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« Quick Notes from Smartphone Wars - Kodak, Nintendo, Lenovo and Blaupunkt | Main | Handset Installed Base Passed Tipping Point. Now More than Half of All Mobile Phone Handsets in Use are Smartphones »

November 21, 2016

Comments

Tomi T Ahonen

Hi Everybody

I just added blog with two graphs to show the migration of handsets from dumb to smartphones. One is new sales, the other is installed base.

Tomi Ahonen :-)

John A

For the Sony Mobile division I think they might survive after all. They are strong on camera sensors on mobile, also to other brands.
And recent news say they will pushing mobile games strongly so I think that can be Interesting.
So I suppose its a advantage to have own mobiles to.

Tomi T Ahonen

Hi Wayne

Hey thanks for that. Yeah it happens, its a number you don't really bother to memorize, then you see me mentioning an odd number and you think, wait, what did Apple just say..

Fair enough. Thanks. So let me also give once again the longer version answer so we deal with this properly too (I'm in a good mood today haha).

First, its apples and oranges. I count explicitly iPhone installed base while Apple reports total Apple devices connected. Of course iPhone count will be less because Apple has iPod music players who access the iTunes store, or iPad tablets installing apps or Apple Mac personal computers plus the various other iToys from Apple Watch to whatever their latest TV gambit is.

So first quick sanity check. Apple has called itself a mobile company for several years now. Roughly speaking half of their total revenue comes from the iPhone, half from all other businesses, so as a sanity check, over a few years, if half of your business is one product, then you could also expect of all those connected devices (if that is what most of the other business is) would be about half, in very rough terms.

Second sanity check. Market share from sales. Apple's annual iPhone unit sales market share has been in the 16% range. That is roughly what its installed base should be by all conventional wisdom. What I count is ABOVE that number, there should then be some reason why Apple has yes 19% of the installed base, if they only sell 16% of all smartphones. So as a simple sanity check, this suggests my number might be TOO HIGH, not too low.

But we know why that is, because Apple products have a longer life span, they get passed on to kids and family members and friends, or sold onward, so they live longer than the random Android smartphone, and far longer than say haha Windows based smartphones did, which often did not even get every unit sold when they shipped out of the factory to the stores (so for Windows the actual installed base was always significantly lower than the unit sales market share). Its BTW also why Symbian lingered on so long but Blackberry died far faster - because Nokia brand was held onto and resold so long.

So the numbers are in the rough ball-park and arguably, one should justify why the iPhone installed base market share is bigger than its units-sold market share, rather than think that number in installed base is too low and should be raised more...

Now why is this? Its replacement cycles. I have not seen replacement cycle numbers recently for really anything other than mobile. But digital music players were replaced at a far lower rate than mobile phones back in the last decade and I can't imagine any reason why any happy iPod user would need to go replace their music player every 2 years. With PCs we know the replacement cycle is roughly 4 years, so for Macs it will be about that. For tablets there haven't been any published numbers yet, as far as I can see, but we could assume tablets are certainly not replaced faster than mobile phones, and as they behave somewhat like a half-way-house between a smartphone and a notebook PC, perhaps the tablet replacement cycle sits somewhere in between, could be 3 years. For mobile phones its 2 years, give or take (Chetan Sharma just counted the latest replacement cycle now in the midst of our smartphone market recession to have stretchd for smartphones from 2 years to be 2.5 years now, so 30 months).

If you replace the phones at about twice the speed or at least 1.5 times faster than the PC or music player and also replace phones faster than tablets, it means the average age of those other Apple devices is longer. They are used for longer periods, their numbers in the installed base reflect a far longer age period. Thus a smaller number sold per year, yields still a nice total number into the famous one billion count that Apple reports.

