The end of easy growth in smartphones

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 fortunes of vendors is now clearly tied to the fortunes of their platform choices. Android has a spotty record with Samsung[1] and HTC having accelerated growth with Android, Motorola and Sony Ericsson have not rallied to a similar degree (though they did remain operational). But it’s at least very clear that BlackBerry OS and Symbian are now a burden to their owners.

The fact that not all vendors benefit from a boom indicates that the early, happy days are over. People are noticing that there is a difference between smartphones and are not buying any and all. An era of competition will follow. I hinted that such a shift would happen when a “tipping point” was forecast and that point has been reached in several mature markets.

The consequences are that weaker platforms and vendors will come under increasing pressure.


  1. Samsung decided to stop reporting the number of smartphones they sell. They also refuse to report the break-down between different platforms–they sell Windows Phone, Bada and Android devices. The figure I gave to Samsung is 19.9 million units, higher than 19.0 and 19.3 million from other analysts.
  • Stanil

    One of the rumors among the OEMs is that Samsung is not sharing the data of smpartphone shipements, not only because of the Apple litigation, but because they’re still bellow Nokia, and that is simply unfashionable 🙂

    • Joe_Winfield_IL

      Speaking of the Apple litigation, it's clear why Apple has turned so much of their attention to Samsung and HTC. If Apple believes the whole industry is riding on stolen IP, it makes sense to go after the winners rather than the losers.

      I can't help but wonder how long Apple will continue working with Samsung on components and fabrication work. Unfortunately for Apple, Samsung has world class hardware; this must muddy the waters quite a bit. But still, one would think that Apple is aggressively courting the Taiwanese and Korean manufacturers to replace Samsung's piece of the iPie.

  • Tom Ross

    Horace, when and at what level do you think Android will end its explosive growth phase and bump against the upper ceiling of the market? 100 million per quarter within the next 12 months? I believe that Apple can only catch up again after that. Their supply can’t compete with 500 % growth, but after Android has beaten the easy targets Symbian and RIM by 2012 it will have to settle with market growth rate of 50 % or so while Apple can keep growing around 100 % into 2013 and beyond and for the first time take share directly from Android. Does that make sense? Or do you think that the upper limit for Android is not just the smartphone market but the overall phone market? Does Android have to appeal to extend the smartphone market as rapidly as they’re growing now? Can it capture a majority not just in smartphones but in phones overall at the same speed?

    • If we don't count IP litigation into account, I don't think the iPhone will ever catch up to Android. This is a reflection of two very different strategies.

      Apple prefers a demand strategy because it lowers their supply and material costs. They also often use higher end hardware that has much higher supply constraints. This is one of the downsides of going to market with only one or two models, but also allows to offer a high value to price ratio.

      Android has been designed with a supply driven model in mind. Need to hit lower price points? Use cheaper components or leave out certain features altogether. This is a market share driven strategy.

      I can see the iPhone catching up with an iPhone Lite or if Apple signs up more OEMs, but for now those are only assumptions that I don't think they should be used in analysis.

    • asymco

      I take the point of view that the entire phone market will be only smartphones. If that's the case there are still several billion smartphones left to sell before we reach saturation. Android coupled with MediaTek is a great combination to enable penetration. I expect Android will reach a billion users rather quickly. But I also expect iOS to reach a billion users (perhaps not as quickly). The market is big enough (and provincial enough) to allow multiple platforms to co-exist and a billion users is a safe pond to play in for a platform, especially one where there are significant sources of stickiness.

      • sscutchen

        I think it is useful to subcategorize smartphones. The iPhone and most Android phones are application phones, which seems like a superset of smartphones. These are really devices that happen to have a phone application and supporting hardware. Nokia and RIM seem to make devices that are phones with internet and communications technology inside, but they don't have the capability nor ecosystem to compete with app phones. WP7 and WebOS devices can be categorized as app phones, but they are lacking competitively at this time.

      • I think you mean app phones are a subset of smart phones, not a superset. If not, could you explain your categories in greater detail?

      • Tom Ross

        Agreed, but that’s 2015. Today, Android is growing at 4,4 % week-over-week, not from a low but from a high level. This will either lead to 400 million Androids shipping in Q2’12 (not likely) or growth will have to slow down very soon. So the question is when and at which level.

      • EWPellegrino

        The answer is, it depends on Nokia. The current growth in Android sales is powered by the collapse of Nokia. If Nokia can reverse that, or stabilize then Android will stop accelerating at the current rate. As long as Nokia continues their death spiral, Android will continue to gain share fast.

      • Bay Area CA Male

        Excellent theory!

        I'm all about Apple but it's simply impossible for ONE company to outsell literally dozens of companies/manufactuers selling at all price points…. summed up sales units from all those separate entities against ONE company, Apple, although that is a super company!

      • gslusher

        "I'm all about Apple but it's simply impossible for ONE company to outsell literally dozens of companies/manufactuers selling at all price points…"

        Probably not in phones, but Apple has already done this in personal music players-iPods have held about 70% of that market for several years-and is doing it in tablets.

      • iosweekly

        I think youll find that the Android growth has already curtailed in the middle & premium end of the market, with the majority of unit growth coming from the low end cheaper android handsets.

        Unfortunately it probably is impossible to obtain the breakdown in what type of smartphones each manufacturer is shipping, but I would take a guess that apple & android probably account for 90% of the $500 ddevice & above market, but android on cheap "other manufactures" units for most of the sub $200 market, with the middle ground from $200-$499 probably being the most fiercely contested between iOS, Android, RIMM, Nokia & Wnidows Mobile/WP7.

        I cant see apple wanting anything to do with the sub $200 market, but can see them making a charge for the $200-$499 market over the next 12 months with a slightly chepaer PAYG iphone 4/iPhone Air (free on contract).

        *note: all prices quoted are for the USD unsubsidised price that the manufacturers actually receives on a sale.

      • iosweekly

        sorry,in teh first sentence I meant the Explosive Android growth has altready curtailed in the middle & premium market, not growth curtailed overall (which I think has slowed to the normal overall smartphone market growth, if not less).

      • Allan Feliciano

        With android’s return rates growing, I don’t see it hitting a billion that much faster than iOS. There have been surveys that a large number of current android owners plan to replace their units an iOS device in their next phone purchase. And with the smartphone market set to explode to take over the rest of the cellphone market, iOS still has a huge chance to still take over the OS lead. android is seeing its share of problems and Apple is running full steam ahead. It’s going to be close, but I’d still be betting on Apple come 2015.

  • pk de cville

    Added to above

    All this customer (and telecom) delight will not be replicated by the avowedly 'open' helter skelter Android model.

    It would take years of costly commitment and marketing for any one of the Android crowd to distinguish themselves as great for the consumer. This is not going to happen.

    Android will devolve to good enough for some, but Apple will remain the 'BMW' that most want and many can buy.

    If we limit to only the current pretenders, I think Apple will take 60% mkt share by 2014. I believe Msft has a chance to create a quality alternative and, if they're successful: Apple 45%, Msft 25%.

    Of course, if correct, Apple will be above $650 by 2013. (Long Apple)

    • iphoned

      So first Apple was going to dominate smarphones like it did music players with iPod, then it was going to have justbthe major share, now it will be the BMW of smartphones….you see where this is going, adjusting the success metrics with to fit the changin data…soon the iPhone will be talked about as the Ferrari of iPhones…then "maket share is not important" as long as they make the most profits…does anyone see any slippery slopes?

      • jfutral

        From Apple's point of view, they have never tried to create anything but the best smartphone. Whether you think that is a "BMW" or not is just a personal characterization. Also from the beginning Apple has never said they seek market share domination (I seem to recall only mentioning 1% of the cell phone market as a stated goal), except in as much as there are people who want a quality product/experience package (never mind that Apple is still the largest smartphone maker in terms of market share).

        "does anyone see any slippery slopes?"
        Only straight to the bank.


      • asymco

        Car analogies are not appropriate. Cars are not sold as platform products.

      • I agree that the car metaphor has problems. It is good way to describe the market positioning of products, but as market share is concerned it is very different cell phones. Actually the wireless phone business is unique in the way the carriers are the largest sales channel. Only Apple sells significant smartphones through their own channel, vertically all others sell the overwhelmingly majority of their product through the carriers.
        Apple's slow carrier expansion (especially in the US) was helpful at the start but has held them back and created the opportunities for the 2nd tear companies (the Android crowd especially Motorola).
        Limited carrier rollout combined with the explosive growth of the smartphone segment and Apple's limited supply has limited their market share more than competitive product from the Android camp to date.
        If the overall market nears saturation the game will change, and many of the assumptions regarding the strength of demand for iOS, Android and Window Phone 7 will be testing in new ways and probably change dramatically.

      • ArtimusMacimus

        If you've ever followed auto racing I believe your opinion would change. Ford vs. Chevy in the US in every imaginable style of racing. Then there's the whole Constructors battle in F1 and endurance racing. The list could go on forever but I think you get the point. "Win on Sunday sell on Monday".

