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January 29, 2015



Did we get Sony sales already?

Tomi T Ahonen


No, only the latest standing Sony guidance says 41 million for their fiscal year which ends in March. That was twice downgraded from 50 to 43 to 41.

Tomi Ahonen :-)


Sony guidance is always terrible...they always overpromise in terms of forecasts and underdeliver.

Samsung is going to continue to be decimated, at least in terms of profitability. Apple is going to eat into more of their high end flagships and their low end is getting attacked in high volume countries like in China and India. There really is no differentiating factor for Samsung that can sell in volume. The Note is too expensive to sell in serious volume vs the iPhone and the problem is that if you sell very cheap phones and high end phones, people won't take the high end phones as seriously from a strict branding point of view.

At the same price, most people will by the iPhone vs Sammy - especially now that iPhones have bigger screens. People don't aspire to own an expensive Samsung in the numbers the way they do an iPhone.

Also you can get a Galaxy S class equivalent phone from Xiaomi or One Plus or Motorola for hundreds of dollars less that runs Android just like Samsung does, with similar specs. Android is basically the new Windows - a race to the bottom in terms of price.


But we know for sure Sony is in the top 10, right?

Tomi T Ahonen

Virkam & AndThis

Vikram - good points and yeah Sony is bleeding. But as its a relevant investor bit if information, if the number is seriously down (say to 38M) they really should announce it in terms of investor relations and stock market rules. As they've already done two downgrades of the guidance and now just announced 1,000 layoffs, I am pretty confident they'll be close to that number.

Samsung does face the problem now that the Galaxy premium end is so similar to iPhones, that when anyone creates their iPhon-a-clone, they will automatically also target Galaxy. So compare to say Nokia Communicators. They were pretty immune from anyone doing an iPhone clone because they had such obviously different form factors. Similar to how a Range Rover would not much care what new specs are inside a Ferrari 2 seat sportscar haha. So you're making a good point, as everyone now gears up and notches up their fight to take on Apple, the collateral damage will almost automatically be to the Galaxy S6 and the Note 4 haha.. Samsung should differentiate away from being so close to that fire... The Apple loyalty is so severe, there will be very few who are willing to leave the iReligion and go to Android (or some who bravely attempt it, soon regret and rush back). But its far easier to steal from one fellow Android brand to another. Exactly as we saw happen in the PC wars in the Windows era, the rival box-movers Dell, HP, Compaq, IBM etc were just churning customers between them and rushing the price war to the bottom while Apple was able to sustain high prices and profits (most of the time, except when they almost went bankrupt haha)

Sammy is vulnerable but far more profitable than any of the rivals. One classic trick done by the market leader is to put a profit squeeze on the rivals. We may well enter price wars and they would weed out many of the weaker siblings. Sony for example, is so much already on the ropes, a brutal price war would end their smartphone business. Many others tinker aroun the profit/loss border and price wars often lead to industry consolidation. But its a trick Sammy has that the rivals can't really play to win. (Apple would not suffer in a price war haha their profit margin buffer is impenetrable. They would laugh it off).

Tomi Ahonen :-)

Tomi T Ahonen

Sorry, AndThis..

Yes, we are not sure Sony is in the Top 10. They sold (about) 9.9 Million units in Q3. To hold their target 41M they should sell about 11.9M now. To fall out of the Top 10 annually, they would need to fall to 6.2M for the Xmas quarter (elevating Microsoft Lumia back to Top 10). That would be so catastrophic collapse, that Sony would have issued a warning about it many weeks ago. I don't see it in the cards but we do not 'know' for sure, yet.

Tomi Ahonen :-)

Crun Kykd

BofA and Chase (2 largest US banks) drop app support for windows phone ( Not a big vote of confidence for the windows mobile ecosystem.

Tomi T Ahonen

Crun and Baron

Crun - thanks. Yeah the rats are escaping the sinking ship.

Baron - really good points and very valid. And no, I don't give all that enough of my attention as maybe I should. I have to draw the line somewhere in terms of what all I can consider. And if you bear that in mind, that my past forecasting has been done without a deep consideration of those points, and I was still consistently the most accurate forecaster about the iPhone - not being an Apple specialist - isn't that a pretty good track record haha.. But seriously, this is why I do love reading the comments of you all who read the blog. I learn so much and you guys keep me on the straight and narrow whenever I happen to wander off the sensible path..