Now with all that. I use my proprietary calculation of mobile phone installed base which I have reported on this blog for ages and my consultancy is one of the very few places where you can get that number. But AFTER I had been reporting it for years (both for dumbphones and for smartphones), we got the first international surveys of smartphone ownership data, if you remember, two years ago, via Google and separately via Pew. And those actual consumer OWNERSHIP surveys covering the planet, it was like 30 countries per survey - came up with very similar final numbers, and when then adjusting for the rest of the countries not reported, by the statistics of the nearby countries that were surveyed, I reported here the first global measured installed base of smartphones as the first 'check' on my math, based on surveyed ownership. And the numbers came close to perfect. I think we were off by five points in the percentages, that kind of scale of accuracy.

So my MATH is sound. I have a model based on a lot of data points over time, of how long people hold onto their phones, and what percentage of those are then given or sold back into the market to give more life to the phone, and derive regionally and by major phone types (and in some cases, by brands too) the life spans of all phones, smart and dumb. And based on that model, I report here the installed base, also by operating system when that was a real contest. Now as its an Android world with no rivals remaining, it may be the time to eventually stop reporting the split of the installed base. But I think I'll still do this for a while..

So unless Apple reports on an installed base of iPhones they count, I will be using my model as the best measure, and keep running the newest numbers into it, which means every quarter we delete the correct percentage from the far end, oldest phones out of use (a differing percentage by each quarter by the way, some replace their phones even after 6 months). And occasionally, when I find the model is starting to skew, I issue a correction like I did I think about a year ago if I now remember correctly.

If Apple sells 16% of all smartphones, and Apple isn't specializing on some kind of 'ultra-durable long-wearing phone' for some kind of industrial work haha, then Apple should roughly see similar installed base market share - over time - as its new sales. That is how various other brands harmonized over time. A new rising brand, like say Samsung five years ago, will see its new sales market share far stronger than the installed base. Similarly old brands who are in decline (Motorola, Nokia, Blackberry) will see their shares of installed base linger far longer than the sales have fallen. Because old phones, especially of premium brands, tend to stay longer in use, and are still resold in parts of Africa, India etc. Apple is sitting well above its sales level, where its installed base is at 19% while annual sales is at 16%. There could be some math that is slightly off, it could be up or down a point, but not more. The OTHER brands cannot 'survive' that math.

Why does Apple say 1 Billion when Tomi says 525 million? Because Apple counts other devices too but Tomi only counts iPhones. Are these numbers consistent, I think yes. Is MY number consistent with other stats from the industry, most definitely yes. I am more confident about my number of iPhones in use, than what Apple calls its 1 Billion users, because some of those music player owners may long since have ended their active association with Apple and now load mp3 files but haven't bought an iTunes song for years, and will not do again... Who knows what method Apple uses to extinguish its inactive users? But we do get new sales of smartphones every year, and the numbers do not offer us more than 525 million installed base for iPhones in use.

Howzat for a complete exhaustive master's thesis treatment of an argument of two numbers?

Tomi Ahonen :-)

cornelius

@Wayne Brady
>"iPhones represented 2/3rd of Apple's revenues"
Come on, it's not that hard to figure it out. If the average Iphone cost is say 800 and an Apple TV costs 80, and an Iwatch costs 250 and an iPad costs 500 doesn't it make sense that the Iphones (slightly more than half of Apple's devices) make up 2/3rds of Apple's revenues? If you still can't figure it out, ask Siri. Plus, Apple milks a lot of money from services like Apple Music, Itunes, and they sell not only devices and services, they even published a book (you know you bought it, it's on your top self). Apple gets money from Google for making Google search the default search, etc. Apple takes one third of all sales in the app store.

Abdul Muis

Nokia android phone (nokia pixel) hit geekbench
https://browser.primatelabs.com/v4/cpu/1025278

ouch

Nokia Android smartphone to feature Carl Zeiss Lens, 2K display: Report

http://www.bgr.in/news/nokia-android-smartphone-to-feature-carl-zeiss-lens-2k-display-report/

Tomi T Ahonen

Hi ouch

Yeah, the rumors look pretty nice, also waterproof and metal body.. We'll see what they come up with in February in Barcelona..

Tomi Ahonen :-)

John A

Nokia Pixel are probably a old Nokia XZ (released in 2104) that someone have but android nougat in. Very low specs for a new phone.
It was the Nokia device with android that looked like a Windows Phone.

