Horace Dediu

I was only half-joking when, on first sight, I tweeted that I will buy a new iPad 2 to go with my new Smart Cover. The new iPad cover is enchanting.

It also seems to be enchanting to many.

I'm estimating that at least 60% of iPad buyers will get one. Based on an estimate of 36 million iPads sold in 2011 and an average price of $48 (70% polyurethane and 30% leather mix), the total revenue for Smart Covers will top $1 billion this year.

I further estimate that with a very modest gross margin of 75% (average cost to produce of $12), the Smart Cover could contribute $777 million to Apple's gross margins.

The iPad by itself should generate $23 billion in revenue and a contribution of $7.7 billion. That means that the Smart Cover will add 4% to sales and 9% to gross profits. If taken as a bundle, the iPad+SC will increase gross margin over the iPad alone by nearly 200 basis points (taking it from 33% to 35%).

It will be interesting to compare the Smart Cover business with competitor tablet businesses.

The following is a work of fiction.

The combination seemed unthinkable just a few years ago. Nokia envisioned itself as a substantial rival to Redmond, threatening to head off its computing dominance as the power of desktop computing shifted to pocket-size devices. But a series of miscues substantially weakened the company, leaving it little choice but to team up with the world's largest software maker.

Although Nokia has pledged to continue using the Symbian OS in both handhelds and phones, the company has now significantly tied its fortunes to the rival it once denounced.

In doing so, Nokia is making a tough bet. The company is gambling that Microsoft's operating system has advanced far enough to power a decent cell phone, while still having enough rough edges that Nokia can carve out a niche by going beyond the standard Windows Phone software. In doing so, Nokia hopes it can avoid the fate of being just another clone cranking out hardware on Microsoft's behalf.

Microsoft, meanwhile, has scored a significant win in its decade-long quest to crack the mobile market. In wooing Nokia, Microsoft has brought a one-time rival into its fold and ideally gained a new creative force as it tries to move its PC empire into the burgeoning market for cell phones.

"Nokia always did great work, and so we lusted after some of those things that they do well," Ballmer told reporters at Monday's launch.

The partnership is not totally out of the blue, of course. The two companies offered a glimpse at the detente last year, announcing a pact that allowed Symbian OS-based smartphones to connect directly with Microsoft's Exchange servers for corporate e-mail and calendar information.

In its secret meetings, Nokia execs managed to convince their Microsoft counterparts to build several software hooks they needed into the latest version of Windows Phone. The changes allowed Nokia to add some handy features into the Windows version of the N series phones. One new trick allows Nokia owners to ignore an incoming cell call, instead sending a brief text message to the caller. A second feature allows Nokia owners to navigate multiple voice-mail accounts using VCR-like buttons, rather than having to know that "5" is the key for fast forward or remember that "7" saves voice mail at work, but deletes it at home.

A key question, though, is whether Microsoft will give Nokia enough room to innovate in the future, now that it has successfully wooed the device maker. By going with Microsoft, Nokia is letting go of one of the key differentiators between its products and those from better-known competitors.

Elop said he understands the risk and only undertook it with assurances that Nokia would be able to build enough software on top of the OS to make his products stand out.

"It was the only way we felt it could work for us," he said at the Monday press conference.

Executives from both companies suggest that the Nokia-Microsoft relationship, forged at those meetings in Cannes and New Orleans, will continue to be close. But it remains to be seen whether Nokia will retain its individuality now that it has the Microsoft imprimatur.

Wirt acknowledges that there are no formal procedures in place that ensure that Nokia will get the things it asks for the next time, or the time after that. "It's functioned more as a relationship-type thing."

Elop said Nokia could try to patent particularly strong advances, but in general he said the company believes the best way to stay ahead is to keep cranking out new products.

"We have ideas about many things that we didn't get to do in this version," he assured reporters.

But for all its ideas, Nokia is still a relatively small company. And given that it has pledged continued support for the Symbian OS, it must now divide its limited engineering resources between two incompatible efforts.

Elop acknowledged that the challenges of developing for two entirely different operating systems are enough to keep his firm hopping. He emphatically shook his head back and forth when asked if Android and MeeGo-based Nokia phones might be next.

"We don't need another operating system," he said, adding later, "It's too much effort."

This fictional article was created by taking an actual article from 2005 about Palm and Microsoft (Palm's tale of Treo intrigue - CNET News) and changing the words "Palm" for" Nokia", and "Colligan" for "Elop", "Ballmer" for "Gates", "Treo" for N series (or Nokia) and "Symbian" for "PalmOS". A few paragraphs about the mechanics of the deal process were deleted.

