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Peak RIM

In their monthly survey update on US phone usage, comScore reported that by the end of April 74.6 million people in the U.S. owned smartphones. In the same period a year ago only 48.1 million did. The percent of smartphone users out of total phone users has reached 32%.

The following data points can also be deduced:

  • 2.1 million or 474k people/week became smartphone users during April.
  • 62% of smartphones in use in the US are either Android or iOS. The sum a year ago was 37%.
  • There are about 20 million iPhone users and 27 million Android users in the US today. A year ago there were 12 and 6 million respectively.
  • RIM’s US user base peaked at 22 million in Sept 2010. It is now 19 million and dropping.
  • Usage of Microsoft mobile operating systems in the US is in steady decline dropping from 7 to 5 million users in one year.
  • During April 475,000 people abandoned their Blackberries.
  • Android and iOS gained 3 million users in April. One million switched from other smartphones and 2 million switched from non-smartphones.

The following chart shows the evolution of installed base share of platforms among users of smartphones in the US.

The impressive share gains for Android are apparently at the expense of RIM and Microsoft. Over the period shown, Android gained 25 million users while RIM gained only about 2.8 million.

Although perhaps comforting to see some growth overall, the situation for RIM is more grim than that. During the first half of the period (December 2009 to August 2010) RIM had gained 4.6 million users. During the second half (Sept 2010 to April 2011) RIM lost 1.8 million users.

The net user gains and losses for the various platforms is shown in the following chart:

Note how RIM (green bars) went from being a consistent net usage gainer to a consistent net usage loser during this 16 month period. In addition, note how Microsoft’s platforms (yellow bars) have had a very poor showing with very small gains during four months and moderate losses during the others. The losses in usage even increased after the release of Windows Phone late last year suggesting no traction whatsoever for Windows Phone.

The other point to be made is that if we assume smartphone users remain smartphone users, then those platform losses are gains by other platforms. In other words, the areas less than zero in the chart above represent smartphone “churn” or switching between platforms (As a percent of all smartphone users that number represents 1.35%.) That number is far lower than the total smartphone gains, so it’s safe to say that most of the iOS and Android gains were at the expense of feature phones rather than other smartphones. And since iOS share is consistent (and supplies are constrained), few if any Android gains are at the expense of iOS.

There are many interesting patterns to observe in the data, but I think the most evocative is the erosion of Blackberry usage. If the Blackberry peaked, and a follower platform not yet in sight, the question is how long will RIM survive?

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

    Might want to fix the error in the first paragraph from "only 48.1 billion" to "only 48.1 million" ;)

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

      That'd be what, 6 phones each for every single person on earth?

  • Shason

    In the first paragraph, "In the same period a year ago only 48.1 billion did." I guess it to be million instead of billion.

  • Rob Scott

    Since the is little to no net gain in total number of users of phones, this is how I would intepret the the numbers:

    Android OEMs are losing customers to Apple/iOS, so is RIM, HP and Microsoft. The pie hasn't grown by much meaning Apple is the only real growth story here.
    The mistake people make is that the upgrades to smartphones are good by and of itself. the argument on the OEM side is higher average $/unit forgetting about the higher average cost/unit. On the carriers is the alleged higher ARPU on smartphones, forgetting about about the higher average cost on those connections.

    For Android to be a true success it must deliver the revenues and profits while growing the base. Android is not growing the base except the number of people who use Google services. Android OEMs are losing customers ( except HTC, who truth be told have achieved moderate growth given their historic numbers, meaning a correction for the most part).
    It is hard to be impressed with Android when all things are considered.

    • gslusher

      "Android OEMs are losing customers to Apple/iOS, so is RIM, HP and Microsoft. The pie hasn't grown by much meaning Apple is the only real growth story here."

      How do you figure that? Android has grown faster than iOS. You can see that in both charts.

      • dunpool

        He means Samsung & co which have lost some customers or were flat. They sold more Android handsets but less feature phones.

  • r00tabega

    I love the first graph. It shows the vice-grip like squeeze that iOS and Android are inflicting on other smartphone vendors.

