year at ~8% if I'm not mistaken. They are now at 10%.
Full year 2015 Apple will have market share of 11% and 2016 at 12%. At that point market is so far in its transition to smartphones that Apple will probably level to there. (Remains to be seen.)
Apple share of smartphones does not depend on unit sales, it depends on how fast people switch from dumbphones to cheap Androids that they will use like dumbphones.

Lullz

I can give my own estimate of iPhone sales while AndThisWillBeToo figures out his answer.

Q1 63 Million
Q2 50 Million
Q3 56-60 Million (depending on the next iPhone release)
Q4 80-100 Million (depending on the next iPhone release)

That would give 249-273 Million for 2015 iPhone sales. i don't know how many smartphones will be sold in 2015 but assuming 1500 Million that would give a market share of 16,6% - 18,2%.

I haven't seen either Huber or Rotten Apple giving forecasts like this. It would clear the air if they did the same and it wouldn't be just up to Tomi and AndThisWillBeToo to do that.

Tomi T Ahonen

Huber

Thanks. VERY good thinking and makes a lot of sense. It also squares very well with the prelimninary data that is coming out about Apple's Q4 performance such as the annual CIRP study of consumer reasons what phone they had before the new iPhone. In 2012 Christmas only 50% of iPhone buyers were returning from an iPhone. In 2013 Q4 that was 60%, now in 2014 Christmas that was up to 70%. Totally fits in with your theory. And while the CIRP study is only US domestic market, it is still the biggest market for Apple, so it is reasonably representative of Apple user base. Like I said, we have to monitor the data as it comes out.

Tomi Ahonen :-)

Tomi T Ahonen

Lultz

Thanks!!! And for the record, yes I did get my forecast for Apple Q4 spike season too low. I was on this blog discussing that very issue in early January if you remember, when the Kantar numbers came out. And I did the projection for global impact if Kantar was proven right. I said the Kantar numbers seemed too high (as they were, but only a little bit) and I said I was convinced enough to upgrade my forecast for Apple Q4 number to 70 million based on that Kantar data, even when I felt Kantar's numbers were too high.

Note also that I've made several other calls about Apple's Q4 as info came out, such as no, Apple was not selling more iPhones in China than it was doing in the USA. Again the math didn't work out. But I also explained (on Twitter when that broke) that I knew where the error was being made - that the surveys for China were only done in the big rich cities, so it skewed the iPhone sales figures.

But for the record, I did estimate Q4 to be less than it ended up being. There was a spike, a big spike, but it was even bigger than I thought (all the while, not as big as its been in past years, in terms of market share, so this is still a modest issue. I never published a 'quarterly forecast for iPhone' I don't bother with quarterly stuff. I talk always about ANNUAL stuff - for all brands. I'd go crazy if I recalculated every brand forecast every 3 months. And if an annual forecast gets the trend right but misses the final market share by one point, that is pretty close to perfection in forecasting. Especially an industry this volatile as smartphones.

Tomi Ahonen :-)

Tomi T Ahonen

AndThis and Lullz

Wonderful !! now we have duelling forecasts... cool beans. Lets remember to come back here in a year to see how it went. Anyone else out there among our Apple afficionados? Dare to put a number onto the blog?

Tomi Ahonen :-)

RottenApple

@Lullz:

I'm not an analyst so I'm not goint to lean too far out of my window and post outlandish numbers, especially since we have no clue right now if Samsung misses their goal with another underwhelming lead device.

If they fail again, Apple's market share can increase. That's also one of the reasons why Apple is so strong this time: The only serious competitor failed to position itself well with the Galaxy S5. That phone was a major disappointment and Apple had the chance to gobble up a lot of the vacuum Samsung left them.

But as it stands, I consider Q4 a hugely exaggerated spike, just read Huber's reasoning which quite closely matches my own impressions.

Lullz

@Tomi

I really wonder if anyone will keep complaining to you about that since that was really a great answer and it explains it all. Now we will have to see what the future brings to us and what will happen next.


@RottenApple

Don't take it too seriously. You can always change your guess about the quarterly sales. The reason why it may be fun and even a learning experience to list the quarterly sales is that people can get something concrete to compare the guesses with the other people.

I will also, very likely, change my mind about the numbers as time goes by and it's just natural to do that. On the other hand I'm one of the first to do a forecast or guess like that and it gives you much better perspective of what I'm saying.

