During the last 12 months 31 million American phone users abandoned the use of feature phones. During the last 24 months over 60 million switched. Over 550k users are switching every week and this rate of switching has not changed much since late 2009.
Some of this switching has to do with demand for smartphone services but some of it is also due to a decreasing supply of non-smart phones. The shelf space being allocated to smartphones is nearing 100%. My single sampling of a Wal-Mart store shows the following data:
Looking at individual carriers, AT&T ranged one feature phone and 7 smart SKUs. Verizon's ratio was 2:8 and T-Mobile's was 4:5.
T-Mobile has been lagging in smartphone adoption and as they transition in 2013 it's possible that the AT&T ratio of 12% shelf space dedicated to feature phones will become the norm for the US. And as the US goes, the world will follow.
With shrinking shelf space comes an accelerated decline in the product category. It may not come in 2013, and perhaps not by 2014 but it's quite possible that by 2015 the last feature phone will make its appearance in the US.
``It’s costly and has unpredictable consequences. That makes it a very bad business model. I suppose both companies have agendas that are not visible in court and perhaps Apple is signaling to other parties, and perhaps Samsung is using it to raise its profile. It still seems that unintended consequences may arise and the result could be very bad for everybody,’’ said Horace Dediu, founder of equity-research firm Asymco, in an e-mail interview with The Korea Times.
The above was a quote from the article Samsung can’t afford to lose Apple fight by Yoo-chul Kim from The Korea Times. Yoo-chul contacted me via email with a series of questions. I want to share all his questions and my answers as well:
Samsung wides market gap with Apple, according to research firms. You think the gap will further be widen and please tell me why
As Samsung converts its phone portfolio to be all smartphones, it is very likely to reach much higher smartphone volumes. One year ago Samsung sold about 56 million feature phones. Last quarter it sold about 43 million. The smartphone portion increased from 20 million to 50 million. At the same time, Apple has maintained a growth in its smartphone business of about 100% on a yearly basis. I expect that to continue into 2013 as well. Therefore it's possible that Samsung could sell 290 million smartphones in the next 12 months and Apple could sell about 200 million in the same time frame.
However, it's important to understand that the companies compete on different bases. What I mean is that what generates a profit (i.e. payment by the consumer above what a product costs) is different for each company. Apple is a platform company that sells access to the iOS ecosystem across many other device types. Samsung sells consumer electronics with limited "network effects" but desirable features. In this view, the gap in device sales is "asymmetric" and not reflective of the actual competition which is between Google's Android and Apple's iOS as forms of access.
Samsung's rapid rises mainly due to the company's heady dependence on Google Android. If Google applies better software for Motorola, then you think Samsung will face difficulties?
Think of Google as a supplier to Samsung. No manufacturer wants to have a situation where they are dependent on only one supplier, especially when there are huge substitution costs for another supplier. And even more especially if that supplier owns one of your competitors. However, it's unlikely that Motorola will become a strong competitor to Samsung. I also don't expect Google will damage their OEM "customers" by favoring Motorola. Motorola can't become big enough quickly enough to be a threat to Samsung. What is more likely to be a problem for Samsung is ZTE and Huawei. They are on the same trajectory that Samsung was on 10 years ago. For Samsung to beat them in the future it will need to develop products that nobody can copy.
How about software? Samsung is good to roll out price competitive models, however, software is always problem. Any advice for this issue?
Software is hard and expertise can't be quickly acquired. It takes time. Only advice [I have] is that efforts must be patient and there need to be many experiments like Bada and Tizen. Google started with Android in 2005 and Apple started with iOS in 2003 or 2004.
How about the patent dispute with Apple and Samsung. The patent war is helping Samsung see a rise in its brand awareness and that also worked for Samsung to grab more shares in smartphones?
It's very difficult to measure the impact of litigation, both in the positive and negative. It's costly and has unpredictable consequences. That makes it a very bad "business model". I suppose both companies have agendas that are not visible in court and, perhaps, Apple is signaling to other parties and perhaps Samsung is using it to raise its profile. It still seems that unintended consequences may arise and the result could be very bad for everybody.