      • asymco

        I did once follow racing (Formula 1). I understand the concept of selling the brand and creating loyalty. However, the point about sale of a platform is not just about branding. The idea of a platform is that it creates loyalty beyond trust. iTunes and iCould (and iWork and iLife) are means for attaching users to a platform that binds their content and learning and increases switching costs.

      • Sadly, I think you are the one trying to make the slope. I don't think there has ever been talk of Apple "dominating" smartphones like it did with music players (though 66% of the profit may just count as dominating). When the iPhone first was announced, it was how Apple would simply fail. Then, after the success of the first iPhone, there was lots of talk of Apple being able to do very well in phones. There was really no talk about market share domination.

        I think all along the talk has been Apple will succeed very well in mobile and make lots of money and form a profitable platform to feed Apple and 3rd parties.

      • iphoned

        I am "making the slope"?? The slope is what it is – just look at the chart.

        I've been following this since 2007. Android proponents's argument has always been "it is going to end like Windows vs Mac". Once iPhone took off, the Apple's enthusiasts' argument I remember was " it is different – more like iPod where Apple walked away with the market.). Then as Android's rise in the mid 2010 refuted that argument, the argument shifted to "it is Apple against each hardware vendor, ,and iPhone is dominating any single Android vendor…etc..". (There was also an argument that is iOS overalls Android phones) But now we have new evidence that a single Android vendor's sales has nearly matched or perhaps even surpassed by now the iPhone, and in some countries as single Android device outsold the iPhone. So the latest argument that iPhone is dominating any single vendor/competitor seems to have fallen…

        Does anyone see a pattern? (Oops, I forgot, I am asking the wrong crowd here…but still, it is fun posing questions based on some factual evidence…

      • asymco

        Putting aside all the other arguments, what is *your* thesis? I try to recognize patterns but I am not sure which one you are alluding to.

      • Thor

        "fun posting questions based on some factual evidence"

        Perhaps, but your "facts" are a bit suspect. While it is certainly true that many have argue that this is not Mac vs. Windows all over again (because, well, it just isn't), the claimed similarity to the music player market was not that Apple would "walk away with the market." Instead, the point was that Apple's control over both hardware and software was an advantage, like it was with the iPod, not a disadvantage. Apple would not be limited to 5% of the market like the Mac.

        Yet, with the iPhone Apple walked into an established market with many entrenched manufacturers and where access is controlled by carriers. The fact that within four years Apple is collecting more than half the smartphone profits is pretty much "walking away with the market," at least as much as a single company can walk away with this market. That profit share has been increasing.

        Thus, If there is an analogy to the PC market, it's this: there is cutthroat competition from a bunch of look-a-likes that cannot distinguish themselves from each other via their operating system. This means low margins for OEMs. See Dell. There is another strategy involving product differentiation and focus on the "whole experience." That's what Apple does. With the Mac (where Apple makes dollars to Dell's pennies), with the iPod, and with the iPhone/Pad.

      • EWPellegrino

        Your questions aren't based on factual evidence, your questions are based on a kind of loose and sloppy analogy – that massive PC share back in the 90s nearly destroyed the Mac and that therefore massive Android share will destroy the iPhone.

        Except that wasn't what nearly destroyed Apple, John Sculley was what nearly destroyed Apple. Once Apple got its act together the massive PC share didn't destroy the Mac at all, in fact Mac share in the consumer market has been growing steadily for years now and they make more money in the consumer PC market than players like Dell.

        So in fact your analogy would indicate that at some point iOS and android will form a duopoly and then as consumers grow richer they will slowly switch over to Apple as they are slowly switching in the PC world.

        You've no more factual evidence that Android threatens Apple than there is that Windows does or Symbian did. Less in fact because Apple is growing iPhone unit sales faster in the last quarter than ever before, and the iPad is doing better yet.

      • Come, come, let's not give Sculley all the credit. (and don't forget who recruited him!) There was Spindler, the CEO who would hide under his desk when he felt tense. Amelio gets a pass because he was smart enough to sell Apple to NeXT (for -400 million dollars) while preserving the Apple shareholders stake in the company.

        Regarding car analogies: I'm sorry, but I'm helpless without 'em. I wouldn't be able to get through my day if I didn't think in terms of food being gasoline, and whether I need to take myself in to the mechanic to see about that knocking noise when I'm in 2nd gear.

      • Again, I think you are trying to make the slope. It is often used by tech bloggers (Joe Wilcox and Eric Raymond come to mind) that Apple is incapable of market share penetration and always references the Mac VS PC as proof. People will always counter that by bringing up iPod VS PlaysForSure VS Zune as evidence that the PC VS Mac analogy has very poor correlation in the real world. When that was brought up by most, it is not saying the iPhone will be like the iPod, just that the Mac VS PC is far from a foregone conclusion. The reality is the Mac VS PC is an aberration in the 70+ history of computers. NOTE: I believe the tablets will be more like the iPod but Phones are controlled to heavily by the carriers and their desired flavor of the day.

        Of course, in 2007, it was NOT (as you remember incorrectly) that Android will be like Windows VS Mac. In 2007, it was WinMo would be like Windows VS Mac. This is what led to Android's importance to Google in the first place. The fear that MS would walk away with the mobile pie of advertising.

        I think you are poorly imagining what the good analysts have been saying. I have been hearing for years the cry of the wanna-bees that we are heading for a monopoly OS share. In 2005-2006 it was going to be Symbian. In 2007 it was going to WinMo. In 2010 is was going to be Android.

        The monopoly controller has been a random shifting target of the year. The better analyist have been saying for 3+ years (and reading on most good tech blogs) that the industry will be multiple players with no single >80% dominate player like we had with Windows. This slope has been mostly steady and unchanged.

        So Samsung, a single Android vendor, has just about surpassed Apple in [smart phones]

        This is something many of the Android fan boards have been bringing up as the a canary in the coal mine prediction of Apple's coming death. The assumption is the 19.x million smartphones are 100% Android phones. The truth is the majority are Android but there are also Bada (perhaps 3-5 million) and WP7 (around 0.8-1.2 million) leaving 13-15 million Android phones. Very impressive but it looks like Samsung did little more than convert their "dumb/feature" phones to smart phones. Still impressive but far from a harbinger of doom for all other players especially Apple given that Samsung was able to budge their profit/phone much, it could be most were very low end phones.

      • LTMP

        I think you are referring to comments you may have read on some sites, rather than anything Horace has talked about. This site isn't really about what "fanboys" think about the market.

        Horace does an amazing job of presenting statistics, trends and analysis to give us a better understanding of what is going on in the marketplace. His predictions are based on sound logic rather than emotional responses, and he never hesitates to point out his errors. In fact, he proudly states that they are what allow him to refine his theories.

        You're correct, lots of "fans" made all kinds of predictions, most without any reason behind them. That has nothing to do with the discussion here (in my opinion).

      • "But now we have new evidence that a single Android vendor's sales has nearly matched or perhaps even surpassed by now the iPhone"

        The estimate of Samsung smartphone shipments is not 100% Android phones. I believe I read somewhere in the comments, probably from Mr. Dediu, that Samsung sells Android+Win. Phone 7+Bada…those are 3 "smartphone" OS that make up total shipments. We know that the Galaxy II has shipped around 5mil. It's Samsung's best selling device. Now you can triple that number to get total Android shipments (which is overly optimistic). Now we consider that these are shipments and not sales, again being optimistic, 13mil Android phones were sold. That's not matching or surpassing iPhone sales.

      • KenC

        Now that's a bit of a straw man, dontcha think? Who said Apple would dominate smartphones like the iPod? Certainly not Horace. And certainly not Steve Jobs who only stated a goal of 1% of the cellphone market. Who exactly thought the iPhone would "dominate smartphones like it did … with iPod"?

        The only "slippery slopes" I see are the ones where people make straw man arguments.

        Now, having said that, I did see a lot of speculation that the iPad market was different than the iPhone market, as the POS, point of sale, was much more similar to the way iPods were sold than iPhones, so that many predicted that iPad share would be greater than what many analysts were predicting which was that the tablet market would follow the smartphone one where Android OS took a larger share. Perhaps that's what you were thinking? (that's called giving you an out)

      • Ajay

        Apple's wanted to take 1% market share with iPhone. They have demolished their own targets. I guess they didn't expect competition as dumb as they turned out to be,

      • asymco

        Apple's 1% target was for the first year. They did not update that target since, but you can be sure it was not expected to remain at 1%.

  • iPhoned

    So Samsung, a single Android vendor, has just about surpassed Apple in smarphones, and already has done so in to two major markets -UK and Japan. Also Samsung is growing smartphone sales an order of magnitude faster than Apple. And that witout their flagship smartphone yet to be available in the US. (I know there will be iPhone 5, but Samsung and others are not sitting still either…)

    How is that trend not ominous to the iPhone?

