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Smartphone users still prefer branded phones

The smartphone market has grown threefold in the span of three years. However, as noted previously, the share of units running a licensed OS has not grown dramatically. The following chart shows the vendors’ shares with the same brown/green dichotomy between licensed and unlicensed OS’s.

In order to gain some insight into this licensed OS area (and who the “others” are) we need some visibility into which OSs are being licensed and what their shares are.

The following chart shows the share of the various licensed platforms[1]. (I blanked out the Integrated vendors.)

Before we dive in to understand the effect of Android, we have to understand the licensing of OSs in 2007.

The chart shows Windows Mobile and “Other” splitting the market. Windows Mobile is rather easy to understand. It was still growing as a platform and Ballmer was famously quoted in 2007 as saying he liked their strategy “a lot”.

But “Other” is something of a mystery. What “Other” actually mostly meant was Symbian[2]. But not only the Symbian that Nokia was shipping and licensing to some vendors. At the time, Symbian also had a version called MOAP “Mobile Oriented Applications Platform” which was in use in Japan (somewhat analogous to the variants of Android now in use in China).

Fujitsu, Mitsubishi, Sony Ericsson and Sharp developed phones for NTT DoCoMo, using an interface developed specifically for DoCoMo’s FOMA “Freedom of Mobile Access” network brand. This UI platform was based on the UI from earlier Fujitsu FOMA models[3]. The user could not install new C++ applications and therefore these were not platform devices, however the industry still included these units as “smartphones” .

So what we’ve witnessed in the last two to three years is the replacement of MOAP and Windows Mobile share with Android TAPAS and OMS.[4]

But, more significantly, when looking at the rise of Samsung and Motorola and HTC we were also witnessing the demise of Palm, Fujitsu, Mitsubishi and Sharp (plus a myriad of Windows Mobile licensees even larger than the Android army).

The significance here is that “other” in smartphones is still mostly about branded vendors. This is in stark contrast to the low-end of the phone market where “others” are quickly replacing branded vendors.

So we can conclude that the smartphone market is so far showing a distinct preference for branded vendors. The value of the brand is still evident. But ZTE and Huawei are quickly developing Android competencies. How long will it be before the branded vendors feel the pressure from the upstarts?

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Notes:

  1. The Other category includes WebOS which was not licensed during this time frame but is not material enough in terms of share.
  2. A few million units running flavors of Linux were also on the market in 2007/2008.
  3. FOMA was also implemented with a Linux OS and the same UI.
  4. It should be noted that except for Windows Mobile, all the licensed mobile OSs including LiMO and Symbian are now open source. Android’s success is not therefore due to being the only OS that is “open”.
  • Hap

    Thanks for the recent color change-ups. Apple's defaults are on the "primary" side.

  • Rob Scott

    Fours after the iPhone was announce we still have integrated taking the lions share of units. Android just replaced Windows Mobile, Linux and other Symbian variant(s). Nokia is certainly leaving the integrated camp tossing their lot with Microsoft. We will see how that will work for them.

    We discuss share a lot on these pages. There is a great podcast by Siracusa and Dan Benjamin on this stuff. Listen to Gruber and Dan first.

    I firmly believe that Apple is playing to win and win big both in units and profit share. I expect an expanded iPhone range come June. Symbian share will gradually be replaced by WP. So, in the integrated side it will be Apple and RIM and I believe that Apple is just getting started.

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

      "Nokia is certainly leaving the integrated camp tossing their lot with Microsoft."

      Did I miss an announcement where Nokia sells out to Microsoft and WP7 sales increase 15 fold to catch up with where Symbian is today?

      I'm being sarky but far too many people are suggesting that is a given and it really makes no sense at all.

      • Rob Scott

        No, no announcement yet. Friday is around the corner we will know for sure soon enough.

    • Vatdoro

      Rob, I love Dan's podcasts. Here are links for those who haven't heard them yet.
      "Market Share" http://5by5.tv/talkshow/28
      "iOS vs The World" http://5by5.tv/hypercritical/4

      I'm not sure about Apple introducing a larger range of iPhone models this June. The current model seems to be working pretty well for Apple. (Latest model is $200+. Last year's model is $49 or $99.) Keeping with that same strategy would definitely keep their R&D costs low. They only have to design and test one new phone each year. And we all know Apple likes keeping their R&D streamlined and efficient.

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

        That's only the model in the US.

        In Europe, prices vary form 0 to $1000 or so depending on the contract or lack of contract. There's plenty of room here for a cheaper iPhone than the previous model on PAYG.

      • Pieter

        So how do you propose to make a cheaper iPhone without making it cheap?

        The price of the device in the EU is of course the same as the USA, but in the EU there are more options for contract or PAYG. The price differences are due to the amount of subsidy from the carrier…
        As Apple cannot make enough iPhones at the moment, but all of them are just selling, why would they want to lower the price?
        (The only reason I see would be to grow the platform faster)

        When new competitor phones appear, the better ones cost just the same as the iPhone, however, they drop in price like a rock, as the products are not compelling enough…

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

        The way other companies would do it is to cost reduce an existing well used platform and accept less margin on it. eg. Nokia N97 all the way down to 5230.