Samsung wants to become a market creator not just a fast follower. For me, it's quite negative for Samsung to create a wholly-new eco-systems because Samsung's edges are coming from manufacturing, not creative thinking. What do you think? If Samsung wants to be a creator, what conditions should Samsung need and what things should the company do?
Unfortunately, manufacturing excellence is not enough to remain successful long term. US companies were successful, then the Japanese, Taiwanese, Hong Kong, and now Chinese. Companies either adapt or become irrelevant. Building ecosystems is the new basis of competition but it's not the only option. Unfortunately we don't know what will be necessary to build the next basis. What matters is experimentation and the building of new businesses. I can't offer specific recommendations as there is no recipe book for how to create new markets.
For your views, who is much better so far since the trial has begun in the US. Samsung or Apple?
I cannot comment on this. Performance in court can only be judged by those present and I'm sure everybody present disagrees.
You think Apple is enjoying its so-called a homeground advantage for the trial and is there any possibility that the issue to go for the highest court in the US. My Samsung contacts say that's the possibility, though.
Again, I don't have an opinion on legal matters. Broadly speaking, IP litigation is similar to playing the lottery.
Need your perspectives about Google's support for Samsung. Google confirms its supports for Samsung for an united front against Apple because the fight between Samsung and Apple is a kind of version that represents Google and Apple fight. Any comments about that?
I believe Google does support Samsung. I question however how this relationship will develop over time. I attached below commentary from a researcher at Deutsche Bank on Android in China. I think it has some clues about how Google treats its partners.
What are pre-conditions before Samsung making an action to sign a peace treaty with Apple?
It depends on the motives behind Apple's actions. I think they want to see a "no copying" rule. They don't mind competition and Android could be a help in the long run by moving users from feature phones to basic smartphones which could later be upgraded to Apple phones. But what I think they want is to signal to others that direct copying is unacceptable. Essentially, the work of their designers is very important to them and copying destroys [the designers'] incentives to do breakthrough products.
Because that is an estimate. Of the 104 million Android phones shipped in the quarter (itself an estimate from another, possibly different methodology), I could only account for 7 million actually reported. That figure comes from a close reading of an investor presentation from Sony. HTC does not report their shipment numbers. It stopped some time late last year. Neither does Motorola now that it's a part of Google. Huawei is silent except for setting targets and ZTE published a press release citing IDC's estimate of its own shipments.
But most glaring of all is the absence of any mention by Samsung of its performance. The company stopped reporting any data on either overall phone shipments or of smartphones within that total since Q3 2011. We may have been able to estimate Samsung if we had more competitor actuals, allowing us to back into a figure. But we don't.[1]
Which leaves us with IDC's estimate[2]. But the problem is that since the industry is growing so quickly it is very sensitive to assumptions. Consider how difficult it is for consensus estimates for Apple's iPhone shipments to come near the actuals--and that's for one quarter, and knowing all the previous quarters with precision. The absence of visibility into the assumptions made by market analysts (or their methods) should lower confidence in the results.
Consider that IDC specifies 50.2 million Samsung smartphones, implying an accuracy down to 100,000 units. Is this accuracy believable?
There is reason for doubt.
I start with the following graph:
It shows the estimates for Samsung global shipments (latter four quarters are estimates without the benefit of company reports.) I separated the component of shipments that Samsung reported as part of its submission to the Samsung v. Apple trial in California. Note that this (orange) segment consists of most US smartphone shipments. It's not all US Samsung shipments. It notably excludes the Note, the latest Nexus and the Galaxy SIII.
Without these "non-accused" phones, it would appear that Samsung's US volumes dropped to 4% of global totals from a 10% average[3]. In order to return to 10%, the US totals would need to be adjusted as shown below:
I added 1.5 million units in Q1 and 4 million units in Q2 (to account for Galaxy SIII).
So far this seems consistent with the total estimated global shipments of 50.2 million from IDC. US units would result in 12% of global shipments.