    • r.d

      Henry Blodget is that you.

      • Really? Do you really need to resort to that?

    • Tom Ross

      Not any more dangerous than Nokia was when Symbian still had 50 % of the smartphone market. Samsung’s overall phone sales are barely growing. They’re just putting a new OS on their phones, turning feature phones into smartphones (I’m ignoring the new hardware here, just in terms of manufacturing, distribution and pricepoints). And it’s not even Android on all their smartphones. Don’t forget Bada. Both Nokia and Samsung are behemoths massively outshipping Apple. That has been true since 2007.

      • iphoned

        >>They're just putting a new OS on their phones, turning feature phones into smartphones

        I see your point. Mathematically this is correct when one looks at the overall slightly-declining Samsung handset sales.

        But at he end of the day, is there a difference? I suppose most iPhone customers still come from the feature-phone pool? No?

      • iosweekly

        the big differnece is that apples iphone customers are coming from other manufactuers feature phone customers, whereas samsungs smartphone customers are mostly coming from their own feature phone customers.

        apple is mostly cannibalising everyone else, whereas samsung is mostly canibalising itself.

      • LTMP

        @iosweekly "the big differnece is that apples iphone customers are coming from other manufactuers feature phone customers, whereas samsungs smartphone customers are mostly coming from their own feature phone customers."

        I don't think we know that. It is entirely possible that there is no loyalty to manufacturers in the feature phone market. Samsung could be loosing customers in feature phones to Apple et al., and be bringing in smart phone customers who haven't used Samsung phones in the past.

      • unhinged

        Then how do you explain the drop in Samsung feature phones (as mentioned by Horace above)?

    • Check the previous blog post by Horace, profit: Apple make ~$300 per iPhone, whereas Samsung make less than $30 per smartphone.

      • iphoned

        Isn't such pofitablity a danger signall in the face of rising market share if he competing smartphone OS?

        I hate to bring up this analogy, but didn't Apple under John Scully enjoyed similarly superior profits, vs Windows box vendors, many of which effectively sacrificed themselves for the ecosystem?

      • Not when you growing your market by > 100%/year. If you are supply constrained, getting the most profit is what you want. Simply lowinger the price and not being able to deliver more product is a very bad idea.

      • Joe_Winfield_IL

        "I hate to bring up this analogy" – no you don't. You relish the opportunity to bring it up, and that's OK. You are an effective troll for some reason on this site.

        There is no danger signal / red flag / canary in the coal mine / warning flare regarding Apple today. Not in its profit, unit growth, consumer sentiment, competitive landscape, or anywhere else. Eventually the company will misfire and will pay dearly for it. But relative growth vis a vis Samsung is a non-event.

        Samsung is an OEM, and has chosen to allocate its capacity to smartphones away from existing feature phone production. They should be commended for reading the market signals and navigating well. They are the clear beneficiary of Nokia's fall from grace, and kudos to them for being ready and able to step up. They smelled smoke coming from Finland before Elop pulled the fire alarm. Perhaps the company can even develop some sustained advantage and differentiation strategy. But the chart at the top of this page clearly shows that Samsung is not a proxy for Android. Motorola and Sony Ericsson are much greater victims of Samsung's success than is Apple, and you don't have to strain your eyes to know this. Samsung (and HTC) is doing what Dell did in the late 90's; they are consolidating the share of a licensed platform. It means little for the platform, but it sure hurts the other licensees. Just ask Compaq, Packard Bell, Gateway, etc. how they feel about this type of land grab. Obviously the tide is rising faster in smartphones today than in PCs back then (leading to growth for most), but the Motorolas of the world can't run in the red forever. There will be losers, even in camp Android.

        Back to the headline – The End of Easy Growth In Smartphones.

    • jfutral

      "So Samsung, a single Android vendor, has just about surpassed Apple in smarphones [sic]"

      Never mind that this is just a quarterly figure, it is amazing how well someone can do if they copy everything Apple! Just shows Apple's model works. Too bad they couldn't come to this figure by coming up with something of their own. Whither innovation?


    • asymco

      Samsung is not growing smartphones "an order of magnitude" faster than Apple. Apple grew by 140% vs. Samsung's ~500%. But Samsung grew from a nearly zero base and Apple been more engaged in the market longer.

      • iphoned

        500 vs 140? That's not an order of magnitude faster, while without even their best selling phone available in the US? In suppose 10x is officially "an order of magnitude", but in the real world 3.6x is close enough to call it that IMHO.

      • simon

        Why do you make up your own definition and act incredulous when others don't know what your definition is?

      • iphoned

        O.K. mea culpa. I am sorry if I confused some people about the fact that most recently Samsung has grown their Smartphone sales at the rates several times faster than iPhone's. Just so no one is confused, I also pointed out that this is just a single vendor smartphone comparison – just Samsung vs just Apple. Not Apple vs. all Android vendors. Now, I think that clears it.

      • asymco

        I would not be fixated by growth rates from low bases. iPhone also had a period of growth at more than 600%. I'll be posting a chart showing the percent of phone vendors' volumes converted to smartphones. That will show that Samsung is moving to switch its feature phones to smartphones aggressively. The wisdom of that move is in realizing that feature phones have no future. That wisdom has not penetrated into all the market participants.

      • iphoned

        It seems to me that Samsuns recent growth is hardly from what one would call "low base". Also the longer term-chart of Samsung vs Apple kind of seems to reinforce the point that Samsung appears to be outpacing Apple in the smarphone race.

        Now, there is no question that mathematically-speaking Samsung is substituting feature pbone sales for smartphones. But how is this relevant other than Samsung being able to take advantage of their feature-phone position to gain smartphone customers? Aren't everyone's smartphone sales still come from largely featur-phone pool?

      • kevin

        Samsung smartphone shipments estimated to be at 3.2m units in 2Q10 and 2.6m units in 1Q10. (Apple sold 3.8m units in 1Q09.) How is that not a low base?

        Apple and HTC have never sold featurephones, so they aren't substituting one for the other. Instead they are taking upgrades from other featurephone mfrs. (I see how you tried to change the assertion by using the word "pool".)

      • iphoned

        I see you point. A Samsung smartphine sold to a Samsung feature phone customer is somehow different from an Apple's smartphone sold to a feature phone customer?

        And, yes, let's just white-out that grey line on the chart idicating the rize in Samsung's smartphone sales catching up to the iPhone sales and rising steeper. it is just a visual distraction to the iPhone chart, anyways, and means nothing, because these are just sales to the Samsung's featurphone customers.

      • Are you making up your own math definitions? Is that not a slippery slope?

      • iphoned

        Yes, guilty as charged.

      • iphoned

        >>But Samsung grew from a nearly zero base

        Samsung grew 500% from a "nearly zero base"???

        Am I somehow misreading the charts/data?

      • asymco

        A year ago, Samsung was selling 3.2 million smartphones. They had 5% market share. They were also selling 60.6 million non-smart phones or about 24% of that market. Smartphones made up 5% of their volumes while today they make up 26% of their volumes. Their overall growth in phones was 18.5% (or less) but their non-smart phone volumes shrank by 8%. Their non-smart share has come down to about 22%.

        The base of 3.2 million is what is being compared to their current 19.9 million. 3.2 million may not be zero but for the second largest phone vendor in the world to have only 5% of the smartphone market indicates just how far behind they were back then.

        Samsung now has 18% share of smartphones which is still less than their overall phone share.

      • iphoned

        oK. The rates are higher because the base is smaller. What about the fact that Samsung has just about matched Apple in the overall Worldwide smartphone sales despite getting a much later start? What about the fact that this includes a single Samsung model outselling the iPhone in at least two markets such as UK and Japan? What explain this performance?

      • asymco

        Samsung has done very well. What we don't know however is how many of the smartphones it sells are its own Bada platform. It could be more than 5 million. Last quarter the company shipped 3.5 million (out of 12.6) (see…. Samsung is also selling Windows Phone devices in Europe. Again, we don't know how many yet.

        Samsung is selling lots of smartphones, that's great. I still don't see why this is an ominous sign given the fact that Apple is also selling lots of smartphones. I have not seen the data on sales in UK and Japan but I know that performance for individual SKUs varies widely depending on promotion and many local factors. What you need to look for is consistency.

        The article is not about this topic however. It's about the fact that Nokia and RIM are heading in the wrong direction for the first time in the history of the market. It's also about the fact that Android did not seem to benefit Motorola and LG to the same degree as Samsung and HTC. If there is a puzzle to be solved it is why does Android favor some but not others and what are the characteristics of a successful Android vendor.

        And furthermore, if that formula for success can be copied, what will happen with ZTE and Huawei et. al. They have a lower cost approach that could an "ominous" threat to Samsung if they can duplicate the Android formula.

        Are buyers looking for Samsung or are they looking for Android or are they looking for a low cost smartphone or are they looking for any smartphone?

      • iphoned

        >>The article is not about this topic however.

        The tweet poining to the article said that the article is about "platforms now having to compete".

