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Comparing Share of Growth: Integrated smartphone vendors held their own in Q4

The smartphone market grew to about 100 million units last quarter. That’s nearly double what it was a year earlier and triple what it was three years earlier, the year the iPhone made its debut.

Few markets grow this quickly, especially as this tripling happened during one of the worst recessions for a century. 100 million units a quarter is not a small number. The rate at which smartphones are growing makes clear the trajectory of where all phones are going.

As I’ve shown in profitability charts, vendors have been benefiting to differing degrees. The overall smartphone market with individual vendors is shown below:

I’ve used the color coding of shades of green for vendors which use their own operating systems and shades of brown for vendors which use a licensed operating system (licensees).

What remains interesting is how the share of licensed OS products has changed since 2007. I selected two snapshots in time: Q1 2008 and Q4 2010 and compared the shares that licensees were able to obtain.

The shares of licensees was then 36%, and is now 38%. Not a huge increase, but an increase nevertheless. In the last such analysis in Q3, the share of these vendors (which I also call “Modular”) was actually lower than in early 2008.

RIM has held steady in terms of share. HTC has added a few points of share. Apple seems to have gained a healthy share which Nokia seems to have lost. Samsung and Motorola have certainly made a bigger mark in the last few quarters.

But I would caution that share comparisons when the market is growing at nearly 100% are not very meaningful. All vendors are increasing their sales, though a different rates. What would be more meaningful would be a “share of growth” measure where each vendor’s increase in units is divided by the overall market’s increase.

That analysis gives us the following chart. (I added Q1 2010 for comparison).

Samsung did very well, but surprisingly perhaps, so did Nokia, tying Apple for second place.

The licensees (whose pie slices have been exploded) added up to 52% of total growth (y/y) and the integrated vendors had 48%. A pretty even split.

  • Enrique

    Interesting point of view Horace. Thanks!

  • ITalian Pro

    In the text you say "shares of licensees was 26%, and is now 28%" but in the preceding pies the sums of slices color coded for licensees are 36% and 38%.
    I assume there is some misalignment between data in spreadsheet and text.
    "Quandoque bonus dormitat Homerus"

    • asymco

      That was a mistake (should be 3x%). Thanks for pointing it out.

  • http://twitter.com/judsontwit @judsontwit

    Your share-of-growth measure shows that Samsung has done well, in terms of new growth in smartphones.

    Don't suppose a profit-growth / share-of-growth ratio chart would be useful? For example, Apple's profits have increased in the last year, but has it increased proportionately or disproportionately to the share of new units they are selling?

    I would be very curious to see Motorola's position on such a chart, as they do not seem to be growing much in quarterly profits, *and* seem to be outcompeted by Samsung and HTC unit-wise.

  • iosweekly

    At first I was quite surprised by Nokia's share of the growth in the last chart.

    But then I realised it is only for growth in the smartphone market. As Nokia has a huge share in the dumb phone market, its share of the smartphone market growth is probably less than what it is losing to the cannibalisation of the dumb phone market by smartphones.

    It would only be good news for Nokia if its profit per smartphone was higher than the combined profit per dumbphone sales it was losing.

    • http://twitter.com/aegisdesign @aegisdesign

      In terms of unit sales, Nokia were only down 3% last year. Smartphones were up 36%, dumbphones down 10% so there's not much cannibalisation internally.

      On the other hand, the market for all phones grew 22% in 2010 from 329m to 403m according to Nokia's financials. How much of that is smartphone growth?

  • unhinged

    Thank you so much for this thought-provoking post! I can only hope that this method of measurement becomes the standard in discussions that judge sales performance. As judson says, profit growth charts would be welcome too.

  • Rob Scott

    “But I would caution that share comparisons when the market is growing at nearly 100% are not very meaningful. All vendors are increasing their sales, though a different rates. What would be more meaningful would be a “share of growth” measure where each vendor’s increase in units is divided by the overall market’s increase.”

    I strongly disagree with this statement.

    One, units share is actually more meaningful and fair to both new entrants (Samsung, Motorola, etc) and established companies (Nokia, Apple, RIM).

    Two, growth is already accounted for in unit share: companies that are growing faster than the market/industry will grow their market share and companies that are growing below industry growth will lose market share. This is the case whether the industry growth is in the teens or hundreds.

    It is true that all vendors are increasing their sales but it is also true that not all vendors are growing their unit share.

    Share growth doesn’t tell you anything that you couldn’t have read from the unit share graph. I actually think that it is the worse major in every way: new entrants will almost always achieve higher growth rates than established companies simple because they are starting from very low numbers, hence the huge growth rates for companies that were not selling/focused on smartphones before. It doesn’t follow that the growth is sustainable going forward, if anything an educated guess is that growth will slow down rather dramatically once we hit comparable month like the last quarter of this year.

    So why growth share would be a better measure escapes me.

    Please educate me.

    • asymco

      This is for the smartphone market only. I'll provide overall share numbers, but it is true that every smartphone vendor increased their volumes. Nokia: +36%, Motorola: +96%, Samsung: +508%, RIM: +41%, Apple: +86%, HTC: +160% and Other: +34%. The overall market grew at about 73% so any vendor which grew slower than 73% lost share. My point is that it is more sensationalist than useful to say, for example, that RIM lost share implying it's doing poorly when in fact it grew by 41%, an enviable rate by almost all standards. Similarly, as I point out with Nokia, they had the slowest growth rate and would be shown as losing share but because they have the largest volumes, that's understandable and, in fact, by the measure of share of growth, Nokia did rather well.

