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Android vs. Windows Phone: Which vendors benefit?

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.

  • Evan

    but RIM is on the way out like books :), investors are valuing RIM pretty poorly at the present.

    • http://mobiledeviceinsight.com Kevin Taylor

      Last six months share price for RIM is +43%, APPL +40%.

      Not that I care about RIM stock, I had to look up stock info since I don't follow but I recall a steady appreciation since September.

      • Evan

        look at the P/E for RIM, it is around 12, P/E for HTC is around 22(admitedly HTC is not listed in US, but in Taiwan, where valuations can be frothy as is generally the case for emerging countries)
        http://investing.businessweek.com/research/stocks

    • davel

      As Horace points out with his charts, RIM is one of the few companies making significant profits in the phone space. As much as RIM gets bashed for not having a host of things they are making good profits.

      I should have bought RIM last year, and may still buy it.

  • Evan

    what is the error factor for nielsen, I see n=14701, so this is a survey based on 14701 postpaid subscribers. I am wondering if prepaid smartphones skew the figures meaningfully like on virgin.

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  • Steve Weller

    Licensing for embedded software (what you are calling Modular OS here) has always favored a large number of small customers over a small number of large customers for the software vendor. That's because the pricing is nowhere near linear, probably closer to logarithmic over, quantity.

    This means that the incremental gain in revenue from selling more licenses to existing customers is tiny compared with finding a new customer with even modest gains. So the software vendors work by landing one or two big fish to prove that the software is worth buying, and then signing up everyone else at whatever they can get. There are no public prices, only those that are leaked from the confidential agreements.

    This contributes to the fragmentation of the hardware market and lowers product quality: the software vendors, having gotten their cash and taken away any chance of the licensees from switching, provide abysmal support for all but the larger licensees.

    • Evan

      but isn't the modularity of ARM business model(just license the IP to varios SOC vendors and watch money flow into the banks) one of the reasons why ARM will prevail over Intel in the long term.

      • asymco

        Modularity is appropriate when the product is more than good enough (which the CPU is). Integration is appropriate when the product is not good enough (which the mobile computer isn't).

      • davel

        No.

        ARM prevails over Intel because the ARM processor is power efficient while Intel is not very good at power management across any of their product lines.

        In the mobile space battery is king. Historically Intel has gone after mips and cycles not efficiency.

  • CndnRschr

    Almost as informative as your graphs Horace! There are clearly advantages and disadvantages to the various models and choice is good. That said, it is MUCH harder to break into the integrated market. Look at the efforts of Palm/HP. RIM built up their base over many years. By contrast, Apple went from zero to 100 in the blink of an eye but is by far the exception (reflecting the true disruptive effect, ditto for the tablet market). That's why giving up an integration model as Nokia has effectively done is so bizarre…..

    • unhinged

      Don't forget that Apple have been working on the iPad and iPhone since the very early 2000s – they may _appear_ to have come out with the products overnight, but they've spent a lot of time working on them to get this result.

  • maddoguk69

    Link is broken :-/

    [EDIT] It's actually broken on the Nielsen site.

  • winner

    If you drew this chart for people who bought in the last 3 months, HTC and Samsung would probably have higher volume than Apple or RIM. So whether they are "winners" or not seems to depend on how heavily you weight the past. (Incidentally, this also explains Windows strong showing).

    To support this claim, Android's been outselling Apple in the US since last August. It had double the sales of RIM in November, 175% the sales of Apple. The latest sales stats I saw which I think were December had them at three times the sales share of Apple and RIM, with Android still rising fast and Apple gently declining, RIM going down fast. If HTC has maintained a third of those sales then it's selling more than Apple or RIM. I believe your own stats had a chart that showed Samsung smartphone sales overtaking HTC recently and looking set to overtake Apple.

    • Steko

      "If you drew this chart for people who bought in the last 3 months, HTC and Samsung would probably have higher volume than Apple or RIM"

      This is easily shown to be false. HTC's own numbers show they shipped 9 million in the holiday quarter and are targetting 8 million this quarter. Apple sold 16 million last quarter. Samsung is looking to double smartphone sales this year to 50 million. Apple sold 47 million phones last year (and another 30 million ipod touches and ipads).

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

        The graph is US market share, not world share, which might have quite an effect on wether those sales figures are relevant.

      • winner

        I think you are confusing Global and US sales, which is what this graph shows and what I was talking about. I think it's entirely possible that Samsung will pass Apple, and HTC will pass RIM in smartphone sales globally by Q4 this year but that's not what I said or meant. (A repeat of last year's year-on-year growth in Q4 for all contenders would put HTC on the same level as Apple, and Samsung comfortably ahead of everyone but that's an extreme outlier prediction since they were growing from a smaller base).