        And in the platform race, one platform growth consistently outpacing the other's is always a point of concern for the one being outpaced. Even when one thinks there is room fo many to co-exist, which is not at all a foregone conclusion.

        I merely pointed out the fact that ine if the most striking features of the chart is Samsungs rapid rize nearly to the level of iPhone sales, with the trent poining out to further gains.

        The people that dismiss this as a threat to Apple's platform, are same peple that change their theory with every data point poinitng to the contrary.

        At first, the iPhone was going to dominafe like the iPod, then with new facts of Android rising beyond that assertion, iPhone was going to dominate any lther single Android vendor, now that this is clearly in question, we are at "there is room for multiple platforms" and " Apple 's profits dominate".

        I know, I seems to have distirbed a hornet's nest of avid Apple enthusiasts with my observations and questions…

      • asymco

        By saying that platforms have to compete I meant that they can no longer rely on just showing up. It was a spectacle to watch uncompetitive platforms like Symbian and Blackberry grow for years without offering as much as a nod toward improving themselves. RIM grew at triple digit rates and Symbian at a very healthy clip while observers marveled at their lack of value.

        It is that era which is now ending.

        From now on products will need to compete on being platform products in the first place and not just shiny hardware stuffed into ambivalent channels.

        On this shift in the basis of competition the essential quality of a platform will make a product stand out.

      • iphoned

        >>And furthermore, if that formula for success can be copied, what will happen with ZTE and Huawei et. al. They have a lower cost approach that could an "ominous" threat to Samsung if they can duplicate the Android formula.

        Agree. Samsung's position as a leading smartphone vendor is not at all safe. Neither is anyone else's (that should be obvious) although Apple's is much safer than the others'. I was just pointing out that we now have a single Android vendor selling at nearly the level of Iphone and with faster growth – a brand new development in the iPhone vs Android wars.

      • iosweekly

        I could be wrong, but the data is far less impressive when looking at overall phone sales.

        Samsung is merely replacing feature phone sales with smartphone sales. its not growing its overall markeetshare. Apple, however, is gaining significant overall marketshare, at a growth rate far higher than samsung.

        Samsung: 70.2 million Q22011 vs 63.8 million Q22010 = 10% growth rate
        Apple: 20.3 million Q22011 vs 8.4 million Q22010 = 142% growth rate

        At those rates Apple will surpass Samsung in TOTAL phone shipments in less than 18 months.

      • davel

        It seems that Samsung and HTC produce some quality phones. Perhaps the discrepancy is due to quality of product rather than specifically OS.

        I have a question with ZTE and the like. Will the introduction of lower quality products significantly degrade the Android brand? To date it is associated with smartphones, ie high quality, high function phones. What happens to Samsung and HTC's branding? Do these two offer uniformly high quality phones to distinguish them from others or do they offer a range of phones high to low further degrading the brand?

    • This is only an issue if the market stopped growing, Samsung is not taking share from Apple, as Apple is still growing both share, units and profits.
      The real issue is that iPhone demand and sales velocity has never really been tested, they have been supply and channel limited since their introduction.
      Samsung on the other hand has much greater capacity in this space and has flooded the market (along with occasional overstocking in the channel). The question is if and when Apple reaches un-constrained supply and distribution will Android or Samsung has established a stung enough brand position to hold onto their share.

      • iphoned

        >>The real issue is that iPhone demand and sales velocity has never really been tested, they have been supply and channel limited since their introduction.

        Don't we have in the UK market a small example of an unconstrained market competition in smartphones? There could perhaps be other small datapoints worldwide that one can use to make reasoned projections, instead of expressing one's hopes of what could happen….

      • Tronin

        Or you could look at Australia – the iPhone has been available on several carriers and unlocked since it's introduction, and dominates the smartphone market. I suppose it all depends upon which "small example of an unconstrained market competition in smartphones" suits your argument…

      • asymco

        The AMP index will give a better picture of industry performance. Stay tuned.

    • ArtimusMacimus

      You do realize those sales figures are only estimates, right. So they could be off by several million units but we'll never know because Samsung won't give us the figures.
      Also, how do you know how many of those sales are in fact Android. You don't, how ever Samsung did say they believe that they will sell about 60 million smartphones this year. Apple without any sales sequence growth the next 2 quarters is on track to sell 80 million.

    • Hamranhansenhansen

      You fell into the trap of assuming all phones are equal, that any 1 phone sale is equal to any other 1 phone sale. Smartphones are not all the same even though they are all called "smartphones" … it is only a category. Apple makes 10 times the profit per phone sale, so they don't have to sell more units than Samsung. The game is profits, not units shipped. Apple took 2/3rds of the profits last quarter. That is ominous for the phone makers who are just hanging on and are going to exit the industry.

      The only argument for units shipped is developer target, but again, that assumes that Android apps (Java) and iOS apps (C) are equal, and they are not, and assumes that monetization of Android apps and iOS apps is equal, and it is not, and that the percentage of users who use apps or the Web on Android and iOS devices is equal, and it is not.

      There isn't anything ominous for Apple. They ported the Mac and the Web and the iPod to a phone and no surprise that is wildly popular. So now they make the most popular phone, media player, and notebook PC. They are the kings of the world right now.

    • @iPhoned

      I added a response as a new comment. It includes a link to an article by Michael Mace who studied dying platforms while he was at Apple. Overall, I think that the most important thing to keep track of is if a platform is retaining it's momentum and how much it needs to sacrifice to maintain growth.

      Both Android and iOS seem pretty healthy to me and we do have evidence of multiple platforms coexisting in the mobile space with Nokia/RIM in the past.

    • Bay Area CA Male

      Dude you are so wrong I don't even know where to begin!!!!

      Apple is not being outsold by ANYTHING these days!!!
      And let's not even bring in the iPhone situation!!! Samaung is not outselling the iPhone even with all their android army combined! If you see the chart above it clear the iPhone leads ALL phones out there. Furthermore, samsung also sells windows phone 7 os. Now if you ADD all the android smartphones out there made by all those dozens of companies and manufacturers they barely outsell the iPhone and in Feb and march and April when the iPhone launched on Verizon is actually outsold every single device in the company's history.
      And I'm not even going to talk about the iPhone 5.
      You and all othe android geeks are about to witness a jawdropping makes you gasp for air type of shift in a dramatic fashion when you talk about the smartphone market share!

      So again… You couldn't be more wrong and I wouldn't and don't even know where to start!!!

  • Sivan

    RIM is the only vendor with a currently non-competitive hardware lineup. That is still a matter of decision for them, the components are readily available.

    • Bay Area CA Male

      You are absolutely right across the board!
      RIM is definitely the only platform without any current or foreseen advantage. The Apple iOS is an explosion which has not let up and doesn't seem like it's going to. And android as a whole, all companies combined isn't doing to shabby at all, despite the fact that profit margin is celebrated when it's there at all (LoL)! But in all fairness android is doing well. Then there's MS's WP7 OS which is on the heels of getting married to Nokia's supply chain and it's existing, formerly loyal, user base. Palm OS is at least getting rave reviews and HP at least to date appears healthy and like a well run organization.

      So that just leaves RIM… Lonely, isolated, cold, confused, deer-in-headlights, left-scratching-their-head type of look on their face.and badly beaten , poorly criticized by the media all in one fragmented sentence.

      I and many according to several news outlets I've visited, see no end in sight for poor RIM's freel fall decline.

  • iphoned

    Thanks r.d for the name calling. Did I get my facts wrong some how in the post?

    • EWPellegrino

      You're assuming that the very fast growth by Samsung over the last year is a fundamental threat to Apple, which is completely unwarrented.

      First, as Horace already pointed out, it's pointless to consider the % growth of samsung because that's more indicative of how long they had failed to penetrate the smartphone market than it is of anything else. For such a huge feature-phone maker to have been shipping fewer smartphones than HTC in 2Q2010 was an embarrassment.

      Second, Apple is having to grow manufacturing capacity at a rate of 100% YoY and above, which Samsung is not. Samsung already had the manufacturing capacity, and as their featurephone sales plummet they have plenty to spare for a switch to smartphones. When you see Apple growing their sales at far less than 100% YoY you can start to worry that they are facing serious competitive pressure. RIght now it's not even clear that Samsung is significantly impacting HTC, nevermind Apple. Apple is also having to expand carrier relationships, has only recently started shipping CDMA phones and has yet to produce a TD-SCDMA china phone at all. Apple's constraints have little to do with other market participants thus far.

      Third, the latest big jump in Samsung's smartphone sales correlates with the collapse of Nokia's. This is indicative that both are big players in the low-end of the smartphone market, which might be considered more like advanced feature-phones. Thus much of Samsung's future rise will depend on Nokia's continued fall, should Nokia manage a turn-around we can expect to see Samsung's growth slow, or even reverse. Even if Nokia collapses, leaving Samsung as the new big player in budget smartphones, that's no reason to assume that they'll be any greater threat to Apple than Nokia themselves were. How can we be sure that Samsung is playing in this end? Because in spite of the massive switch from feature to smartphones their ASP rose only 10%

      Fourth, we have yet to see any negative pressure on Apple's ASP or gross margins. Not only has Apple's YoY sales growth not fallen in the last quarter (in fact it rose), but margins and ASP are as strong as ever. Samsung's handset revenue is lower than Apple's and growing more slowly.