However, there is more data we can test against. First, we are also given pricing for the US phone portfolio, or at least we have revenue per unit sold. This allows us to get an idea of what revenues can be obtained for the smartphones in the US, and possibly world-wide[4]. Knowing prices for smartphones and knowing global sales (which Samsung reports) and finally knowing global total phone shipments allows us to price the average non-smart phone.
Excluding the non-accused smartphones, the average revenue per smartphone in the US for Samsung in Q2 was $339. Adding in the estimated Galaxy SIII (4 million) at an average price of $470 gives a new "ASP" of $413.
This is where the analysis goes off the rails.
If we assume the global ASP is equal to the US ASP and knowing everything else about the mix of smartphones (54% of total) and revenues (as reported) yields a negative ASP for feature phones. Assuming the revenue figure is correct, either the number of smartphones is wrong (50.2 million) or the global ASP ($413) is wrong. The total phone number is also an analyst estimate which can be called into question.
There are many assumptions being multiplied here so I have very low confidence in the result, but we should ask "what do you need to believe" in order for the 50.2 million figure to be real. The following scenario for example has to be true:
Global Samsung phone shipments total 93 million units (which means 42.8 million feature phones sold as well as the 50.2 million smartphones).
6 million smartphones shipped into the US, equivalent to about 50% increase y/y, roughly in-line with market growth
4 million Galaxy SIII shipped (but not necessarily sold through) at an ASP of $450. This results in a US total smartphone ASP of $413
The global smartphone ASP is significantly lower (at 80% of the US or $330)
Global revenues of $18.14 billion is essentially all from phones
Global feature phones will have an average price of $36
If these conditions are met then it's possible that 50.2 million Samsung smartphones did ship.
The figure for feature phone ASP is difficult to accept as it would be lower than Nokia's. Also, the low global smartphone ASP is also difficult to accept but it might be possible to find a scenario with the above variables which makes the 50.2 million figure believable.
Unfortunately this is an unsatisfying analysis. I could propose another figure to answer the question in the title, based perhaps on more "believable" assumptions. But I have no means to defend my assumptions. The only option I have remaining is to caution that the total smartphones shipment estimate for Samsung remains precarious. The new evidence from the US trial places more doubt on it but it is not enough to disqualify it entirely.
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Notes:
This cone of silence over 93% of the most popular mobile platform is somewhat puzzling in contrast to the perfect information we are used to having about iOS, BlackBerry and even Symbian. It seems that the more open a platform, the less is revealed about its market performance. This extends to the licensed Windows Phone whose shipments are only revealed through Nokia's reporting of Lumia shipments.
In the PC market, vendors also selectively publish their units. The norm is, however, not to. As a result IDC et. al. are the only sources for global market data. However, the PC market can be sampled more easily than the phone market. PC retail measurement methods are more reliable compared with all the points of sale for phones.
Note that Apple sells about 30% of iPhones in the US.
Apple's pricing world-wide is very consistent with pricing in the US which makes sense from a channel management point of view. One would not want to create incentives for cross-border arbitrage of phones.
During the first quarter this year HTC, RIM and Nokia all surprised investors with bad news. The effect is evident in the share price of these companies which, in the case of RIM and Nokia is around book value, and in the case of HTC, neared 12 month lows and a 70% drop from peak.
These "misses" in earnings and expectations are on top of the already woeful news from Sony Ericsson and Motorola, which have not had profits for years and LG, which has been borderline since late 2009.
In combination, this seems to imply a dearth of profits in an industry that is, by all measures, booming. Units are up 7% with smartphones up 47%. Revenues are up 20% and overall profits are up 52%. This are exceptionally strong numbers. Few industries can measure growth in double digits.
So if the industry is booming but the majority of participants in the industry are loss making (and surprisingly so) then what is going on? There are two answers: new market disruption and low end disruption.
The new market disruption is the migration of a large number of demanding customers away from phones-as-voice-products to phones-as-computing-products. The low-end disruption is the migration of a large number of less demanding customers from branded phones to unbranded, commodity phones.