Credit: This tweet from Charles Arthur.

I last looked at the race to a billion in September 2010. I've now added a few more data points to the tracked platforms and also added points for the major console game platforms and Symbian.

The chart shows the cumulative number of users (approximated by units sold) for 11 platforms indexed to the same starting date. The horizontal axis is the number of quarters since a platform launched. Every fourth quarter is numbered so each number on the axis represents a new year. The last number on the axis represents 10 years.

The vertical axis is the cumulative number of users on a logarithmic scale. Each number of the vertical axis is 10x more users than the previous number. The top of the graph represents a billion users.

The overall chart shows how quickly a platform has grown and is bounded by a billion users and a decade of usage.

When judging the performance of a platform, the adoption slope and sustainability over time is perhaps the most interesting measure.

One can see how many platforms slow down before reaching 100 million and so far none have hit the billion mark (Windows has but not in the 10 year time frame of this chart.) Looking at game consoles also shows the limits of a narrowly focused platform. They performed better than i-Mode and Netscape but not as well as iTunes or iPod which themselves have growth limits.

If you're looking for the "fastest growing" title, it's a toss-up. Both iOS and Android are following almost identical trajectories.[see Notes]

The absolute highest cumulative sales total is Symbian, though now that it's been deprecated, it's set to be bypassed.

It does appear that Android and iOS each have the potential to reach a billion users in less than a decade. Perhaps Android will do so faster but the mobile computing platform race will not play out as the personal computing platform race did.

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Notes:

1. For Android I used my own summary data for historic performance except for the last estimate and forecast which came from IMS Research.
2. iOS forecasts are my own.
3. Symbian data comes from VisionMobile. Forecast is based on Nokia's 150 million additional sales prediction.
4. Game console data is current as of end of 2010 via Wikipedia.
5. Other data sourced from Morgan Stanley.

John Siracusa dusted off an interesting quote from a former Microsoft employee.

Spolsky: But synergy…there are also negative synergies. In the case of Microsoft they call it "strategy tax." Where, like, the Internet Explorer team is not allowed to fix the DHTML editor because it might compete with Word. So they’re forced to make that continue to be bad.

Via: The Apple strategy tax

The notion is an interesting one and is a reframing of the metaphorical expression that those who live by the sword die by the sword: Building a business a certain way will, in the end cause it to perish by that way.

In the case of Microsoft, the focus on their platform lock-in strategy binds them into avoiding compelling opportunities and, even more tellingly, keeps them from improving existing products.

It's tempting to suggest that this "strategy tax" also applies to a company like Apple when it seems to act irrationally or sub-optimally to some arbitrary definition of optimality.

However, what if Apple's motives are not "strategic"? What if Apple actually does act in a way to optimize what they perceive to be important: the end user experience or as I like to call it "the product".

What if "the product" is dogma and nothing is allowed to compromise it?

This question is not designed to glorify or defend any one approach, but rather to ask what is to be compromised. In Microsoft's case dogmatic "strategy" means the installed base and channel cannot be compromised. In Apple's dogmatic product approach, is the relationship with partners subject to compromise? Is the platform itself compromised?

I would argue that yes, the product-focused company has to "pay a tax" for its product priority. It uses an approach with a huge built-in opportunity cost. But I would also argue that every company has some tax to pay for its priorities.

Ultimately, every company needs to decide what is important and to pay the tax for not doing what is unimportant. Business management, like engineering, is about compromise and the choice of trade-offs. Outside observers, unaware of what the company's priorities really are, will always find it puzzling why companies do what they do. But to insiders, the puzzle is why anybody would do anything else.

The most important skill for an analyst, and that which separates her from the casual observer, is to determine what the company's priorities really are. Interestingly, many companies don't clearly state their priorities and may not even be aware themselves of what they implicitly are.

I believe that there are deterministic ways of uncovering priorities and categorizing companies according to them. I believe that knowledge of priorities leads to a more precise understanding of strategy and competition. I hope that within this forum, I can share and provoke debate over these methods so that these skills can become more commonplace.

Microsoft's Steve Ballmer argues that the tablet computers (aka slates, media tablets or iPads) are PCs. Steve Jobs argues that they are post-PC devices. There are analogies to trucks, cars and various metaphors for what these new devices symbolize. Some argue that because the iPad needs a PC, it's not a post-PC device.