      So in conclusion while it is true that Samsung's YoY smartphone growth was 500%, it's not true that this has anything like the implications for the market that iPhones 600% YoY growth when the 3G launched had. This is just the equal and opposite reaction to Nokia's fall.

      • iphoned

        oK. Nothing to worry about then….that Canary was really small…1/100 size of a human…and a different species anyways…not relevant.

      • EWPellegrino

        If that is your best counter argument then I think we can consider the 'samsung growth threatens apple' case closed.

      • iphoned

        That's what I said, too. Nothing to worry about.

      • iosweekly

        motorolla ecperienced explosive smartphone growth last year on the back of android, look where they are in 2011…heading for the dumpster…

  • As the market matures it is obvious that iOS and Android will be major players, and it is questionable if there is time or space for Win Phone 7. All the others are out unless something changes dramatically for HP Palm and RIM.
    Also interesting is weather Motorola and Sony can survive as significant players, if the market matures and becomes more competitive that would imply significant price pressures on undifferentiated product. Once it Android is rapidly moving to a commodity business where being a low cost supplier with fast time to market is the key. Samsung, HTC and LG are better positioned to succeed in the Android commodity market.

    • Hamranhansenhansen

      With Windows Phone 7, it is questionable whether they have sold enough phones yet to make back their marketing budget.

  • EWPellegrino

    Horace, can you give any insight into how you determined your Samsung numbers? Is your estimate potentially including their tablet shipments? Is your higher than consensus estimate of their smartphone sales due to a lower than consensus estimate of their tablet sales?

    • asymco

      I used the information they provided which was growth rates but picked from the range optimistically. I assumed 8% growth in overall units (they cited high single digits.)I then assumed that their non-smart units shrank by 3% sequentially (they cited “small” decrease)The difference between these figures was the total smartphones.Others have cited 19.0 and 19.3 but I figured it could also be over 20. Basically the error we're looking at is about +/- 1 million or 20%.What I am really curious about is the number of Bada handsets in that mix. This is not only an Android story.

      • asymco

        I meant 1 out 20 or 5% (not 20%)

  • EWPellegrino

    Absolutely agree on the Bada issue – but hard to see how we can get any insight into it. I think we also have to consider the tablets. The 70mil handsets shipped in Q1 specifically included tablets I believe, so if there were increased shipments of tablets in Q2 that would eat directly into the assumed increase in the smartphone number. If their quarter ran till the end of June then the 10.1 launch was within it and would presumably have entailed significant shipments into channels.

    • asymco

      Good point about tablets. There are analysts who estimate the platform volumes separately. I recommend Canalys. Unfortunately the data they publish freely is chosen arbitrarily. We can hope they release the Bada estimate.

  • Iphoned

    “The Decline and Fall of the Finnish (mobile) Empire” – Anonymous, 2011

  • Rob McQualter

    All this Samsung /Apple discussion seems to be ignoring a vital piece:

    When an Android vendor sells a phone, that is the end of their income. With Apple, it is only the beginning.

    Google is the big winner here, Samsung is only avoiding losing.

    • Kevin C. Tofel

      Rob, I don't believe that's entirely correct. Back in October, Samsung started up their media hubs; software storefronts for books, music, television and movies. Those hubs are now shippingon Samsung smartphones. I don't know how much $ Samsung is (or isn't) earning from them, but the company has at least created another potential avenue for revenues after the hardware sale.

    • But can apple continue to ignore the low and middle parts of the marketplace? Apple devices continue to be high end, relatively expensive and are only on the two most expensive carriers in the US. If they continue to ignore the value / cost sensitive users – Android devices made by Samsung and htc will continue to sell.

  • Ptmmac

    I think iPhoned has raised some intelligent questions. It is clear from the slope of the Samsung sales curve over the last 5 quarters that they are on a tear. It also is obvious that Apple has lost some momentum in the last 2 quarters. Long time apple watchers are aware that the slope drops every time a model gets long in the tooth. Last quarters numbers showed an up turn in momentum in an off quarter for apple. This is why apple number crunchers are incredulous that some one is pointing out a real competitor. I think you should not underestimate the power of Samsung's brand and its willingness to get down and dirty to win this war. They have a very strong integrated production capacity, brand name, tech know how and are highly motivated by Apples profits to improve the return on their assets. That they are an important supplier of Apple's parts is beyond question. If Android wins the patent battle then they are clearly positioned to push Apple out of the way. Apple has learned something over the years about IP battles. Being the popular choice to win is no consolation if the IP is not strong enough. Apples real solution is to continue innovating and draw a clearer and cleared picture of Androids willingness to copy them. If Samsung fails to win this battle they will always have the option of taking second or third place and scraping by on commodity supplier profits. This is not a sprint. It is a marathon. Look at the battle for pc os domination. It is more competitive today than it has been since pioneering days. Smart phones are here to stay. Samsung and Apple are going to be battling it out for years to come unless Steve Jobs has not truly gotten Apple ready for his demise. Apples stock price still reflects these realities. I personally believe Steve is going to be with us a lot longer than his competitors are expecting. I know I don't think Apple can ever be ready to innovate at its current pace without his critical eye.

    Thanks for all the really good analysis here at asymco. I really enjoy the quality of both sides.

    • I know this chart only covers through Q1 2011, but the comment here that "Apple has lost momentum in the last two quarters" seems silly in light of their reported performance in Q2. Record performance in iPhones sold along with $24.67B revenue and 95% profit growth is losing momentum? Really? Perhaps I'm missing something in my fanboi bubble.

    • iosweekly

      Samsung only grew their total phone shipments in Q2 at 10% over a year ago figures. they are barely increasing their smartphone unit shipments quicker than they are falling in featurephone unit shipments.

      Samsung is on a lot more phone carriers than apple currently is, so has much less opportunity for distribution channle growth (whereas apple can still double the amount of carriers it distributes through).

    • davel

      I do not agree with the statement that Apple has lost momentum in the past 2 qtrs. Their growth year over year was pretty good.

      Your point about IP is very insightful. Clearly Apple has learned the lessons from the 80's and 90's with its battle against Microsoft. Apple lost the look and feel war to Microsoft because it did not stake out its ground in an era where nobody but Microsoft did. It is doing so now. Google is clearly trying to acquire patents because it has none. It very successfully copied Apple and now both companies are in a battle to win in the courts.

      Apple also recognizes the threat by Samsung and is responding by pulling off from them where it can and suing them to slow them down. Samsung has a well earned reputation in various categories. It is trying to move into the brand name smartphone market rather than just dominate the component market.

      • ptmmac

        I am only going by the slope of the curve. Experienced Apple watchers know that the earlier trend was for the curve to go negative as the new iPhone was about to go on sale. This did not happen so from our perspective there was an upswing in demand and more importantly supply when we all expected a down trend. This does not remove the drop in increase of the curve that still happened. Samsung has not been supply constrained like Apple mainly because of how many different phones and price points they are covering. The real thing to watch for is Apple producing a lower price point iPhone. If that happens, then Apple may have a growth curve slope matching Samsung's and possibly including its high margins. Remember the iPod. Apple did finally fill in the lower end of the market and walked away with 70% market share. 70% market share in cell phones would make Apple the first multi Trillion $ company. I don't expect this, but it did happen last time.

  • Walt French

    iPhoneD’s persistent challenges inspire me to wonder: how can people do straight-line extrapolation on such a dynamic market?

    I’ll pose this riddle: what happens if Sammy and HTC continue to dominate the higher-priced Android market (possibly paying Microsoft and/or Apple $15 a handset)? At that point Google can congratulate themselves for having prevented Apple from achieving 100% market share, even for speeding up smartphone domination. But to also declare that they have no intention of keeping up their subsidy to two manufacturers. Declaring a victory and pulling out. Isn’t that a very likely scenario under the economics we now see in place?

    • PatrickG

      Good points Walt. I wonder though if Google's stated desire to prevent the draconian control by Apple is nothing more than smoke and mirrors to draw attention away from other issues they would rather not enjoy much scrutiny. Much also depends on what Google's intentions are internally for the lifespan of Android. I've heard it argued that Android was a stop-gap purchase to bring a player into the mobile space because they saw that the smartphone mobile device was a stronger penetration than their ChromeOS-driven netbook solution. Confirmed when netbook sales declined so badly. Even the first ChromeOS driven hardware has been met with tepid reviews. This may signal that Google will now attempt to strongly reinforce Android's importance, where prior to this they were staging ChromeOS to take over for Android – primarily because it plays more closely to their core business.