But have you seen the SciFi movie Elysium (Matt Damon, Jodie Foster) where they have the rich people living on a satellite paradise world above the Earth and the planet only has poor huddled masses in despair. That is a bit of what Apple is creating, at obviously tiny scale and only in the digital space. But they are consistently isolating their own 'gated rich peoples community' where the entry is an iToy and everything has to be clean to Apple standards, no porn etc, and nothing conforms to the world standards and you have to be rich to afford it. And they won't even CONSIDER extending their luxury to the poor people who are most of the world.

So now the Apple Watch won't even function without an iPhone. Now the programming language you mentioned (yeah, I remember reading about Swift, but didn't notice Stanford had already created that course haha, well, California and iReligion.. no surprise). But yeah. Compare to how Google wants to bring Android and wireless connectivity to the rest of the planet. How Nokia used to work with all rivals to ensure we have a common standard rather than proprietary private gardens, etc. So yeah, that does make PERFECT sense for Apple. Me as a tech blogger/writter, I do deplore that elitist approach and wished Apple did care more about the whole planet, not only the rich of Silicon Valley and their brethren in the skyrises of the big cities. Call me a sentimentalist old fool haha

Tomi Ahonen :-)


Apple works by creating aspirational branding. They do it by creating the best integrated products (hardware and software) that are thus differentiated from other competitors (think iOS and the Ax series of SoC's). They take their time to get the HW/SW integration to work (think ApplePay). Differentiation commands higher prices and better margin in comparison to the commoditised junk that fills the rest of the market (think the race to the bottom, ie Windows and Android OEMs). Better margins allow for more R&D, better talent, etc., which further develops the differentiated integration. A virtuous circle. Business School 101.

And you cannot call Apple elitist! They target the mass markets of the developed economies of the world. 30-50% of the smartphone market in the USA, UK, Japan, Denmark, Sweden, etc. They are mainstream as mainstream can be in these wealthy economies. Their approach works because there is a sizeable enough population that is willing to pay for aspirational quality. Over time, as the world develops economically, Apple has slowly expanded the countries it operates in - hence the rapid recent growth in the large Chinese cities.


"Yes this is Apple's spike-quarter after their new model launch but still. Even if it is only one quarter, this is quite a shock."

Um, it's far from a shock to many of those who've been saying so for the last 4 months. The only shock is realizing that Apple's production line went from 51 to 75 - an almost 50% growth in production capacity.


Microsoft to invest in Cyanogen


@Baron95, @KPOM,

"Tim Cook said that the percentage of iPhone 6/6+ sales that are iPhone upgrades is "in the low teens, barely in the teens" - so 13-14% iPhone 6/6+ in Q4 were iPhone upgrades."

Tim Cook said that low teens percent of the iPhone installed base upgraded to iPhone 6/6+ so far. So if the base is 400m, about 52-55m have upgraded.


I posted my last comment right after the previous one but it failed the captcha and I didn't notice it for awhile. When I reposted, I hadn't refreshed so didn't see your clarification. Sorry.

John Fro

There's been a lot of interesting computer news in the past ten days. MS's W-10 show, followed by quarterly declines in OS sales was interesting, along with high Apple profits reported and another delay in Samsung figures. It seems the thin client to cloud approach currently in vogue is working well for the players that are able to take advantage of it. You have a smartphone and use it to connect to the cloud--achieving some sort of balance between what's local and what isn't. Samsung has no cloud presence, and no backend IT experience. They really can't add to your phone experience. MS is doing well with Azure, but doing worse w/ Windows--primarily because even on the desktop, Windows really doesn't play well with Azure. This is something MS has been trying to do with Windows since 98 came out and put the file explorer inside a browser window--but it's never really worked seamlessly. Will Apple step up their game? Will Samsung?