Tomi is giving us forecasts and numbers and that's great. Actual numbers. There is really no reason why you couldn't also do that to illustrate the opinion you have. Don't be afraid of guessing just because you can get it wrong. It's not like you would lose your house if you got it wrong.

Lullz

@Rotten Apple

Btw, you and Huber are both basing your estimates about sales slowing down mostly on a single assumption. You think that the product is not really that good and it all happened because lots of people were waiting for a bigger screen. You also assume that most people who wanted to get iPhone with a bigger screen already bought one and there are no longer that many people looking for a product like that.

Because of this your analysis will fail if the product actually is desirable and remains like that until the next product launch. This of course remains to be seen. You know my guess.

RottenApple

@Lullz:

"Btw, you and Huber are both basing your estimates about sales slowing down mostly on a single assumption. You think that the product is not really that good and it all happened because lots of people were waiting for a bigger screen."

No, that's not what I was saying. I was saying that the amount of added sales caused by people just waiting for the larger screen, has skewed the numbers quite significantly this quarter.

I'm myself in the situation that I just can't work a 4'' screen with my fingers - so if I had any interest in getting an iPhone, this would have been the time - not next quarter, not next year - but now! (or to be precise, 3 months ago.)

So yes, I believe that most of this particular user group has already bought their new iDevice.


Tomi T Ahonen

Getting back to Huber's points:

- Lots of Apple customers waited for a bigger phone. As soon as this was available, they bought it
- Some Android users only used Android because for them, Apple's old iPhones were too small. As soon as Apple was competitive regarding screen size, they switched (back?) to Apple

I think these are very strong drivers of the Q4 2014 spike. We know iPhone owners had wanted bigger screens even in the 3.5 inch era when Apple was slow to go to 4 inches and now for years waiting for phabet sizes. They had a big pent-up demand. It won't explain all but I think its a significant part of the jump above just that its two years from the last iPhone cycle.

The Android argument is interesting and also I am sure such customers exist to significant degree. I am thinking of another.

NOKIA big screen users. Nokia has always had larger screens than the current iPhone models all the way back to the E90 Communicator. So yeah, they might go reluctantly to a Samsung or Sony but big screen Nokia owners tend to have premium Nokias/flagships and now suddenly there IS an Apple worthy of switching over. Now, the Lumia sales levels are not that big to give much of a jump (the CIRP survey of US switchers to iPhone had only a boost from 1% to 3% coming from Windows Phone) but - there are many who held onto old trusty Nokias like E7's. And some Asha users too have suddenly a good reason to get to an Apple. It won't be as big as the Android gain but for Nokia owners, as Nokia disappers, Apple will feel very comfortable.

Ok thats what I was thinking.

Tomi Ahonen :-)

Lullz

@Rotten Apple

"So yes, I believe that most of this particular user group has already bought their new iDevice."

Last year Apple sold 43.719 Million phones in the first quarter of 2014. What would you say, how many should be sold to prove that there is genuine demand for the phones Apple is producing and most people who wanted to get a bigger screen didn't already buy one? What would that number be? 50 Million, 60 Million, 70 Million?

Huber

@Tomi: Thanks :-)

@Lullz:

"Last year Apple sold 43.719 Million phones in the first quarter of 2014. What would you say, how many should be sold to prove that there is genuine demand for the phones Apple is producing and most people who wanted to get a bigger screen didn't already buy one? What would that number be? 50 Million, 60 Million, 70 Million?"

I think that mainly we should look at the development of Apple's installed base during the next few quarters (absolute as well as percentage-wise). If the iPhone 6/ 6+ has a genuine impact on the market, the installed base should grow considerably this year.

Lullz

@Huber

"I think that mainly we should look at the development of Apple's installed base during the next few quarters"

How does that differ from iPhone 6 selling more on the current and next quarters? The installed base can pretty much only grow because of Apple selling more phones or is there another way to gain any reasonable growth to the installed base?

If the phones were used for a longer period of time, there would be some growth or more like less shrinking. This makes me think that you don't want to tell us a number. That's probably because if Apple would be able to match that number it just might prove a point about genuine demand.

Also, remember that I'm not asking here what the sales will be but what kind of sales would tell us that there is genuine growth in the demand for iPhone.