      In which case they will try to bolster support for HTC and Samsung and the other players where they can, perhaps in off-setting subsidies against Microsoft and Apple licensing. Samsung is a strong electronics company, and has a lot of advantages that Apple does not. What they do not have is a platform, and the value of that is still playing out in the smartphone market.

      • neilw

        >I wonder though if Google's stated desire to prevent the draconian control by Apple
        >is nothing more than smoke and mirrors.

        Of course, that was always meaningless theater. Google's worry would be a dominant ecosystem that is not dependent on Google and/or is out of reach of its advertising.

        Google's vision is that you should be able to do whatever you want, as long as you're dependent on them and they can watch you at all times. It is up to the user whether this is more or less appealing than the aforementioned "draconian control."

    • iphoned

      well, the chart shows that Apple’s #1 competitor has nearly matched it in smartphone sales in one fewer years, and cuntinues to grow faster…and that is just one playet from the competing ecosystem…one has to be blind not wonder about the implications of that to Apple’s position long term…

      Having said that, Android’s IP challenges are looking pretty grim. I would’t be surprised if IP issues will end up nutering Android.

      • David

        That's one way to interpret that. Another way is that Samsung, after release years of effort, giveaways in the form of BOGO, rather alarming copying with the benefit of hindsight *still* can match neither the profitability or units sold of Apple's two models.

        All of their effort cannot outsell the year old iPhone 4 and two year old iPhone 3GS.

        And this is with Google handling the OS side of the table and Apple handling Design for HW and software.

        All of this effort, all of the lawsuits and they are still in second place to older hardware.

        There is a canary all right, but the mine isn't in Cupertino.

      • praev

        It's SHIPMENTS!!! NOT SALES. So far Apple has confirmed that it can sell all iphones it ships. This is reflected through its very high profits. Samsung hasn't said anything about shipments versus its actual sales. So…..hmmmm.

      • davel

        You have made some good points, but confuse Android with a single entity. Which Android are you referring to?

        There are many Androids out there and that is the problem. It is nascent now, but over time this will be a problem. Likely this is the cause of Google closing its 'open' platform this year.

  • L Frank Turovich

    There are two battles going on here and Apple only cares about one. Many people think that selling the most smartphones is the big battle, and that Apple somehow lose's by not being #1 in sales. In fact, Apple cares only about maintaining profits and have handily won that battle for many quarters already, taking some 2/3 of the profits in the entire smartphone category last quarter from everyone else. As long as they're making money hand over fist, it doesn't really matter how many they sell, although more is always better.
    So let's not confuse the two goals, marketshare is important, but whereas the others are not pulling in much profit, even when using the 'free' Android OS, Apple continues to rake in the majority of profits. Who can stay in the market longer under that situation? I know who I'd bet on.

    • MGD

      Apple took 2/3rds of ALL mobile phone profits, not just smartphones (featurephones are usually barely break even)

      if the long term stable distribution is 60 Android / 40 iOS, Apple has succeeded. 40% is sufficiently sticky for developers and users not to abandon it (but then…. Symbian had 50+% back then and still imploded)

      • Tom Ross

        "Apple took 2/3rds of ALL mobile phone profits, not just smartphones"

        This is not quite correct. Horace only tracks 8 large companies which currently hold about 70 % of the market.

  • poke

    I think it's time to stop breaking out the arbitrary category of 'smartphones'. All we really know about Samsung is that they shipped x number of phones and y% of those fall into the 'smartphone' category. How that mix is determined by Samsung's relationship with carriers we do not know. These aren't direct sales. If carriers can get smartphones at similar price points to feature phones and that's what Samsung is offering them then they'll take it. Samsung's overall phone market share (smart + non-smart) isn't showing the same spectacular growth. The real winners are HTC and Apple. Every additional smartphone they sell is additional marketshare.

    • Niilolainen

      The smartphone category is not arbitrary, but rather fundamental to what has happened in this industry since 2007

  • This rise of apple shows a very humble and gradual approach.
    And same stands true for Samsung due to tremendous customer liking for Android

  • Pingback: Apple y Samsung superan a Nokia()

  • Pingback: The Smartphone Salad Days Are Over «

  • Robert

    Great article. It looks like Apple competitors are not competing against Apple so much, but against themselves.
    If Apple gave away product with buy one get one free deals, or free high-end phones with a contract as Android does, Samsung and HTC would be left in the dust. They are fighting for the lower end of the smart phone market. Let's face it, Android phones are low-end copies for those who can't afford an iPhone. This is easily evidenced when you look at the profits in the smart phone market. And this is ok, it's not a zero-sum game. There is plenty of room for multiple competitors of be winners. But with that being said, Android manufactures are terrified that Apple will enter the low end of the market in full force. For those companies that cannot compete, as Horace shows to be clearly visible, Apple can easily buy their patents, or other assets if they have anything of value.

    • davel

      I think one of the points Horace is making is that the market shows signs of limits.

      In the past we could say the sky had no bounds.

      From his opening statements:

      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.

    • Paul

      "Let's face it, Android phones are low-end copies for those who can't afford an iPhone."

      This is a pointless and arrogant characterization. I'm software developer/mathematician/website designer and can fully appreciate and afford an iPhone but instead chose an Android device. I have an iPod Touch (3rd generation) and I'm happy to lavish praise on Apple for their extraordinary hardware and beautifully executed software. I needed a good cell phone and the Android OS provides a very decent smartphone experience similar to iOS. Sure, I've run into literally a couple of rough edges but nothing insoluble. I was able to choose my carrier, my device, and my plan and I have so far found the device to be an excellent phone, email, calendaring, music and news delivery device. Would my experience be materially different with a considerably more expensive iPhone (and more expensive carrier plan)? Absolutely not . The Android phone is a completely practical alternative to the iPhone not a cheap knock-off for poor schmoes who can't afford an iPhone. I'm glad to see a competitive landscape and frankly as Android becomes more refined, it will continue to be an excellent choice for smartphones and eventually tablets as will the iPhone and iPad. I'm not a Microsoft fan but I hope that they too have some nominal success in the game as this will, as we have already seen, spur continuing innovation and creative solutions in this space. Characterizing anything that isn't an iPhone as a "poor man's iPhone" is ridiculously arrogant and, in any event, completely false.

      • davel

        I agree. Android is a quality platform. My impression is that it is not quite as smooth as ios, but it is a good platform esp from a quality hardware provider.

        My question to you is why do you say iphone is considerably more expensive? My impression is that a subsidized phone of similar quality have similar price points. I too wish Microsoft and PalmOS success.

        I think programmers tend to prefer Android as one common complaint is the restrictiveness of ios. A tech person is more apt to ignore small issues as they are used to dealing with incidental issues.

      • David

        Programmers, perhaps, prefer both. I am a programmer versed in Java and C++ and I prefer the iOS.

        You may not like the statement, but it is a valid one. I'll bet anything that Android phones were sold as "as good as an iPhone." The BOGO and low end markets are eating it up. Why? Cost. Simple as that. That doesn't make it a bad device, but I'm reasonably confident that the constant price drops and BOGO sales contribute heavily to Androids success.

        Cost is the primary reason why the vendors chose Android. A good test will be based on the results Apple, MS' and Oracles lawsuits. If they win and the price of Android goes from free to comparable to licensing, will vendors continue to choose it?

        I wonder: Google has seemingly poor support, no indemnification…what is the appear beyond cheap?

      • Paul

        No, the statement is not valid. For me, my Android phone is primarily a phone (and not an aspirational or ego-stroking device) and no, no-one I ever spoke with when researching what smartphone to buy ever made the comment that it's "as good as an iPhone". The fact is that you have your choice of low, mid, and high-end Android phones (your comments imply that all Android phones are just low-end drivel which is obviously false). iPhone is certainly a gold standard in both hardware and software design but the notion that everything else needs to be compared to it is rather silly. I don't compare my Honda CR-V to a BMW and spend every waking moment wishing that I could trade my "poor man's BMW" in for the real thing (and no, the car salesmen never did say that the CR-V was "just as good as a BMW"). While I have Apple devices, I can find no reason whatsoever to reconsider my purchase of the Android phone. The iPhone experience would not be materially different to me from my Android smartphone experience or requirements. As to the notion that cost is the sole driver of vendors choosing Android, well, what other OS do you suggest they choose? Certainly not the iOS which is locked into the closed Apple ecosystem. Symbian, Blackberry? Um, no (Horace's charts show why). For those who want a smartphone experience comparable to the iPhone, it's the Android system. If Android were to suddenly incur a licensing cost that caused all Android smartphones to be comparable in expense to an iPhone, I don't see how you can immediately conclude that all such vendors would no longer select it as their smartphone OS. Are you suggesting that either those vendors will cease making smartphones altogether or perhaps switch en masse to WP7? What's the obvious or readily available alternative to Android for smartphone vendors who aren't named Apple? Even if there were no longer a low or mid end for Android and it had to compete head to head on a comparable price basis with iPhone, do you still see no value to the fact that Android phones can be had in a variety of form factors (e.g., Want a slide out keyboard? Then iPhone's not your phone.). Certainly, it might impact the growth of the Android smartphone market but, no, everyone on Earth would not suddenly switch to iPhone because not everyone will be happy with the choice of one style of phone even if it comes in black or white.

