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Who is winning the cell-phone wars?

Who is winning the cell-phone wars?
by Paul McLellan on 11-15-2011 at 2:17 pm

 Answer: it depends how you count. Units, market share, revenue, profit.

According to Gartner, Android has doubled its market share and now run just over half of the world’s smartphones. Android handset sales actually tripled during the year, selling 61 million last quarter, not that far off a million a day.

iPhone sales increased by 4 million but market share dropped. This is somewhat to be expected since iPhone 4S was delayed (the story I’ve heard is that they had power problems with the A5 chip inside the smaller enclosure of a phone versus an iPad, and that delayed the release from early summer). But everyone knew it was coming which meant that Apple partially Osborned themselves as people waited for the new model. Nonetheless, Apple is still making almost all the profit in the smartphone market. The direct profit, that is. Google’s monetization is different and harder to measure. But the Android phones in general are much lower margin than iPhone for their manufacturers.

Symbian is being phased out and so its market share is cratering. Nokia is switching to WP7 but hasn’t really got its act together there yet. They have their first products just coming out “real soon now” and it remains to be seen whether, as Gartner predicts, Nokia+WP7 makes a real go of it in the second half of next year. I remain somewhat skeptical but I think that it is interesting that Microsoft is regarded by the carriers as a safe third choice against the Apple/Google behemoth. That’s not how the PC manufacturers thought of Microsoft. I remain skeptical about Nokia, under attack at the low end by cheap Chinese phones and at the high end by iPhone/Android. As Nokia’s then CEO said at iPhone’s launch: “it’s only a handset announcement.” Yes, like a diamond is only carbon.

RIM (blackberry) continued to lose market share and, at this point, I have to say that I think it is doomed. It is now down to just 10% of the US market. And even more doomed in tablets where apparently the second version of their tablet still doesn’t have email, unless connected to a Blackberry.

 If you look at units, Nokia is still #1 but will soon be overtaken by Samsung. The total market at 440MU/qtr is not far off 2 billion handsets per year. With the world population at 7 billion that’s an amazing number. Perhaps more amazing. Rovio just announced 500M downloads of Angry Birds (mostly at 99c). Which means one in 14 people in the world has downloaded it (although some people have it on more than one platform). Apparently 400,000,000,000 birds have been launched.

According to another analyst, Cannaccord, Apple now has four percent of the cell-phone market by unit volume but over half the profits. In Q2 I read one report that they actually had two-thirds of the profit but there were some companies (Nokia I’m looking at you) who had a loss which may distort things a little but Nokia eeked out a profit last quarter. When Apple launched iPhone, Nokia made 67% of the profits, now it is down to 4%.

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