The New Market Disruption
The new market disruption is evidenced by the shift of fortunes to Apple and Samsung and away from every other device maker. Here is the profit picture:
Of the vendors tracked (public companies who report mobile phone divisional performance), Apple obtained 73% of operating profits, Samsung 26% and HTC 1% [1][2].
The "share of profit" picture is potentially misleading because it could imply that the profits available are a constant. They're not. The absolute profits picture below shows how the industry actually expanded available profits by quite a lot. Two years ago the vendors generated profits of $5.3 billion in the first quarter and last quarter they generated $14.4 billion.
Seen this way, the story isn't so much that Apple "took the profits from the incumbents". Rather, it's that Apple created a vast new pool of profits. And one need not look far to find out where they came from: operators. These profits were mostly carrier premiums for the iPhone 4S.
Before shedding tears for operators, consider that although this does amount to a current transfer of profits from carriers, the decision is a popular one. Hundreds of operators have made it. It's unlikely that they all colluded to be robbed. Indeed, they willingly hand over these premiums because the iPhone ensures a competitive advantage or preserves their customer base from churning. The calculations that go into a decision to range the iPhone are compelling enough that 250 operators made the decision (though, crucially, there are still 250 who have not).
Following this value proposition to its logical conclusion would suggest that the industry is rewarding those who can supply computers-as-phones which preserve the cash flows of what is essentially a trillion dollar data services business. Vendors which cannot offer this solution saw their businesses implode. At least on the high end.
The low end disruption
Simultaneous with this shift of the high end to smartphones-as-app-and-service-platforms came an explosion of growth in unbranded phones. As Apple led and most brands followed the new market, the old market of voice-oriented phones was abandoned to new entrants offering cheap "good enough" phones. Nokia tried to preserve its volumes and margins there but it's becoming increasingly difficult.
The following chart shows how the "Other" vendors have come to make up about 44% of the market.
Note that although this "feature phone" segment is not growing, it is still a large market (250 million units a quarter). The entrants in this market are numerous (perhaps in the thousands) and they are offering white label and unlicensed knock-off products. They are also offering unregulated (i.e. without IMEI numbers) products which are technically illegal and sold mainly in underdeveloped countries which have no incentives to enforce regulations.
This is a consequence of feature phones reaching the point of being "good enough". The feature set and quality are adequate for voice, text, games and even media playback and are priced at $30 or less.
This commoditization of the low end is pressuring what would normally be the fallback cushion under an underperforming smartphone business. The crisis for the incumbents comes from not only being unable to shift to the new market as fast as needed but also from not having cash flows from a low end that was thought to be sustaining.
This combination of two disruptions is why we see an explosively large and growing market failing to reward all but two of the participants.[3]
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Notes:
You can download, view and interact with a motion chart for the industry data here. All data is sourced from company filings except for some estimates where data is missing.
Operating profits are sales minus cost of sales minus operational expenses attributed to the business. When not available, opex is estimated as a percent of total in proportion to sales. Note that operational income excludes taxes, depreciation and other capitalized costs.
We cannot say that the thousands of low end entrants are unprofitable. They are probably enough profits to sustain them and even to attract more entrants, but we have to also recognize that there are likely to be very low margins.
Nokia currently estimates that Devices & Services net sales in the first quarter 2012 were EUR 4.2 billion, comprised of Mobile Phones net sales of EUR 2.3 billion (71 million units), Smart Devices net sales of EUR 1.7 billion (12 million units),
We don't have the total number of Samsung shipments, however estimates exist. They range between 41 and 44 million smartphones and 44 and 47 million feature phones. The low end of that range would imply Samsung shipped 85 million phones.
Nokia's press release indicates that it shipped 83 million.
This would be the first quarter that Samsung beat Nokia in total phone shipments. It had already overtaken Nokia in sales volume and profitability last year but this is the most cited metric of market performance: being the biggest in volume. Here is the tale of the shipments:
How did this happen?
The answer should become visible when we look at at another set of data. If we split the smartphones from feature phones the charts look like this:
Looking at product mix, Samsung growth is shown to be almost entirely due to smartphones while Nokia's stagnant growth seems to be a failure to have any smartphone traction.