But how to define a new generation of computing? Since the PC is not the beginning of computing, it may make sense to look to the eras of computing that preceded it.

The first post-mainframe computers worked alongside mainframes and were typically used by engineering departments (vs. the finance and accounting departmental role occupied by mainframes.) They did not require a dedicated (often external) mainframe service team and could be administered by in-department system administrators. Input was not through dedicated data entry personnel and output was not a ream of folded paper. Users could use a CRT terminal to interact with the computer directly. Digital Equipment Corporation, Control Data, HP, Honeywell, Prime, et. al. grew up in the shadow of IBM but thrived. Their products were cheaper and simpler to operate. Initially, the products were not more powerful.

The first post-minicomputer microcomputers (also known as PCs) were used alongside mainframes and mini-computers. They were typically used for 2-dimensional spreadsheets analysis by individuals in many departments and were easier to justify cost-wise than the time-sharing cost structure of the incumbent computers. Many microcomputers were able to access mini-computers and mainframes through terminal emulation software (and sometimes special hardware boards) so they were still able to work with existing business processes. They did not require dedicated personnel for administration but had a shared support department. Input and data storage were on the "desktop" as was printing. Compaq, Dell, HP, Apple and IBM embraced this new form factor. Their products were cheaper and simpler to operate than the previous generation of computers. Initially, the products were not more powerful.

The first post-microcomputer tablets are used alongside microcomputers for tasks such as presentations and entertainment. They have software available that allows access to desktop computers and services dependent on PC-architectured servers. They depend on PCs for data backup and software updates. They do not require IT support. They do not require a keyboard or a desk. Apple and many mobile phone vendors are embracing the new technology. They are cheaper and simpler to operate. The new products are not more powerful.

To define a new generation of computing by its isolation and exclusion of the previous generation is not sustained by the history of computing.

I would suggest that the definition of a new generation of computing is that the new products rely on new input / output methods and allow a new population of non-expert users to use the product more cheaply and simply.

I might add that the consequences of each generational shift are:

1. Consumption increases
2. Skill required decreases
3. Support required decreases
4. There are new applications and use cases
5. The economics are not favorable for incumbents
6. The economics are favorable for new entrants
7. The older generation slowly fades through diminished growth but never disappears

We removed the malicious applications from Android Market, suspended the associated developer accounts, and contacted law enforcement about the attack.

via An Update on Android Market Security - Official Google Mobile Blog.

It's great to see that Google is quick to call law enforcement to prosecute those who took advantage of its open(!) market. Now I wonder what Google will do about policing copyright infringement on the same market .

In September I wrote a note about how some of the top applications in the Market seemed to be infringing on copyrights (and attempting to hide the fact). Today I went back and searched for "Disney". I was offered about 350 apps and I am pretty sure that none one of them is endorsed by Disney.[1]

While there is a vast amount of copyright infringement on YouTube, Google is actively working with video content publishers to either compensate them or to take unlicensed content out. This after extensive legal maneuvering.

I'm not sure how policing or licensing deals will be struck for content on the Android Market. Apps are content, but of a different sort. It's not so easy to scan for infringements. It's not easy to draw up a compensation contract. The revenue model is ad-based (by and large.)

The fact that there seems to be little activity[2] to filter the material today indicates that it's not a burning issue for Disney. Could it be because Disney is unaware of the success of Android Market, or could it be that Android Market is not big or successful enough to become a priority at Disney legal?

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1. You can do the same search in iTunes and get about 120 iPhone apps, though at least half are clearly sanctioned with most of the rest being related to the parks franchise.
2. There might be activity to police the copyrights as, unlike in September, there don't seem to be many infringing apps in the top seller or featured sections.

As iPad shipment volumes increase and as the iPod touch becomes the de-facto iPod, it's time to look at the overall split between iOS devices.

I will focus the discussion between iPhone and iOS "others" because I believe the two categories differ greatly in terms of their positioning and market strategy due to the different channels.

The company does not provide iPod touch units shipment data but it can be estimated that, based on overall iOS numbers released in September, iPod touch represents approximately 50% of iPod units sold.

If we put all we know together about volumes, we have the following chart:

Note that iPod touch has, occasionally outsold the iPhone. The pattern of approximately equal volumes for the two types of products is likely to continue depending greatly on the growth rates.

Next, I turn the spotlight on revenues.

 

Over $10 billion flowed in from Operators, and a bit under $8 billion from other channels.