Quite often people give a number like 100 Million to a question like this so that they feel safe and Apple can't possible match it. So, what would be it? 50 Million?

Per "wertigon" Ekström

@KPOM:

Apple was *up* in units, but *down* in market share. How hard is that concept to grasp?

Lullz

@PWE

"Apple was *up* in units, but *down* in market share. How hard is that concept to grasp?"

It also seems to be quite hard for you to understand how little Apple lost market share and what was the trend.

Trend matters. If the big sales would have been in the first quarter, it would have been really alarming. Now it's considerably less bad and possibly even promising because Apple was able to have a very good last quarter. Don't you see the difference there?

Another completely different question is if this trend will continue or if it even is a trend. In any case Apple did much better than anticipated in the last quarter and lost much less market share than almost anyone expected them to lose. That's the big question everyone is asking. Not Apple losing market share because of some fractions of a percent which is actually just as irrelevant as if Apple would have gained it as much as they lost it. What matters is the trend or if there is no trend.

RottenApple

@Baron95:

Let's talk again when the peak is over.

I remember that 3 years ago you declared victory for Apple in the US when they briefly surpassed 50% market share in Q4, and it never came. This quarter was an anomaly and won't repeat the same way and it was boosted by Samsung's lack of a good premium device, since they completely failed to impress last year.

These 2 factors - first release of large screens and lack of true competition - won't repeat this easily again.
Of course, if Samsung releases another dud this year - which I don't expect - yes, then Apple will have won.


@KPOM:

" But "MOAR specs" on competing phones aren't going to do it. "

Depends on the specs. If they are something people want to have, they will have an effect, but if 'more' specs just means 10%-20% more CPU-power, no, that won't cut it, we can see that lesson from the Galaxy S5.

Per "wertigon" Ekström

@KPOM, @Baron95, @Lullz

You guys still don't get it.

The reason why Apple will fail is written in the cards. While they may hold off the inevitable for quite some time, their market share WILL drop eventually. Why?

Simple. Apple is one of MANY competitors in the premium race. There's Sony with the XPeria, Samsung with it's Galaxy, and a whole ton of other brands as well. These brands can maybe not 100% match Apple in terms of features, brand loyalty and a general "look-and-feel" - but they don't have to.

They only have to do 90% of what Apple can do at *half the cost*. Many will then ask themselves "Do I really need to pay twice as much if I don't really need the last 10%?" same as they asked themselves "Do I really need to pay $2000 for a Mac, when I can pay $1000 for a PC?"

Apple will fuck up. Every company do. And once they fuck up, they will lose market share. Market share they with the current strategy will find very difficult to regain. Sadly, cheap will beat quality every single time - as long as cheap is "good enough". It's been proven in virtually every consumer industry on the entire planet. What makes you think Apple is immune to these effects?

No, Apple as it currently stands will fall from grace. Anyone that believes otherwise is just simply deluding themselves. The only question about Apple is, will they slip into obscurity in five, ten or twenty years?

The only thing sad about the Smartphone industry is that Android won, and will now hold the entire industry in a death grip for atleast 20 years. Just as Windows and IBM before them. Sad, but true, and innovation suffers because of it. :(

AndThisWillBeToo

To everyone in thread:

Ben Bajarin had excellent graph about shipments per OS:
http://twitter.com/BenBajarin/status/561303739127308293

We all know that Apple sales go up and down QoQ but how many of you knew that Android sales (not market share but actual unit sales) go DOWN when Apple goes up?
Existing users replacing their iPhones? I don't think so.

Lullz

@PWE

"The reason why Apple will fail is written in the cards. While they may hold off the inevitable for quite some time, their market share WILL drop eventually. Why?"

I'm sorry. I didn't understand this was a matter or religion and faith to you. This is how you sound to me when you effectively say they are destined to fail as it's written in the cards.

You could have saved us lots of time telling that in the first place. There is usually little point in talking with someone who acts on faith and believes something is written on the cards and is destined to happen because it's written on the cards. Get it?

"The only question about Apple is, will they slip into obscurity in five, ten or twenty years?"

You sound like those who predict the end of the world. It will happen one day. They, like you, don't know when but sure they are right. The world will end one day. Just like Apple will fail one day. Don't know when but it will definitely happen one day.

You contribute nothing to the discussion with that.

The comments to this entry are closed.

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