It's even more clear when showing the above mixes of devices as percents of total.
As a percent of total, Nokia has shrunk its smartphone business from a peak of 24% in Q3 2010 to 14% last quarter. In the same time frame Samsung's smartphone share of portfolio has exploded from 10% to nearly 50%.
Note that both companies have seen non-smart device volumes contracting. Samsung's level is approximately the same as it had in late 2007 and Nokia's is lower than at any point in the last six years (perhaps longer).
So the answer to the question of how Samsung beat Nokia is told in the following chart:
Samsung was able to convert its portfolio to smartphones while Nokia failed to do so. This is the sort of transition that can only come about from an explicit strategic intention on the part of management. Market demand can steer you in any number of directions, but a vision of a future should provide the compass for making the big bets.
The bet Nokia made many years ago was that there would be a continuing, substantial business in the "low end". And low end meant feature phones. This strategy was still in evidence last year under the moniker "the next billion" users. The decisions were not driven by whether the products would be hired for different jobs, but that they would hit different price points. In other words, segmentation of customers by their ability to pay for devices rather than categorization of the jobs they hired mobile devices to do.
Perhaps Samsung was no wiser, but they were more pragmatic. Being non-dogmatic meant being flexible. They ran with off-the-shelf technologies and managed a transition to smart devices faster than anyone expected. It may not be a perfect strategy but it beat a bad strategy.
The August comScore mobile survey (MobiLens) is out. It measures the penetration or consumption of various mobile products and services in the US over a three month period.
I track the change in this data over time. Here are some highlights:
In August about 520,000 users switched to using smartphones (from non-smart phones) as their primary phone. This is a bit down sequentially from July but about average for the period starting January 2010.
Penetration increased by about 1 % to 36%.
Extrapolating this growth implies 50% penetration by September 2012. However growth is accelerating slightly so that tipping point may come sooner. Separately, T-Mobile reported that 75% of its device sales during this year have been smartphones, so if this is indicative of overall US market, then by next year it may in fact be quite difficult to find any non-smart phones to buy.
Among the smartphones, the different OSs have the following installed bases:
The growth in both Android and iOS has been fairly constant for the last 18 months.
Microsoft seems to be stabilizing at around 6%
But RIM shows an alarming deterioration. The company has lost 4.3 million users in the last year and is now at about the same number of users it had in late 2009. This is in a market that has more than doubled.
With only about 16.5 million US users and an average loss of half a million users per month, unless something drastic happens, RIM could lose its entire US user base by the end of next year.
During the last month alone RIM lost 1.2 million users. Management insists that new devices will boost sales but here we're measuring the erosion in core users, not upgrades. It's much more likely that those 4.3 million who left BlackBerry went to other smartphones. To move from a BlackBerry to a feature phone seems very improbable to me.
That means that BlackBerry's pain is probably iPhone or Android's gain. This sort of switch is often painful and I can only imagine that it's done with some reluctance. All the more remarkable then that RIM could not offer incentives to stay. The BlackBerry brand is fading rapidly and brand value is very hard to re-build.
There's one more thing.
We can see platform rivalry in the installed base chart but the bigger battle is the competition with non-consumption. The following chart shows how overall platforms are faring as they carve up the feature phone market.
There are still 150 million Americans whose primary phone is not a smartphone. The conversion of those users is happening at a consistent pace but there are many years of growth remaining. I've often wondered if and when this pace would moderate. I suggested perhaps at 50% there would be an inflection point as the "easy money" would already have been made.
Much of that will depend on how the product (device + service) will be priced. It's hard to get data on overall pricing. We can get some subsidized phone prices (for example now ranging from $0 to $400 for iPhone and probably similar for Android). What we don't have is an average device+service price point for the industry. That's what I would like to keep an eye on.
The violence with which new platforms have displaced incumbent mobile vendor fortunes continues to surprise.