    I say squeeze because the with the iPhone having super-high ASP of $600+ at the top and Android (via Tapas/OMS and chinese vendors) at the bottom of the price/ASP scale, it leaves very little in the middle.

    "The middle of the road is for yellow lines and dead armadillos."
    -Jim Hightower

  • kevin

    Thanks Horace for the studying the data. Some other things that can be seen:
    1. The impact of Verizon iPhone 4s in Feb, Mar, and Apr 2011. iPhone sales doubled or more, and Android growth started to slow.
    2. The impact, especially on RIM but also on Apple, of the "free" Android phones offered by operators in Nov 2010 – Jan 2011. In 2009 and 2010, those free operator offers also emphasized Blackberries.
    3. The collapse of the iPhone 3GS sales once the iPhone 4 was leaked by Gizmodo in May 2010.
    4. The disaster of the Microsoft Kin.

    Looking at comscore's share of US mobile subscribers (i.e., all phones) data is also interesting. Of the top six (I think Nokia is still #6), only Apple has continued to gain share since Nov 2010. Samsung and LG are flat, so they are likely getting 1-for-1 smartphone replacements of their featurephones (since we know that Android has been growing), and that isn't bad. But Motorola, RIM, Nokia, and Palm are going down.

    I wish comscore would release more data on HTC, though I'd assume they are also gaining share. In the Feb 2011 extended data release, HTC looked like they were probably the third leading Android maker, behind Motorola and Samsung. That data showed that Mot, Sam, and LG accounted for almost 70% of Android units.

    • Kristian

      iPhone 3GS did take a hit, but it did perform very well later:

      "After launching on Verizon's network in February, Apple's iPhone 4 further solidified its position as the top-selling mobile phone in the U.S., while iPhone 3GS, Motorola Droid X, HTC EVO 4G, and HTC Droid Incredible rounded out NPD's top-five mobile phone handset ranking."

  • Bennett

    Hey! I like the newmobile stylesheet. It looks great.

  • Kas

    To have reached their peak and be bleeding users is bad enough, but to be doing it in a market segment that is booming is a true indictment. The growth in the smartphone sector has hidden their problems for quite a while.

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

      It's not entirely bad. Blackberries sell well in Europe to kids although one wonders how long that will last as it's riding on the back of BBM and there are plenty of alternatives that work across platforms like WhatsApp.

      • jeremiah

        Blackberries don't sell well to kids in Europe. Where on earth did you get that idea from? In Sweden, where mobile phone penetration is quite high, Blackberry doesn't even rank in the bottom rung. Your comment smells a bit like astroturf.

      • eyez00

        >>Where on earth did you get that idea from<<

        The UK where they have "ghetto-chic".

        BBMs are "off the grid", your dad can't track the messages and your local dealer is convinced the po-lice can't either.

  • Hamranhansenhansen

    Smartphones keep looking more and more like just another kind of iPod.

  • Kas

    Two questions and a comment:
    Where are RIMs customers going – iOS as it becomes corporate friendly or are they making up part of the Android growth?
    How did Google beat Microsoft at their own game – to be the mass market, licensed alternative for OEMs competing with vertically integrated leaders?

    And while Android may not appear to be taking iOS market share, as it is stable, it definitely killed it's growth, taking addressable market.

    • claimchowder

      "And while Android may not appear to be taking iOS market share, as it is stable, it definitely killed it's growth, taking addressable market."

      I do not quite agree with your last statement. Although I will never be able to put it as well as Horace does I will give it a try:
      Android "growth" is an illusion that stems mostly from feature phones being migrated to Android by the incumbents. The amount of non-Apple phones sold per time unit is probably stalling or posting only minimal growth. The amount of iPhones sold per time unit is growing.
      I.e. while an iPhone sold is a win for Apple, an Android phone sold is more or less a zero-sum game for the incumbent because he's basically selling one less feature phone. They DO probably make a little more money selling an Android phone than they do selling a feature phone, but it's not like they're taking anyting away from Apple just because they switch their feature-phones to a new OS.
      Android "growth" is not real. It's just a migration pattern that remains internal to the incumbents.