Note that I labeled the iPod touch and iPad as non-operator channel (Consumer electronics) distribution. Although this is not entirely true (and conversely iPhones are often sold through Apple stores) this gives a rough indication of split.

The iPhone business is staying ahead of the other iOS businesses but the gap is narrowing.

As previously noted, the iPhone is a unique product in Apple's portfolio. It depends on a distribution channel that no other product was designed around. This has advantages and disadvantages. The advantage is a high margin due to service revenue sharing but the disadvantage of network incompatibilities, politics and a range of telecom-related regulations.

What I believe is that the non-operator channel will grow as a proportion of iOS revenues. This is both as iPad grows to disrupt personal computing and as the iPad emerges as a communications tool.

As time passes, I believe Apple is motivated to also move revenues to its traditional channels. Whether, or to what extent, cellular phones will move in that direction remains to be estimated.

Demonstrating the value of openness and broad support from partners:

In terms of openness and broad support we've done very well... Literally available on over 150 different handsets. It's available from over one hundred different mobile operators around the world. We will probably license about 20 million devices this year which is really quite dramatic at least among smartphone systems. So we have great momentum. We've brought [a new version] to market. We're driving forward on our future releases. We'll have to see what [the competition] does. Right now they have a press release [...] We have many many millions of customers, great software, many hardware devices and they're welcome in our world.

Inspired by a tweet from Charles Arthur.

[Update]

The quote is Steve Ballmer speaking in 2007 soon after the announcement of Android and in response to a question of what he thought about Android. The source video is here.

The last time I took a snapshot of the iPad death watch it was March 9th, 2010. Almost a year ago. The now-classic quotes are reproduced here.  Last May I wrote:

Apple keeps a tight lid on new products so that competitors don’t get a head-start on copying, but in the case of the iPad, advance knowledge would not have had any impact. Competitors look at the iPad and see nothing.  They’ll only react once the market explodes and they start to feel belated pain.

I thought that would be that. As the success of the product would become self-evident, predictions of imminent demise would trail off. The pain of share loss would prompt a wave of challenger copycats. Imitation would be the the best form of flattery.

But no.

Critics were not silenced. One year, 15 million units, and $9.2 billion later I went back to the source of the quotes and found the following (published quotes dated after March 9th 2010). (Cited from aaplinvestors.net with some editing for brevity and relevance):

“Problematically, the Android competition is just as expensive as the iPad lineup, so Apple obviously feels free to continue gouging consumers on iPad pricing.” Paul Thurrott, Windows IT Pro, 3 March 2011

“Apple’s iPad 2 might be ‘magical’ but it still should’ve been better ... It needs more G’s. It’s still just a toy” Zach Epstein, Boy Genius 2 March 2011

“11 reasons NOT to buy an iPad 2 ... Reason 5: Competition David Gewirtz, ZDNet, 23 February 2011

“Given what I’ve seen of Honeycomb and Motorola’s excellent tablet, Cupertino will have some serious catching up to do with their iPad 2.” J.P. Mangalindan, Fortune, 4 February 2011

“We very carefully chose our tablet processor, the Nvidia Tegra 2, and to really compete it will take [Apple] some time. You know, [Nvidia] is well known for graphics.” Jonney Shih, Asustek Computer, 3 February 2011

“If you were to ask me in two years time, will Apple have less than 50 percent of the global tablet market, I think that’s a certainty. Neil Mawston, Strategy Analytics, 31 January 2011

“We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market. Though Apple is winning a significant share in the Chinese market, it has not gained a clearly leading position yet. Our advantage is we know this market better.” Liu Chuanzhi, Lenovo, 27 January 2011

“The iPad may still be the lone leader, but with 100+ competitors on the way, it won’t likely keep its majority market share unless the pending next generation iPad really addresses all the complaints about the current version, like a missing camera and a lack of a USB port, and the company has to add those features without a major price increase - a tall order, to be sure.” James Brumley, Investopedia, 13 January 2011

“Hands-on PlayBook demonstrations at CES showed its differentiation in multitasking and performance, which may be difficult for Apple/Android to rival.” Mike Abramsky, Royal Bank of Canada Analyst, 11 January 2011

“Apple Inc.’s popular iPad is getting its strongest competition thus far as consumer-electronics manufacturers unveil tablet computers with bigger screens, front-facing cameras for video chatting and more.” Rachel Metz, AP Technology Writer, 3 January 2011

Apple may be simply trying to get in ahead of Research in Motion’s aggressively priced PlayBook or combat the early success of Samsung’s Galaxy Tab.” Rick Aristotle Munarriz, The Street, 29 December 2010