Nokia's Symbian platform has gone from 47% share to 16% in three years
Microsoft's phone platforms have gone from 12% to 1%
Other platforms have gone from 21% to zero
Although far less dramatic, RIM's decline from 17% to 12% is causing acute pain and anxiety
This while entrants have grown share in spectacular fashion:
Android from zero to 48% (A two year period)
iOS from 2% to 19%
Bada from zero to 4% (two quarters only)
The picture of platform share over time looks like this:
The platform volume growth is shown in the following graph:
Shocking
Or is it?
The surprising thing is that it should not be surprising. When the iPhone re-defined the basis of competition (at the beginning of the time frame of these charts) it unleashed forces which are still spinning the industry into a new configuration.
In that context, Android is a natural consequence. As iPhone created a threat, the response from all other vendors (other than Nokia and RIM) was to seek something that would sustain their business. Android was salvation.
It enabled the pursuit of better margins and hence better returns. So much so that Android offers the escape up-market they have always sought. It enables vendors to abandon the profit-free feature phones to low-end entrants like ZTE and Huawei.
LG, Samsung, Motorola and Sony Ericsson all took the bait. They are racing as quickly as possible to turn their feature phone portfolios into Android portfolios. This is certainly something that Google also wants to see happen and has been planning all along.
However one of the consequences of the modular (aka "open") approach is that the low end disruptors gobbling up low-end share are also motivated to move into the Android business as soon as it comes within reach. The only reliably predictable consequence of Android will be the postponement of displacement of the existing brands by the low-end entrants.
Is this fate unavoidable for all brands?
Clearly some vendors see the trap. For all its apparent failings, Nokia saw this outcome and chose to attempt a "Hail Mary Pass" with Microsoft. The strategic point being that because they no longer had faith in their ability to execute on an independent platform, they would pick a platform that gave them at least some control or leverage. There are serious risks and problems with this approach--something which has been covered here already--but the bet being made is a clear rejection of the slippery Android slope.
RIM is trying to resist with QNX which is a similar approach but timing may also be the undoing of this strategy. HP's approach with WebOS and Samsung's Bada are also hedges to avoid this fate.
And what about Apple?
Apple is always skating in a different direction. iOS needs to be seen as not so much a phone platform but a computing platform. Given what we know, iOS was always conceived as the future of computing. Voice, after all, is just an app on iOS. So my expectation is that Apple's iOS will continue its attack on the mobile computing market, skimming (or carving as the case may be) profits from the phone business to sustain its ultimate target of reclaiming the computing universe.
By this thinking iOS lives only by improving more rapidly than anything else in dimensions that redefine the basis of performance. In other words, doing more of what the iPhone did in the first place to set off this disruption.
In a recent answer on quora, I wrote that I did not believe developers are tempted primarily by economic incentives when choosing which platforms to work on. I suggested that they hire platforms because of their star-making potential and that star-making value is not a something that money can buy. Using Hollywood as an example I suggested that subsidies decrease the perceived value of a talent-oriented platform.
The notion that a platform signals meaning to developers led me to think about how mobile platforms signal meaning to consumers. I have a hypothesis that platforms can and should be treated as brands. This point of view allows platform orchestrators to develop a comprehensive market-driven strategy for platforms that transcends technical debate.
First a word about what a brand is.
Brands are vaguely defined. They are identities, names, symbols or attitudes or all of the above. Marketers struggle to define brand value because they are trying to encapsulate what they sell into a single symbolism. The problem is that there are vast varieties of things being sold. Every product or service has different meaning to buyers and it cannot be captured the same way. Because I cannot rely on a single definition I have to create a specific definition of brand to the context of mobile platforms.
I choose to define brand in this context of platforms as the "promise of the platform". A platform is a promise that the products will function in ways beyond what's "written on the box"; that the product is extensible and has value provided by an ecosystem bigger than the original vendor.
For example, although the iPhone is based on iOS platform, iOS is not the brand. "iPhone" encompasses the platform brand and it's a promise to users that they can expect apps and content and an extended flow of innovation to continue well beyond the initial purchase of the device. This brand value is attached to iPod touch and iPad even though it's not communicated as a unified platform. In other words, consumers don't look for "iOS inside" but the implicit value of "there's an app for that" covers all the products.