        As for poor Android support, right now, you are quite correct; Google's support system for Android is comparable to what Microsoft normally does which is to say, it provides next to zero real support. Will that change over time as Android solidly reinforces its position as one of the dominant players in the smartphone OS space? Probably, if for no other reason than it would be bad for business to do otherwise – but still, the shoddy level of current support is a valid critique of the Android OS. For me (and apparently millions of other people), it's not a show-stopper and so far, I haven't encountered any issue that has actually required support (of the couple of issues I've run into, it's typically solved by a quick Google search followed by a download from the Android Marketplace to address the issue; hardly an earth-shattering problem for Android).

      • “As for poor Android support, right now, you are quite correct;…”

        Everybody has a different set of priorities in buying a phone. The more tech-savvy we are, the better we take for granted that we can deal with whatever issues that arise.

        One of Apple's themes has been that they sell to individuals/firms that don't want to pay for third party systems integration, or to worry that they'll have to work it out themselves. It's obvious that this can be very expensive versus a $300–$600 phone, so Apple benefits every time there's a headline about malware, or other FUD elements that have a ring of truth to consumers.

      • Paul

        davel, you're correct in that iPhone is not necessarily more expensive than an Android phone. In my case, I don't have substantial phone requirements (I do most of my software and website development from home so I'm always next to a land line) so I was able to pick up a no-contract Android phone through Virgin mobile. The phone itself is the Optimus V, an entry-level phone that has turned out to be surprisingly good. I have a very inexpensive plan and excellent coverage in my area (I've compared the service to my wife's Verizon phone all around our area and there's so far no difference). If I had chosen the iPhone 4, I would be forced into a contract with either Verizon or AT&T for roughly three times the cost of my no-contract phone. And again, for me, there'd be no material benefit to having the iPhone over the Android phone for that extra cost. I didn't get the Android phone because it was a cheapo version of the iPhone, I got it because the Android phone gives me all the same functionality of the iPhone at far less cost (both initial and ongoing). This may not be true for everyone who needs a smartphone but it certainly is true for me.

        I don't really have a sense of what phone the average software developer actually prefers. I'd be surprised if the overall numbers for software developers were significantly different from the overall population. If you like the iPhone, then that's the phone for you. If you like Android, then that's your phone. I don't think coding ability will necessarily factor into the decision.

  • Let's see what will happen when Mango will be released.. All it needs is supplemental marketing and boom!

    • Niilolainen

      Biggest open question in the industry

    • I understand Mango went GM so I guess we should be seeing those carpet-bombed REALLY? ads any minute now.

      But I wonder who's going to sell those WP7 devices? I nosed around in the VZ and T stores near me this weekend, didn't see any prominent displays. The WP7 forums are claiming conspiracy by salespeople to direct people to Android or iPhone.

      • asymco

        Salespeople work for whomever is paying their commissions. The only conspiracy is that Microsoft is not paying them to sell WP7. (Apple never paid either but they did not need to and they had their own stores anyway).

  • Next1On

    When it comes to smartphone, up until the 3GS release, Apple kept raising the bar with each new release. The consumers expectation of Apple kept on going up and up. How long can Apple keep this up? Look at the latest iPhone release (4). I personally think the cracks started to show with that release. It didn't happen without negative press as the previous ones. As the crakes get bigger, the consumer disappoints get bigger, and they will turn on you faster than they turned to you. Just my 2 cents.

    • David

      Are you kidding? They sold more iPhone 4s last quarter than ever. And this is despite the age of the iPhone *and* going up against the Atrix, Thunderbolt. Droid2, DroidX, Droid Pro, Droid Incredible, Droid Incredible 2, Galaxy, Galaxy II and the Nexus 2.

      And I haven't even listed the slew of low end phones. Despite all this, the iPhone beat them all..

      In addition, you are mistaken about the previous release. Amazingly so actually. Every iPhone release, everyone single one had pundits and people complaining. Here is a sample just from my memory:

      1. No 3G
      2. 3G, but worst battery life
      3. Bad call quality
      4. No memory slot
      5. No keyboard,
      6. No copy and paste
      7. No multitasking
      8. bad notifications
      6. No front facing camera
      7. Bad rear camera(two years running)
      8. slippery plastic back
      9. Yellow screen
      10. wifi doesn't work
      11. No user replaceable battery

      • Next1On

        Yes, but these issues were ignored because the iPhone was the first real Smartphone out the door. You couldn't really compare it with anything else. That is less and less the case today. And as the Android phones keep growing from many other manufacturers, Apple's WOW factor will diminish.

      • David

        Those issues spanned 2007 to 2010 and made even the mainstream press each year. I left out only the iPhone 4 complaints. You, my friend, have a very short memory.

        And considering Apple's sales number, you should consider not making predictions.

      • Next1On

        I never said iPhone is going away. As a matter of fact, I believe iOS and Android will be the dominating OSs. I'm just saying it won't be the "Diamond" everyone sees it as, at the moment.

      • EWPellegrino

        But as David said the press have never treated it as a flawless diamond, instead they have always been searching for something negative to say. No matter how good the iPhone-5 is, no matter if it smells like fresh bread and cures cancer, the tech press will find a cause to complain and some mac faithful folks will complain about the lack of a matte screen option.

        It was ever thus.

        The iP-4 is without a doubt the best iPhone to date. I owned the Og Iphone and it was a beautiful device but it did have flaws, I didn't like the 3G or 3GS due to the plastic back, though I understood the reason for it. The iP-4 is more beautiful than the first iPhone with none of the drawbacks unless you have the world's dampest palms, a deathgrip and an allergy to rubber bumpers.

      • asymco

        You might want to take a stroll down memory lane:

    • davel

      Hence the importance of iCloud.

  • Pingback: Mobile Lowdown 8-1-11 | Market To Phones()

  • Niilolainen

    Horace. Good stuff. But you haven't seen fit to include LG yet? They're cranking out the Android phones these days…

    • asymco

      LG is not reporting smartphone shipments but there is a claim that they shipped 10 million this year.

  • For everyone who is predicting iPhone's doom, I think this article is worth revisiting.

    In summary, the Michael Mace (who studied dying platforms while at Apple) argues that the first signs of a dying platform is the combination of three things:

    1. Diminishing Net New Subscribers
    2. Diminishing Margins
    3. Diminishing ASP (Average Selling Price)

    So far, I don't think Apple has felt a real hit in any of these categories. Yes, net new subscribers dropped last quarter, but that's for a phone that has already been on the market for 15 months. Their margins continue to increase as well as their ASP. These metrics seem to say that Apple's momentum is still very healthy.

    HTC has predicted that ASP and margins would fall, but their prediction was only a fall of about 1-2%. HTC is still gaining a lot of new users. I'd conclude that Android's health is pretty good as well if we didn't include IP lawsuits in the analysis.

    So we've got two relatively healthy platforms that are filling the different needs of the market. What's wrong with that? Nokia and RIM were able to coexist in the past.

    • David

      In addition, Apple, in the absence of dropping their prices, could be seen as *increasing* them. Android phones get released at full price for seemingly a month then its BOGO or a price drop of some kind.

      After a year, the iPhone 4 still sells at full price. I submit that in terms the mobile opportunity article, Apple has reach the mainstream since those people are reached via lower pricing.

      So, who are these millions of users? They have the numbers of what we call mainstream, but the wallets of early adapters.

  • JohnnyG

    I read a recent article that highlighted the profit margins of Apple vs. Everybody Else and the author made the valid point that Apple is just devouring the smartphone market in terms of profit. What I am curious about is that while Apple is extremely profitable, Foxconn, Apple's major assembler in China, is running nearly break even on profit. It seems like Apple's profits are being built on the backs of underpaid Chinese workers (well, duh). I know this is an old story but this is what I am really curious about. Is there a risk to Apple that Foxconn may suddenly decide that 2 percent margin is not good enough (which it is not) and either demand more money, thus killing the Apple profit machine, or, and this is admittedly highly unlikely, pull a Huawei and start making cheap Apple knockoffs, the way Huawei copied Cisco (and ultimately got away with it, at least in most of the world). Any opinions from anyone? Thanks.

    • Foxconn is a subsidiary of Hon Hai Precision Industry. Hon Hai's primary profit engine is in manufacturing high margin electronics components. In order to push the sales of their components, they are often willing to take a loss or break even on the assembly contract through Foxconn.

      This is a similar strategy to Apple, who tries to boost the sales of their hardware by offering other services such as iTunes at break-even.

    • David

      Perhaps. But perhaps Foxconn needs to share *its* profits.