        Back to the US figures: Various stats houses show recent Android sales as being 3 times higher than Apple or RIM with the trend being for the gap to widen (e.g. NPDs numbers for Q4 were 53/19/19 share almost exactly a 3/1/1 ratio, quite different from the 1/1/1 ratio in the current diagram).

        Gartner claims that Samsung sold the most Android phones in the US with almost exactly a third (32.1%) of all US Android phone sales in Q3. A third of sales which are 3 times higher than Apple or RIm would put them on level pegging if it repeated in Q4 but I'd actually assume it was even higher and that total Android sales in the US continue to outpace their rivals into this current quarter so there's a chance for HTC to make it into the 2nd place spot for Q1 2011.

      • Iosweeky

        Any US smartphone sales figures trend before the iPhone was released on verizon last month – will now look very different going forward.

    • Pats

      I think you are delusional to think Samsung Smartphones will outsell Apple's iPhone in the US. According to Samsung the Galaxy S sold 10M units worldwide following the June release .http://www.samsung.com/us/aboutsamsung/news/newsIrRead.do?news_ctgry=irnewsrelease&news_seq=19806. Apple's Iphone sold 9.3M on ATT, so I find it extremely difficult to believe that with Apple adding Verizon in addition to ATT that they would sell less as a percentage. You make a fatal mistake in your analysis of passing the overall android growth rate to each individual manufacturer when a large portion of the android growth is not HTC & Motorola but folks like ZTE.

      • winner

        I own a ZTE phone and think they will have an interesting impact on the market going forwards, but it's not accurate to say they are a large portion of Android growth, especially in the US. They only sold 2 million Androids globally last year (they hope to sell 10 million this year).

        I'm not aware of them even having a smartphone of any description for sale in the US so it's surprising you think that they're taking a large portion of Android's US sales growth. Who else do you mean by "folks like ZTE", Hauwei? They've got a couple of devices on the smaller carriers in the US. Again interesting, but I don't think the numbers add up. With the vast number of devices being sold, the ones selling in quantity are the ones you've all heard of and seen advertised.

    • asymco

      This is not sales in a period. This is number of users surveyed who were using these devices. In other words Nielsen measured installed base.

      • winner

        Nielsen also ask when people bought as part of their survey. They usually present both sets of info, with "recent acquirers" being the subset of people who have bought in the last 3 or 6 months. And in the U.S. for the last 12 months, the recent acquirers graph has looked better for Android than the installed base one since Android sales have been growing strongly over that period. For example, the 3rd and 4th figures on this blog:
        http://blog.nielsen.com/nielsenwire/consumer/amon

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

    It's a great graph. I love me a variwide lasagne plot!

    Shame the link is broken now

  • Eddie

    Look at all that extra market share Nokia can look forward to once they start shipping their Windows Phones, I mean we must be talking a huge uptick of maybe 2% or 3%, maybe even 4%!!!

    Well done Nokia – smart move! :)

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  • KenC

    Nice chart, but Canalys has been doing a similar mobile chart for years. And, I'm sure they got the idea from someone else.

  • Abhi Beckert

    Where are the non-smartphone iOS and Android numbers? Reading between the lines from Apple's press releases, the iPod Touch and iPad appear to be outselling the iPhone.

    What is the point of an "operating system marketshare" chart that ignores more than half of the largest player's marketshare?

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  • http://mobiledeviceinsight.com Kevin Taylor

    Moto, HP, LG, even Samsung, will exit the smartphone and tablet market in 18 months if Andriod has nothing new competing against it. Whether Andriod is more successful against Apple or RIM or not.

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

    nielsen totally missed this by not focusing on the "trends" in market share or to put it another way, they are looking in the rear view mirror to see where things are headed. If they had focused on the trends they would proclaim rimm as the winner. they also focus on individual vendors instead of ecosystems.

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

      nielsen totally missed this by not focusing on the "trends" in market share or to put it another way, they are looking in the rear view mirror to see where things are headed. If they had focused on the trends they would never proclaim rimm as a winner. they also focus on individual vendors instead of ecosystems.

    • asymco

      Nielsen (and ComScore) measure what people are using/doing. They are not measuring what people are buying in a period of time. Measuring installed base has its uses. Measuring sell-in sell-out has its uses.

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

    except the problem is that the media has misinterpreted the data. rimm's installed base is merely a vast pool of people who are "easy pickens" for apple and android. the media got this one wrong. installed base means very little in technology businesses. ask Nokia.

    • unhinged

      Well, Nokia expect to sell another 150 million Symbian phones, so I don't know if they're the right people to ask…