      Market share changes are much more significant when the market is stable.

      • Rob Scott

        A pass is a pass I get that. But how is that helpful? If the average growth is 73% and RIM and Nokia fail to grow at industry rate then they are failing. Are you arguing the "law of large numbers" here? If you are, Nokia had 45% of the market, they had room to grow, and there is absolutely no excuse for RIM. These companies are failing to grow and they have small to moderate unit market share, they are not constrained by big numbers.

        While I sympathize with both RIM and Nokia, I however have no excuse for their failure to grow at industry rates. It is my final take that growth share is a poor measure, it does not illuminate, and it has helped me understand anything new about these companies. If anything it is more like an excuse for big companies for doing poorly compared to their more nimble competitors.
        Finally I hope you do not replace unit share with this fuzzy measure in your future analysis.

        While I am at it:
        I also have a problem with your unit share numbers: Windows Mobile was still big in 2008 (19% of the market or there about), HTC had 80% those units, where are those numbers in your charts. Two, Symbian was still untested, Sony, Samsung, etc were licensees, where are those numbers. I know you are constrained by data availability, but not getting those numbers skews the graphs rather badly. If my numbers for my network were not a tiny fraction of global sales I would give them to you. Windows Mobile had 30% of activations/distribution in our network in 2008. We are laggards in tech adoption but not by much. Damn, things change.

      • asymco

        I will be posting share numbers soon.

      • http://twitter.com/aegisdesign @aegisdesign

        I'd doubt Windows mobile ever got close to 19%. Outside the USA there were a few weirdos using rebranded HTC XDAs but they weren't very popular. There's probably some old Canalys numbers kicking about …googles…
        http://www.appleinsider.com/articles/09/11/03/can

        I'd take anything Dilger writes with a huge pinch of salt but if those figures were straight lifts then at least those might be useful.

      • asymco

        WinMo peaked at 13.5% in Q4 2007.

  • Narayanan

    The growth share is indicating the relative strength at a point in time. Clearly, Samsung owns the field right now and their sheer momentum is laudable. (are we talking shipments or actual sales here ;-)

    The 39% for Nokia in Q1 2010 is intriguing. Most likely due to the rather flat growth for all companies between Q4 2009 to Q1 2010.

    • http://twitter.com/aegisdesign @aegisdesign

      It has been suggested that Nokia were lowering prices aggressively at the end of 2009 in order to maintain market share which they did manage to do briefly. I think it may have even went up for a short while.

      They can't continue doing that on the S^3 handsets or MeeGo though hence more modest growth now.

  • timnash

    Intriguing snapshot which as usual raises questions. How much of Samsung's Q4 growth came from South Korea? When KDDI, the second largest carrier, announced selling 2 million iPhones total smartphone sales there were around 9 million. Samsung and LG have dominated that market for years, but LG smartphone sales have been much weaker than Samsung's and Apple can't supply enough iPhones to KDDI.

    Q4 was also the last quarter, Android and RIM had Verizon's walled garden to themselves. What will happen to HTC, Samsung and RIM there?

    RIM's recent growth has been in international markets. How much will governments demand for email oversight in areas like the Middle East and India reduce that growth?

    Apple's share of the Q4 pie is strongly affected by its inability to make enough iPhone4s to supply demand. How much does that depress its share?

  • GeorgeP

    The share discussion with iOS, Android, WP7, etc and hardware vendors is very confusing to make any clear conclusions.

    Right now the Verizon experience with Blackberry, Android, and now iPhone probably provide best assessment of the market reality, but apparently very competition sensitive info.

    Given the public info can good insights be made within next Verizon quarter.

    • http://twitter.com/aegisdesign @aegisdesign

      That would cover the US market, which is an oddity compared to most of the rest of the world.

    • Evan

      US is different, maybe a good point for comparison would be UK, where IPhone, Android phones and blackberries and symbian handsets are all available on all carriers.

  • KenC

    I'd like the 2nd pie chart, to also represent the market's growth by making the 2010 pie, about 3x larger than the 2008 pie. Otherwise, as you point out, it's not very meaningful when the market growth itself is the big story.

    As for the share growth pies, they're just a snapshot of one quarter, where the influence of one hit product launch has a distortionary effect. Just by looking at those share growth pies, you'd still think Nokia was doing fine, but when you put that chart next to the operating profit by unit sales chart that you made, you might come to the conclusion that Samsung is taking away unit sales from Nokia.

    I wonder how the integrated vendor chart will change once Nokia adopts WP7 for its high-end phones.

    • http://twitter.com/aegisdesign @aegisdesign

      You mean if.

  • Danthemason

    Our host has provided excellent data. In depth study of these analytics would involve 3d graphs, statistical analysis and calculus. Really, how much can you ask for on a free blog site?

  • raphael

    Do you include Bada smartphone marketshare in Samsung data ? If so it can't be entirely assimilated as a "licenced" marketshare since Bada is Samsung homegrown integrated OS.

    • asymco

      You're right. Bada is another source of error in this data. It could be as much as 5 million in 2010.

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