Aaron Abraham

Tomi don't you think that the lumia will survive this bloodbath considering the small growth in Sales it posts QoQ and YoY. It has grown even in the latest quarter also where we didn't see any significant flagship release or new OS update release. Many people including you continue to chant Lumia is dying but all the indications are other wise. Now these increases are before the highly awaited W 10 update which most lumias are promised by MS. Also of important note is the fact that of the 3 manufacturers in this article of yours 2 showed a decline QoQ, despite it being the holiday Quarter where sales usually increase yet the 1 manufacturer which showed an improvement in sales is being labled as dying, if you ask me I think LG just like Sony has greater chance of Smartphone exit than MS considering their existing meagre sales and decline on top of that despite having brand, Phones and sales distribution of comparable quality of Samsung, LG has few options to boost their sales has they depend on their Android smartphone sales which suffers from low differentiation from other manufacturers in Android. MS doesn't have these problems of differentiation.

Tomi T Ahonen

Hi All

I added the analysis of the Apple conference call to the Apple Quarterly results blog. You may want to go read it there but yes, most of the sales of iPhone 6 models went to existing iPhone owners, not to new buyers. About 45 million of the total Q4 sales (and by far most of the iPhone 6 models) were to existing customers not new ones. More of the low end 5 models went to capture new customers. It also makes sense, someone who is not indoctrinated to the iReligion will not stand in line overnight to get the newest iPhone haha..

Aaron - I hear you. You probably are not a regular reader here, so welcome. The Lumia unit and Windows Phone saga has been litigated on this blog more thoroughly than at any other public domain source, all the turns and twists and disasters are reported. The story is no longer of relevant size, Lumia is now out of the Top 10 so its as irrelevant as HTC or Blackberry. Windows Phone itself is a dead OS with both handset vendor partners and software app developers abandoning it. The whole mobile unit at Microsoft will be shut down probably within 18 - 24 months, might be sooner (or sold). The unit has run 15 consecutive loss-making quarters with no hope in sight.

That modest growth for 'Nokia' Lumia smartphone unit sales is smoke and mirrors of Microsoft propaganda. Yes, the unit number is up but that is totally not comparable to any rivals because Nokia has collapsed and this is a futile attempt at a recovery. There are vast ARMIES of existing loyal Nokia brand buyers from past years who were used to buying Nokia brand at levels of 15 million to 28 million per quarter of its smartphones and more than Lumia on the Asha series, who are now coming to the stores expecting to buy a new Nokia smartphone who refuse to take Lumia/Windows Phone. So where all others are genuinely growing from the year before (except the other dead man walking, Blackberry) Lumia is still not matching its past sales so it is still bleeding sales. This is before we count the attempt at forced migration from dumbphones to Lumia. Motorola and Sony have completed their migration from dumbphones to smartphones. Samsung is at 80%, LG is at 75%. Nokia was AHEAD of all those rivals until Windows Phone and Lumia came along, now Nokia has been bleeding customers and its current conversion rate is only 20% of all Nokia brand buyers take a smartphone, 80% take a dumbphone. The Lumia growth is an illusion, Nokia brand is still losing 2 customers for every 1 it manages to convert, and those are past Lumia owners who refuse to buy another, or Asha owners who see this is not a good bargain. And all along, yes, Lumia keeps selling at a loss.

So, there are probably a million words about the downfall (six hardcover books worth), which also went through all the analysis of why it was dying and when it died and why there is no recovery possible. Windows Phone will never be sustainable as a smartphone OS. Windows 10 may be ok on PCs and tablets, not on smartphones. So yes, there was technically a unit growth number comparing Lumia to past quarter. But at these numbers the total business is utterly unsustainable. That is no cause to celebrate, Lumia is already dead, more dead than Blackberry is. Sorry.

Tomi Ahonen :-)

adi purbakala


You always say skype are microsoft mistake. If microsoft kill windows for phone. Skype still microsoft mistake still?

Aaron Abraham

Tomi I still dont get it. Its true that the current Nokia/MS sales is no way near its peak time but, the company and the platform doesn't need that kind of sales in the immediate basis for it to survive. OEMs must have abandoned WPs but you cant say developers too have done that, App gap in WP store has closed greatly atleast as far as I am concerned, WP has come all this way with way lesser sales than it gets now, the developers supported it when it had just 4-5 million sales, it has doubled and is still growing also not to mention the enormous support of MS which has plenty of Money to throw away esp at projects like WPs that if successful can result in landfall for MS. The biggest challenge for WPs was surviving the takeover of its sole manufacturer by another company and its has did that splendidly with two Quarters of increasing sales.
The growth of Lumia aint a dead cat bounce as u suggest, there is no proof of such.