      BTW that is also the reason why Andoid on tablets so far is an utter failure. There just aren't any existing "feature tablets" to switch to Android. Hence the complete lack of success by the competition to thwart Apple's growth in the tablet market. The phone market really is special in that there is this huge base of phone lines ready to be switched from a proprietary OS to Android. But that doesn't sell a single phone more than before.

      Yes, Android does take away adressable market for Apple, but not as strongly as you suggest by saying "killied its growth".

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

        HTC AFAIK never sold feature phones so one more Android sale for them really is one more phone and they're selling a load more phones now than they did when they used Windows Mobile.

        ZTE never really did well OEMing featurephones either but are doing well with Android.

        You might argue that Samsung, SE, LG, Moto might be selling Android phones at the expense of their own feature phones but if it wasn't Android it would have to be another smartphone OS or they'd not be selling phones at all. SE for instance killed off it's own Symbian UIQ models and their Windows models in favour of Android. LG in particular was late to the party and suffered for it. Moto would be dead without a smartphone as their feature phones were years behind the competition.

      • scryer

        Good comment – I'd add that Android is really a "semi-integrated" platform and that is has indeed thwarted Apple from completely dominating the smartphone market.

        Imagine the smartphone market without Android. Can you see HTC, or worse, Zuawei, competing on an OEM OS basis? No vendor would be able to accumulate critical mass of developers to compete with the App Store. Symbian would probably be the best bet, and it would not be close. RIM's developer relations are so bad they would continue to flounder. Who else?

        But now when I consider a smartphone purchase, I don't have to take on faith that the vendor will provide an acceptable market experience or acceptable app selection. Google acts like an integrated OS vendor when it comes to app provision. It takes away a significant barrier to entry for HTC, Zuawei, and other efficient hardware producers. They can now compete on apps. Apple still has other barriers to entry – interface design, deals with content providers, cloud provision – but those are much less firm barriers than deliver critical mass which is a zero sum game. And Google can and will compete on those other barriers on the behalf of the vendors.

        That path leads to commoditization of the hardware vendors, obviously. But it means Apple has been moved from a rent collector (as they are with iPod) to a shark that must continue to innovate to survive. Apple appears to have to talent to win at that game but it's a much less secure way to make a living. And night explain why the market worries about Jobs' health and continues to undervalue Apple.

      • asymco

        I believe that had there been no Android, the role of licensor to current OEMs would have been Microsoft's to take and develop. The effect may have a been a slower growth for smartphones in general but I don't think the iPhone would have grown much differently.

      • Kas

        Hi, OEM phone maker growth is an illusion as consumers move from feature to Android, but Android growth is very real. Horace's first chart doesn't lie :) . I think Google would be pleased with their gains.
        As I mention below I was referring to Apple's market share growth disappearing as Android took off, not unit sales which I agree have always grown.

    • asymco

      The growth in iPhone units has been consistent throughout its life and is mostly constrained by the cycle time of new product introductions (which limit the ramp-up). You could say the iPhone's greatest constraint on growth is its strategy.

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

        Yeah.
        In layman terms, if you have a sizeable and constantly expanding userbase that's willing to buy at your (very profitable) conditions, why rush to maximise the addressable market, which would mean giving up on many of your privileges (fatty margins, minimal products portfolio, selective industrial design philosophy…)?
        Especially when the only competing platform that's beating you on market share hasn't got yet a compelling strategy to make use of its scale against you (exclusive top-class features, content store and app store that could favour lock-in, halo effect and marginalization of smaller competitors)?

        At the moment it seems that only Amazon has the chance to build a platform, Android-based or otherwise, with a content ecosystem capable of threatening Apple's own.
        If and when they'll succeed at that, you'll probably see Apple pursuing overall market share more aggressively.
        Until that, it makes no business sense for them to do so.