        Apple could cost reduce the 3GS to create an iPhone Nano and reduce it's margins. It'd totally wipe out the low cost Android and mid-priced Symbian handsets.

        At the moment Apple are only taking the expensive end of the market with many people who can't afford an iPhone compromising and buying cheaper. Not all people but many. For instance, one of my kids doesn't want an iPhone 4 because she can't afford it and too many of them get broken or stolen. Her Nokia 5230 brick is cheap, bombproof and doesn't get nicked.

        Someone was saying earlier that the iPhone 3GS was outselling the iPhone 4. I'd guess that's something to do with the 'got to have an iPhone no matter' crowd. The iPhone is a bit of a chav status symbol in the UK suffering from prole drift like Burberry or BMW and Audi. Nokia is as fashionable as Volvo.

      • asymco

        Pricing data shows that competition is not yet happening on the basis of vendor pricing. Not surprising considering the growth rate overall. My guess is that price competition will begin late 2012 to early 2013.

      • dchu220

        I think we are still in the push phase of the market, meaning that any supply that Apple makes is automatically snatched up. I went to a cell phone store to day to ask about upgrading to an iPhone4. The iPhone POP display had been moved to the very back of the store and they were still out of stock.

        When the push phase is over, I think Apple will start thinking about releasing products that hit very specific parts of the market to pull customers in. That time isn't right now and I'm guessing won't happen for a while.

        Being in Asia, I still hear about component supply problems. That's a good indicator that there is still significant growth left in the market.

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

    If you only see things in terms of global market share then yes, MOAP has disappeared. If you're Japanese however, it's probably as prevalent as ever. It's never going to increase to take global market share like Android because it's only available in Japan and that market hit saturation years ago.

    They're also trying to merge MOAP(S) and MOAP(L) into one development platform for 2012 so that apps for either platform ran on the new platform.

    Android hasn't eaten MOAP, it's just that the worldwide market for smartphones has grown so much that the influence of Japan becomes less significant on a global scale.

    • asymco

      Are MOAP(S) devices still being developed and sold? Last I read was a mid-2010 merger between Fujitsu and Toshiba.

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

        Of course it is. From Spring 2010…
        http://www.gomonews.com/competition-for-android-j

        and
        http://www.allaboutsymbian.com/news/item/11471_Ja

        The Japanese MOAP handset developers have been behind much of the push to get Symbian on to different hardware. Nokia skipped Symbian^2 but the Japanese used it. Fujitsu have spent a significant amount of effort getting Symbian running on multi-core CPUs.

        The problem with Japan is these handsets don't often get counted as 'smartphones' so don't appear in Others or Symbian which is often just lazy analysts counting Nokia. Secondly, with the smartphone market growing at 80% or so, a non-growing Japanese market is going to diminish the influence of Japan's MOAP handsets.

      • asymco

        These news stories are nearly a year old. I heard about Fujitsu's merger in June and about the demise of Symbian Foundation in the fall. Was wondering what's happened since.

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

        Japan Symbian day was October 2010 and the Japanese were still on board then. I'm really not that close though to say what is happening in Japan today but as I was pointing out, all the way through last year, MOAP was still around so I don't *think* it can be discounted so easily.
        http://blog.symbian.org/2010/10/14/the-hottest-sy

  • dchu220

    I wonder how much MOAP hurt the Japanese manufacturers in their efforts to compete in global markets. You see the same thing from China today where they have developed their own versions of CDMA and WiFi. Do these protectionist environments hurt these companies once they try to expand out of market?

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

      I don't think it's deliberately protectionist, FOMA was just first to market. The rest of the world (except USA and a few others) went GSM.

    • asymco

      The Japanese have a word for it: Galapagos technology. Their development of technology in isolation leads to a separate and distinct ecosystem. I believe that however marvelous they might be, these ecosystems are very vulnerable when they come in contact with external influences (like non-indigenous species introduced into new habitats). Even if it can be protected against encroachment, the chance that an isolated ecosystem can be exported is nil.

      See also iMode.

    • Evan

      US is great about so many things, but US carriers wield extraordinary amounts of power to the detriment of its consumers and the industry. So yeah all countries have their drawbacks.

  • gctwnl

    Looking over three years, we see a replacement. But looking at 2010 we see explosive growth of the Android platform's market share. Apple is just physically not able to match the growth of all Android licensees together. All the other providers will keep the market provided with an alternative. Very interesting to see what is going to happen in 2011 with the extremely strong growth of Android in 2010.

  • gctwnl

    Horace, have you already produced an absolute graph? Where you see not the normalized market share but the absolute numbers so the growth of the market and the part of each party in it is visible? That should show almost everybody growing, but at different speeds.

    • gctwnl

      I see, it is the next blog post.

  • Pandrade

    Cool analysis, but what the source of the data? Are you sure the grey smartphone market is being correctly counted? Is it that ZTE/Huawei are not ready or simply that researchers are unable to count them in the wild?