4. Competitors are coming. Brett Arends, Wall Street Journal, 22 December 2010

Reason 6: WiFi is still unreliable David Gewirtz, ZDNet, 16 December 2010

“I can’t imagine anyone under the age of 30 wanting an iPad. A PS3, Wii, GameBoy, or even a useful laptop maybe, but an iPad? Furthermore, I do not recall ever seeing anyone under 30 actually using an iPad.” John C. Dvorak, PC Mag, 13 December 2010

“We hope our tablet PCs can reach a global market share of 10-20% initially, and become the market leader in two to three years.” Gianfranco Lanci, CEO and President, Acer, 26 November 2010

“It’s a nice-to-have product, for those of us who don’t have a budget, but is it a must-have product? I don’t think so.” Ashok Kumar, Analyst, Rodman & Renshaw LLC, 12 November 2010

“Steve Jobs never says anything without thinking through it carefully. But I think in this case he may be a little afraid of this category. And he’s finding whatever he can to attack because he sees [seven-inch tablets] as a challenge to the dominance of the iPad.” Adam Hanin, VP Marketing, Viewsonic, 1 November 2010

“There could literally be millions of first-generation iPads gathering dust in people’s home offices already. This product is the tech industry’s biggest MacGuffin yet.” Paul Thurrott, Windows IT Pro, 23 October 2010

“I cannot see a need for the thing.”John Dvorak, MarketWatch, 22 October 2010

”For those of us who live outside of Apple’s distortion field, we know that 7″ tablets will actually be a big portion of the market and we know that Adobe Flash support actually matters to customers who want a real web experience.” Jim Balsillie, Research In Motion, 20 October 2010

“iPhone and iPad have been amazing products that have opened new markets. But I do not think they will own either market in a few years. Android will.” Fred Wilson, AVC.com, 18 October 2010

“The constant search for an ‘iPad killer’ and the sheer multitude of tablet computers launching in the next 18 months should make Apple aware that its competition is fierce and will only become tougher.” Barbara E. Hernandez, PCWorld, 5 October 2010

“HP’s New Tablet Could Be an iPad Spoiler HP’s decision to bundle a tablet computer with its new $399 printer could make trouble for competitors.” Cliff Edwards and Aaron Ricadela, Bloomberg Businessweek, 23 September 2010

“Our tablet will be better than the iPad.” Chang Ma, VP Marketing, LG, 20 August 2010

“Not only is Apple typically lost in the enterprise, but it focuses very little of its time there. And with a new, potentially more compelling tablet coming — the Cisco Cius — the iPad’s success in the corporate world could be short-lived. Here’s why:... 10 The power of Windows” Don Reisinger, Channel Insider, 5 August 2010

“I don’t think there is one size that fits all…I’ve been to too many meetings with journalists who spent the first 10 minutes of the meeting setting up iPad to look like a laptop.” Steve Ballmer, Microsoft, 29 July 2010

“ [...] It still isn’t the device that I’d take to a meeting because it has no input.” Bill Gates, Microsoft, 2 June 2010

“Which means I end up on the iPad — and tablets more generally — where I started. Tablets will not create a new category, but will supplant (or merge with) one or more of the current substitutes: smartphones or netbooks.Here I am less optimistic about the iPhone and webOS than I am about Android. ” Joel West, professor of Innovation & Entrepreneurship, College of Business at San José State University, 30 May 2010

“The iPad is useless. Beautiful, but useless. The iPad is too heavy. It’s awkward to hold and view in public. It’s fragile. It requires expensive accessories to protect it and extract more functionality. ”Josh Belzman, MSNBC.com, 20 May 2010

“Mum, the iPad is not ‘amazing.’ It’s just marketed very well, both by Apple and its culpable partners in mainstream media. ” Paul Thurrott (in response to comment by Mum), Paul Thurrott’s Super Site for Windows, 26 April 2010

“In short, I don’t get the ‘magical and revolutionary’ vibe that Apple chief executive Steve Jobs touted at the iPad’s January unveiling.” Rob Pegoraro, Washington Post, 9 April 2010

“The first troubling sign is the fact that you can still get an iPad today. They didn’t sell out. The pure slate form factor has failed all these years because, other than for vertical applications, people want and/or need a keyboard for regular use. The fact of the matter is that a touch screen or bluetooth keyboard just doesn’t compensate.” Jonathan Yarmis, Ovum, part of Datamonitor Group, 6 April 2010