Abdul Muis

@Tomi, I wonder if these used smartphone sell number is "re-counted" again as a new devices sales?
http://www.idc.com/getdoc.jsp?containerId=prUS41929916
Worldwide Market for Used Smartphones Forecast to Grow to 222.6 Million Units in 2020, According to IDC

"According to IDC's taxonomy, a refurbished smartphone is a device that has been used and disposed of at a collection point by its owner. Once the device has been examined and classified as suitable for refurbishment, it is sent off to facility for reconditioning and is eventually sold via a secondary market channel. A refurbished smartphone is not a "hand me down" or gained as the result of a person-to-person sale or trade. "

ouch

@John A

Obviously, Nokia tries a 1:1 conversion of the dumb nokia phones still in use to smartphones with Nokia Pixel. I think that is a good beginning.

@Tomi
Indeed the phone from the rumour looks nice and I am looking to go back to Nokia smartphone sometime in the future.

Asko

So wait...
Nokia skipped BOTH Christmas and Chinese New Year sales?
I can't believe they are this dumb, clearly they haven't learned to listen to Tomi yet.

Wayne Borean


Samsung may have further problems.

http://money.cnn.com/2016/11/21/technology/samsung-galaxy-s7/index.html?iid=ob_homepage_tech_pool

JollaPolla

Now that everybody talks about Trump and Putin: Jolla's SailfishOS is Russian Government default OS now.

https://techcrunch.com/2016/11/29/jollas-sailfish-os-now-certified-as-russias-first-android-alternative/

zlutor

@Tomi: what do you think about it? Does it mean anything real?

https://together.jolla.com/question/152476/not-a-question-sailfish-os-is-now-the-only-accepted-mobile-os-for-new-government-and-state-owned-phones-acquisitions-in-russia/

Tomi T Ahonen

Hi JollaPolla and Zlutor

Interesting development yes. Now in terms of total volume of smartphone sales, a government even one like Russia is way too small to sustain an ecosystem by itself as a viable market. BUT as the other OS platforms die out one by one, this could be a bizarre turn in the race that could have Sailfish OS become an 'Anti-American' alternative for a wide range of nations and regions, from those who actually don't like the US like say Venezuela to those who may just have concerns about the US especially now in a Trump era, like say the European Union. Sailfish is Linux based like Android so an ecosystem in terms of porting apps for it is far more plausible than say Windows would have been.

What it likely does mean is plenty of Russian language & character set apps and a modest market in the Russian-speaking sphere, and plenty of government and similar large enterprise apps, likely led by the various secrecy needs.

A brave little heart ticks there in Sailfish OS, they just utterly refuse to die and seek out opportunities where others might not see them. And Finland often has taken advantage commercially of its Eastern giant neighbor, so that too is not so strange.

I'd say this is very smartly played by the Sailfish people to spot this type of opportunity and deliver this deal. Well played! Now what they'd LOVE is a 'significant' brand handset maker to join and do a phone on OS (aimed for primarily the Russian market then)

Tomi Ahonen :-)

Tomi T Ahonen

PS JollaPolla

thanks, I mentioned it to my Twitter followers and thanked you as source

Tomi Ahonen :-)

zlutor

@Tomi: what brand was 'significant' back then in Russia? ;)
Would it make sense?

Maybe Jolla should go for partnering with Vertu - new level of exclusivity... :D

ouch

Specs leak for Nokia’s rumored D1C Android smartphone, report indicates two sizes

http://mobilesyrup.com/2016/11/30/specs-leak-for-nokias-rumored-d1c-android-smartphone-report-indicates-two-sizes/

TomiUrBest

@Tomi
HMD confirmed today that the new Nokia phones will be coming out "right away":
http://www.kaleva.fi/uutiset/talous/uusien-nokia-puhelinten-valmistaja-aloitti-laitteita-alkaa-tulla-heti/745132/

FYI

Tester

So... Like the previous rumors this hints at some utterly unimpressive devices that won't make any impact at all.

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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