At the end of last year I was saying that the smartphone boom was a tide that lifted all boats. That is no longer the case.
But the big story is that there has been a clear non-seasonal counter-cyclical decline in Nokia and RIM’s smartphone performance. RIM’s steady rise has come to an abrupt halt. Nokia’s decline has accelerate precipitously. So much so that Samsung and Apple have overtaken Nokia and RIM and it looks like HTC will overtake RIM within one quarter and perhaps Nokia as well.
The following chart shows the current profit distribution between phone vendors with an eye toward identifying volume dependencies. The vertical axis represents operating profit per phone and the horizontal axis the number of phones sold.
The area of each vendor bar is therefore the total operating profit that vendor captured. A vertical (portrait) orientation implies high profitability with relative low volume while a horizontal (landscape) orientation implies a high volume/low profitability focus.
The other important observation is that bars can also be negative. Those vendors’ names are listed below the bars rather than within them.
You can also compare the chart with the one from last quarter:
The Rawr Chart | asymco
The major publicly traded phone vendors have all reported results for the second quarter. Based on the data available so far we can begin putting together a picture of the market.
The first picture I’ll draw is usually the last: profitability. The following chart shows operating profit from the sale of mobile phones among the eight vendors I follow (Nokia, Samsung, LG, Sony-Ericsson, Motorola, HTC, Apple, RIM).
This quarter saw a slight sequential decline in overall profit for the sector, but four vendors did not manage a profit from selling phones. Nokia, Motorola, Sony-Ericsson and LG all saw losses. The other vendors split the slightly decreased pie with Apple getting two thirds of it (66.3%)
This share is up from 57% in Q1 and 50% in Q3 and Q4. Samsung’s share went to 15%, though that’s not a peak level historically. In Q1 2008 the company was at 21%. RIM was at 11%, a level in a range that has been unchanged for three years. Finally, HTC captured 7.4%, a new high and an increase from 6% since last quarter. The profit share chart follows:
As Verizon has reported iPhone sales for one and a half quarters, it’s time to try to discern the impact on the product. There were several hypotheses floating around prior to the “big bang” of Verizon.
Some assumed that there would be a large migration away from AT&T and that AT&T iPhone sales would slump. Others that there would be no Verizon iPhones volumes at all because there were so many Android users already converted. There were also suggestions that the iPhone would explode in growth with two major operators carrying it.
What really happened?
The first chart shows historic AT&T activation with Verizon activations added. It also shows sales to “none of the above”, namely non-US sales of iPhones.
AT&T iPhone activations show no significant impact from Verizon and Verizon itself shows a modest start to sales. What did not happen is an exodus from AT&T. We also did not see a rejection of the iPhone by Verizon customers long exposed to anti-iPhone Droid advertising. We also did not see a considerable impact of Verizon on growth.
Verizon did contribute (4.5 million Verizon iPhone users is nothing to sneeze at) but the contribution was to a degree that was nowhere near a big bang.
That was because the real big bang was from the rest of the world. The same data in the first chart is shown below as a stacked area chart and a share chart. Had Verizon not come on board the business would still have grown year-on-year over 100% (and sequentially).
This graphic representation of the current and year-ago sources of income and sources of expense for the company shows how the business evolved in the last year.
The colored segments in the first column are Gross Margin contributions per product for Calendar Quarter 2, 2010. The white segments are cost of sales for those products. These costs are combined in the second column and the operating expenses are shown in the third column, taxes in the fourth and Net Income is shown in the fifth.
The same information is shown for Calendar Quarter 2, 2011. Click for larger view (1440 x 873 pixels)
The increase in the first columns is the “top line” growth and the increase in the last (fifth) columns is the “bottom line” growth
Similar charts for the last few quarters are shown here:
Combating superlatives fatigue | asymco
Summary view of Apple’s income statement [Updated] | asymco
Describing Apple’s growth, cost structure, product-level and overall profitability in a self-explanatory chart | asymco