Ur analysis of the conversion of sales of dumbphone to sales of smartphones also aint accurate considering how much Nokia/MS promoted dumbphones like Ashas and S 30 devices. Nokia- MS is selling so much dumbphones still because it wants to not because it cant sell the lumias in its place. Nokia had and still has the biggest collection of Dumb phone models, its the go to brand for people who are looking to buy a companion dumbphone to their Android or Lumias. Sony and Samsung all have virtually stopped the dumbphone sales because it wasn't that big in the first place while Nokia"s dumbphone sales was. In my view MS will continue to offer dumbphone and push for its sales as long as the market exists for such phones cause a person walking to a store looking to buy a keypad dumbphone ain't exactly walking out with a cheap Android or WP smartphone no matter how much he is pushed by the sales people.

Tomi T Ahonen


Good analysis and I didn't take into account the launch weekend.. BUT you are assuming all iPhone sales were 6 series. Read the transcript, they say quite clearly that all 4 models selling well and made a point about 5C and 5S doing so. I took a very modest estimate of only 10% for one and 20% for the other, of 30% total. Could as well be closer to 20% each ie 40% total for 5 Series and only 60% for two 6 series models. Also ASP is far too low to have mostly 6 series sales, there is plenty of 5 models in the mix. They may be converts from Android, they are not won over by 6 series.

Then there is the CIRP survey (which is US market only) which has pushed the iPhone buyer stats ever higher as return buyers not new buyers (now up to 70% of all iPhone buyers in US were return buyers, that was 60% a year ago same period). And the Android wins are down from before the 6 series launch, but who is up? From its tiny base - Windows Phone yes, Lumia's few premium customers in the USA are jumping to the iPhone. And a jump up in first-time-phone-buyers (not move from dumbphones, first cellphone ever) of a couple of percent haha. The granddad whose eyesight couldn't take the smaller screens but now like this new big-screen iPhone haha...

Most of the 6 series sales of this spike went to return customers. Yes there is of course some stealing of Android rivals but more probably converts from dumbphones to first smartphone, and yes from its tiny base, some from Windows Phone too... And of Android it seems to be that most Android wins were with smaller screens and cheaper iPhones, not 6 Plus phablets (where the iPhone is a poor choice if you already had an Android phablet, as Samsung's Note 4 performance for example shows).

If its 70% return customers of all iPhones, 30% are first-time Apple buyers and there is always a mix there of cheapest 5C users, mid price 5C and 6 users, and phablet 6 Plus users, the big surge of loyal iPhonistas were of course to the 6 Plus, the dream they've had for years. I think its safe to say that the proportion by phone type, of 6 Plus the successful stealing of Android users was least successful (maybe 20% or less) and with the new 6 model the most successful (as its new and the 5C and 5S have been around for a year so their competitiveness is not that great anymore).

Tomi Ahonen :-)

John F.

@ Tomi

In the previous blog you stated this "" Where did Apple gain on Samsung? Samsung lost most of its market at the bottom end - where Apple isn't playing. Sammy didn't lose to Apple, it lost to Huawei.""

Clearly it says that you should analyze the market 2 ways ....

As a whole AND the segments where Apple plays so we get the proper numbers, meaning Apple share in their segment AND apple as a player in the phone bloodbath otherwise you contradict yourself

IDC ??? you of all people ?? Seriously ??? They GET paid to issue reports, if you are a client... well the numbers are kind of nice

Now, you are way too clever to avoid looking deeper into EVIDENCE given to us all by Samsung ... 40% of the S5 sales are sitting gathering dust somewhere ... a phone in a box that didn't sell is called production NOT sold item.

Yes, Samsung manufactured a lot of phones, a tie with Apple BUT it did't sell them.

And how do you guys get the "right" number IF Samsung doesn't report in a transparent way ? You get them by their word just like that ? Then get the 40% they told you they didn't sell.

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