When looking at platforms as promises or brands, we can observe how some are more powerful than others.
Symbian or Series 60 was never marketed as a brand and Nokia users are generally unaware of what OS or platform their phone runs. Does Symbian make a promise of an "extended flow of innovation to the device" after the time of purchase? It's hard to make that promise when you can't communicate clearly anything but device specs.[1]
Conversely, Android has become a strong brand. The Android label (and mascot) is frequently used by device vendors to signal platform brand value.
How did Google achieve in a year this value with Android while Nokia continued to squander any brand goodwill around Symbian for a decade? The answer lies in marketing decisions. Nokia wanted to focus on the hardware as value (and the Nokia brand as the way that value is encapsulated). Google and Android OEMs wanted to lift their own device brands into becoming smartphone brands and attached the value of Android branding to them.
Which brings me to the question of how to design platforms as powerful brands. Creating awareness of extensible value is the way to signal to developers and all members of an ecosystem that a platform is valuable. Apple did this very well with their iPhone ads which focused on the app value of the product. They showed the product in use and did not rely on metaphors. Developers saw other specific apps being advertised by Apple and it engendered huge star value in the platform. Every developer wanted a shot at being featured in an iPhone ad. The iPhone could and did make stars.
But you can't make the great promise of the platform without the ensuring consistency, reliability and longevity. Fragmentation, malware, copyright infringement and arbitrary termination amount to the confiscation of platform value by the orchestrator. Poor custodianship results in the destruction of both ecosystem and end user value.
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Notes:
The lack of platform promise for Symbian may also explain why Nokia believes they can sell 150 million Symbian devices which have a deprecated platform. Those devices could be sold as feature phones, not platform products. The challenge for them will be to get a smartphone price for a feature phone product.
Goldman Sachs: “Evidence that the structural competitive issues are starting to weigh on its growth prospects. We estimate that RIM’s U.S. business declined 15% [quarter-on-quarter]—the second q-o-q decline in a row, and the first [year-over-year] decline. While RIM attributed that to an inventory reduction at a North America customer, we think the magnitude of the decline points more to lower demand at Verizon as a result of its endorsement of Android; our checks showed a dramatic reduction in the number of RIM [models] at Verizon last quarter and better sales for Motorola’s DROID than for RIM at many Verizon stores.”
The overall traffic admob handled was 14.1b up from 6.6b a year ago. (114% growth)
Smartphones generated 6.78b impressions in February, up from 2.3b a year ago. (193% growth). The iPhone OS generated 3.4b impressions.
Feature phones generated 4.9b, up from 3.5b (43% growth)
Although it's dangerous to equate "usage" to these impression numbers, the overall trend is that most of the growth is happening on smartphones. Of those, the iPhone OS and Android are taking 75% share of eyeballs, at least on Admob's network.
The iPhone platform generated as many impressions in February as all feature phones generated a year ago. It does not seem a stretch to predict that iPhone will overtake all feature phones in overall impressions in the near future.
Consumer Reports announced this week the results of a study it commissioned assessing the monthly data usage for customers of Apple's iPhone and other smartphones. The data reveals:
On average, iPhone users consume 273 MBs of data per month. That compares with 54 MBs for consumer users of Blackberrys and 150 MBs for consumers who use other brands of smart phones, the Validas study found.
The disparity in data usage is particularly evident at low levels, where 80% of BlackBerry and 54% of "other" smartphone users consume less than 50 MB of data per month while only less than 20% of iPhone users maintain such low usage.
As I argued in the past, Blackberries should be considered feature phones. Doing so helps to understand both their limitations and their potential.
This categorization helps put into perspective the phenomenal growth RIM is able to maintain while not being at all competitive with other platforms by any measure of performance that defines the basis of competition in smartphones.
Being a feature phone means the Blackberry just needs to be better than a dumb phone, something it’s more than able to demonstrate to a prospective buyer.