“I don’t get it. It costs $500 for the basic model, when you could get a laptop with a lot more functionality for about the same price. The iPad hype machine has been in full effect this week, and I still think it’s just that—hype. ” Alex Cook, Frontier Outlook, 3 April 2010

“As far as what this means to Apple, one thing to keep in mind: Even if the iPad sells more than the iPhone did in its first year, it’s still only around 5% of the company’s revenue. So it’s a very small slice. From there, it probably doesn’t grow as large as the smartphone market. So, if you’re buying under rumors, keep perspective in mind. The iPad’s a great product, but it’s probably not a game-changer.” Eric Bleeker, Analyst, Fool.com, 31 March 2010

“The iPad will remain an expensive, niche device compared to all-purpose netbooks.I think that one of the iPad’s most important uses will be for reading ebooks and publications. Even so, though, when it comes to the marketplace, netbooks will sales still far outstrip those of the iPad.” Preston Gralla, PC World, 30 March 2010

“Don’t Believe the iPad Hype. Apple has sold out pre-orders of the forthcoming device, but it could all be a marketing tactic. By not manufacturing enough iPads for the initial launch date, is this a case of Apple shooting itself in the foot?” Mike Schuster, Minyanville.com, 29 March 2010

“‘iPad Killer’ May be Palm’s Last Hope”Tom Bradley, PC World, 20 March 2010

“Even if your company has relented and now supports the iPhone, as growing numbers of businesses do (70% of the Fortune 100 are at least testing it, says Apple) you’ll want to say “No” to the iPad and other tablets. Here’s why: 8. Speaking of money, there is no money in the company budget to pay for iPads. 9. Not supporting iPad will be the enterprise norm. Robert McGarvey, CIO Update, 16 March 2010

“This morning, the fool’s parade gets started. Apple is taking online “pre-orders” for its iPad tablet, which is supposed to begin shipping on April 3. Buying a new kind of product sight unseen is foolish. Especially given how mysterious Apple has been on what the iPad can do and what restrictions on capabilities and media access it will place on users and content providers.” Galen Gruman, InfoWorld, 12 March 2010

“The recent launch of Apple, the iPad tablet, has won the award for the second edition of Fiasco Awards delivered this Thursday in Barcelona. From the more than 7,000 people who voted via the website www.fiascoawards.com, 4,325 have considered it the fiasco of the year. Fiasco Awards, 2010, 11 March 2010

“I think I’ve mentioned this once or twice before, but it bears repeating until it sinks in: the Apple iPad is not unique, nor necessarily the best of breed in the media tablet sector it is spearheading. And it ain’t gonna help Apple shareholders any.’” Anders Bylund (TMF Zahrim), 11 March 2010

From this critical review, it looks like 2011 will indeed be the year of the iPad 2.

The announcement of $2 billion total for App store payments to developers did not come as a surprise. On January 22nd Apple reached 10 billion total apps downloaded. From that figure and an earlier derivation of the average selling price, I estimated $2 billion was paid out around the same time frame.

We don't know exactly how many apps have been sold at exactly the moment when $2 billion was paid out so we don't have the means to update the ASP of apps (currently estimated at 29c).

We do know for certain however that the app store generated $2.86 billion in sales if $2 billion was paid out.

The new data affirms existing estimates.

Who is Winning the U.S. Smartphone Battle? | Nielsen Wire.

This is a great chart from Nielsen showing the split in manufacturer share by OS in US installed base. What I consider significant is how the modular software platforms Windows Mobile and Android worked out for the licensees.

Whereas in the case of Windows Mobile HTC took a significant, nearly dominant share, the Android ecosystem was more balanced between HTC and Motorola. However, HP and Motorola left the Microsoft camps, Motorola going exclusively for Android and HP buying Palm. That leaves Microsoft with HTC, Samsung and Other (mainly LG I presume).

The question of how Windows Phone will shape up vs. Windows Mobile and Android remains. Motorola has signaled they are not interested in WP7 for the time being and so it's likely that they will stick with Android. Samsung is always hedging its bets so it will probably balance its portfolio. One could conceive of Nokia stepping into the US with significant WP volumes, but there are many hurdles on the way.

One can see the challenge individual modular vendors have to edge the overall volumes of the integrated vendors. As Nielsen points out:

But an analysis by manufacturer shows RIM and Apple to be the winners compared to other device makers since they are the only ones creating and selling smartphones with their respective operating systems

Not only are the volumes higher, but so are the margins and hence profit share.