      • Kas

        The question is how fast is the userbase expanding. According to Horace RIM had a "sizeable and constantly expanding userbase" just last year, and we're already watching a demise in motion. In expanding markets, unit sales growth can be deceiving. I think it's acceleration of sales growth that needs to stay in the positive.

        It also comes down to whether or not you can you come up with a cheaper, basic product that appeals to a new segment more than your existing segment.

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

        "According to Horace RIM had a "sizeable and constantly expanding userbase" just last year, and we're already watching a demise in motion. "

        K, we all have to remember how fast things change in the mobile world.
        After all, the first usable Android version (1.6) isn't 2 years old yet.

        But, it is four years straight, since the first iPhone announcement, that RIM is being questioned – they've been losing mindshare, losing on innovation, losing on features, losing on content strategy since then, with pundits constantly questioning their ability to avoid being left behind technologically and strategically.

        Compare that to Apple, I mean in between our comments there's been the WWDC keynote, it's safe to say that the impression is just opposite, could you really point out signs about their platform losign traction, enthusiasm or credibility?

      • Kas

        By "killing growth" I was referring to market share growth, not unit sale growth which I agree has always grown, albeit no longer exponentially. From memory Apple's market share grew rapidly then really leveled off as market share growth passed to Android.

  • scryer

    One minor nit: given that the article is about "Peak RIM", the first graph really should have RIM/Blackberry on the bottom so you can see the relative share effects on RIM.

    Fine work as usual otherwise. I quite agree with the article's main point and have had RIM on my "walking dead" list since late last fall. My internal debate is whether Nokia should be on that list as well, although they have the White Knight of Redmond to defend them.

    • CndnRschr

      That wouldn't change much. RIM peaked some time ago in terms of marketshare and has been stagnant or declining in that parameter since the beginning of 2010. Peak RIM refers to the fact that RIM is now losing net customers. In the vernacular, RIM put on weight and profits, managed to tread water for a while and is now slowly sinking.

  • Pablo

    It would be great to visualize the first graphic including Symbian and feature phones OSs. I bet there's a correlation there between Symbian's decline and Android's growth.

    Also it would be interesting to differentiate between Android "smartphone" units and "feature-phone" units. It's not the same at all when comparing platforms. Feature-phone Android sales do not compete against iOS at all.

  • poke

    "During April 475,000 people abandoned their Blackberries."

    If you assume an average 18-month contract for Blackberry users that's almost half the people up for contract renewal that month choosing to abandon the platform (i.e., 19 million total user base / 18 months is approximately 1 million up for contract renewal per month). That's astonishing.

    • CndnRschr

      My daughter has a Torch and loves it. My son in law has a Bold which he upgraded to OS6 (big mistake) and hates it. He's going to replace with an iPhone (due to his great experience with iPad2). I guess they are typical!

  • newtonrj

    Horace – Enjoyable read. Typo in last paragraph "patters " instead of 'patterns' -RJ

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  • Kristian

    Apple still makes lots of profit from iPhone 3GS and other phones are also subsidized. RIM had that buy one get one free thing going. iPhone 3GS has now 8GB of memory instead of 16GB or 32GB as it was.

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

    “…most of the iOS and Android gains were at the expense of feature phones rather than other smartphones.”

    You carefully don't say that BlackBerry is losing share to Android or iOS. It's interesting that BlackBerry's strength is in the Enterprise, where Android is said not to compete well for a lousy security model. So the Enterprise must be a submarket that is NOT growing, or many of the iOS sales are BYO deals that DO go into the enterprise. Or the notion that Android isn't going into the Enterprise is dubious.

    • eyez00

      I'd guess that the Enterprise is a sub-Market that's not growing like the main, non- Enterprise Market.

      Which would make sense if Enterprise were considered Early Adopters and are known to be conservative regarding shifting suppliers/systems.

      They've already got their smartfones and they are keeping them. Ancedotely though, I know many enterprise users are switching to iPhones, the Blackberry has been issued, but the user is insisting on using their personal phone. That wouldn't show in the statistics.

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