      I don't know enough about the Foxconn leadership, but why kill the Golden goose. Apple keeps you running full steam AND most likely provides capital for expansion and new production technology.

      What's would be their motivation? And what would be the endgame? Apple would move to another company, doing the same thing and ultimately competing against them.

    • Tom Ross

      Foxconn workers are not underpaid. At a basic salary of over $300 per month (plus overtime payment and extensive benefits) they're making more than the national average, and keep in mind that this is unskilled labour. That is main reason why Foxconn's profits went down this year.

    • asymco

      Foxconn has announced a shift to robots and a move away from human labor. But specifically to your question, labor component of an iPhone's cost is probably single digit percent. I would guess it's about $4 to $7 out of $650 selling price.There is a pervasive myth that technology products are labor intensive and that labor is exploited.

  • Jeff G

    Iphoned. I see some flaws.

    1) You bring up some good points, but when they are challenges you resort to sarcasm and rhetoric.

    2) You speak for” apple enthusiasts” as if they had one voice that was in agreement during each time period you are trying to characterize. There have been many views.

    3) comparing one quantifiable snapshot to your rhetorical impressions of what enthusiasts thought, is not exactly scientific, methodical or pardon the phrase…apples to apples.

    4) Profits are still important. You cant dismiss them under some esoteric argument. Profits are why samsung and apple are both in business. if you think apple has an” ominous” future, you should sell the stock short and buy put options. Please revisit here in a couple years and let me know how that worked for you…

    Great discussion

  • Khaos1971

    Most people i know dont even think iPhones are the be all end all phones. There are so many choices that i think Apple has to continue do something radiacally different to stand out. My thing is smartphone's seems to be eating away at so many other non-phone devices. Take the Nintendo's DS line of products or Sony's PSP. Even the PC market. My phone does a lot of things all those devices do. In turn i havent even bothered to buy another PC. We actually need to stop calling these devices phones in my book. Call then what they really are pocket PC's.

    • EWPellegrino

      The idea that 'Apple needs to do something radically different to stand out' is both false and dangerous, it actually represents a lot of what went wrong at 'old Apple' before Steve Jobs returned. After he did, in 1997 at WWDC he explained in a Q&A session at the end that Apple needed to stop focusing on being different and focus entirely on being better. Sometimes that meant being different, sometimes it meant embracing open standards, sometimes it meant using custom hardware, sometimes it meant using off the shelf components.

      It's not important to be different, it's important to be better.

  • Howard

    What most commenters above fail to recognise, imho, is that Apple have never been and still are not interested in volume. They are not interested in being the biggest seller. This is not their philosophy or ethos.
    As <pk de cville> says: "Android will devolve to good enough for some, but Apple will remain the 'BMW' that most want and many can buy. "

    Android will inevitably sell more than Apple. But Apple will be the premium product, the one everyone wants and they will cream off the biggest profits by far. That is what Apple will do.

    • Actually Tim Cook said in a quarterly conference call that they don't want iPhone to just be for the rich and hinted that they are working on a few neat ideas to tackle the pre paid market. This sounds like they want profit share AND market share to me. Android smartphones will probably continue to sell more than iPhones due to the wide range of OEM's. However, I can't see Apple being relegated to profitable but low market share like in the PC market. IMHO

  • Pingback: The Smartphone Salad Days Are Over - Programming Blog()

  • Pingback: Samsung’s Android vs. Apple’s iPhone | Jerry Sinaga()

  • nimesh

    Slightly irrelevant to this battle's future is the fact that Apple has a $73 billion cash pile to deploy as it pleases. Unless management succumbs to investor pressure or otherwise stumbles badly, that amount of money can be a formidable weapon. Still Samsung with its chaebol culture is going to be hard to beat over the long run.

  • Spartacus

    This graph/article brings to mind the cost of the devices vs. the profits. One users excellent comment on Foxconn's margins at 2%, is very substantive. Apple garners enormous profits on the handsets based on brand and an OS that is free to itself. The current Android manufacturers have suffer along without brand, but enjoyed the free os.

    History shows that brands that generate large profits attract competition from other brands, or are evaluated by consumers in like groups. At the moment Apple has a hardware/software notoriety, but as with most luxury items the audience or potential sales targets are limited.

    • Kizedek

      The profits are not solely to do with brand — Apple's strategy around a simplified product portfolio, superior supply chain management, and use of its cash to secure components has been discussed on here many times. All of these together give Apple the profits per unit that it enjoys.

      Second, iOS arguably costs Apple more than Android costs the OEMs — Apple puts time and energy into it's development, and serves it out to iOS device owners. This is another thing that adds to the iPhone's popularity, not brand-appeal alone: the useful shelf life of each iOS device is extended way beyond most competitors' devices.

      Third, what's luxury got to do with it? Either you are looking for a smartphone or you aren't. Apple's phones are priced competitively with other smartphones. Apple's iPads can't be beat for price, let alone value for money. Others can't make a tablet for what iPads cost. And all the others are trying to make their phones look and feel like iPhones…

      So, the potential sales targets are limited? Oh, yeah, that's discussed on here, too — potential Market:
      1) Anyone with a smartphone
      2) anyone with a feature phone who wants a smartphone
      So, basically, half the people in the world, same as for any other manufacturer's smartphone offerings.
      Oh, plus 3) anyone with any other Apple product,
      and 4) anyone who has done at least an attempt at research before making a purchase.
      That's quite a wide audience — wider than anyone else's.

  • Spartacus

    So, I would say that Apple has an eventual large ceilings of luxury users given no competition, but a much lower audience given a choice of brands, and the likely cannibalization of its margins for share.(Apple will likely sell a cheaper phone to keep share) The graph in this article shows the short term affects of price on target adoption, given a comparable set of features. The producers who actually have a brand that could generate margins above the FOXCONN example of 2% return are GOOG, RIM, MS, and NOK. The long-run should play out with some combination of these brands returning above the 2% mark.

    To finish, I would not extrapolate future success based on current share, I would look at the profits that each brand has demonstrated over time. Apple will be a luxury good earner, it always has been. But as Smartphone’s become the norm everyone can’t own a BMW. That is also part of the brand experience. Apple has a peek, or a choice with the iPhone product. That choice will come when they have to begin to try and sell it at lower price points to gain/keep share. To keep their margins, they will need to choose not to compete at the bottom.

    • melgross

      What you forget is that Apple is still selling the now over two years old 3GS, which outsells pretty much all, if not all other phone models from anyone else. So they do have a low priced phone in the market. The problem is that much of the world is Pre-pay, and even the 3GS can't sell for a low enough price in that market.

      However, there is no reason why Apple can't come up with a lower priced phone that would sell for $399 in the Pre-pay market. Many people would pay more for that product than another Android, BB or other phone model selling for less. And there is no reason why Apple, considering the numbers of phones they would sell, couldn't get get better than average pricing for that, enabling them to maintain a high margin, even if it would be a bit lower than the top line product.

      Right now, it looks as though most other phone makers are barely managing to break even on their phones. How long will they be able to keep that up?

  • Pingback: The Smartphone Salad Days Are Over | Tech & Gadget Blog()

  • George Fraguio

    Apple's I-Phone has brand, form factor and its massive app store. It will continue to dominate as it continues to offer subsequent upgrades in its camera capalities, processing speeds, and decentralizes its carriers. Its amazing that until last year it was only on one carrier and still leading the pack. Android is nice but its a software not the whole device…Apple has always distinguished itself with its form factor and they will continue to improve on that…I think the next phase will be a mini-pad(a cross between a i-phone and an I-pad…something that can fold…usingCorning glass…

  • As Rob McQualter correctly points out, the real battle is the downstream dollars of these eyeballs. It'd be interesting to see what the revenue impact of a new smartphone subscriber is to Apple and Google, e.g. ads, music sales, books, movies, etc. Clearly Apple is out in front but Google and Amazon are coming on strong. The Asian manufacturers, try as they might, don't have any mojo here, unless it's outside of the U.S. and I'm not seeing it.

  • melgross

    I've been saying from the very day that he made the remark, that Nokias' sales would plummet. When Elop decided that he had to put his mark on Nokia, and break with the past, he made a major mistake that you learn in Eco 101 to never make. That is, never knock you present product line. So, what did he say? For those who aren't aware of it, here it is with possibly not the exact wording:

    "we are pouring oil on our burning platform, and jumping into the icy sea, where we may not survive."

    What was he referring to? The burning platform of course, was Symbian, and the icy sea was WP7.

    So he said that Symbian was failing, and WP7 might fail. Not exactly a confidence builder. Nokia then told Symbian developers to move over to WP7, they pretty much closed the OVI store, and discontinued work on QT. What more would Nokia users, and potential Nokia users need to desert the platform? Not much, other than Elops' lack in confidence in WP7.

    Where did these users, and potential users go? To Android and iOS. It was his announcement that can be directly attributed the drop in sales. Can they recover? It's going to be a long row to plow, and I doubt they can ever regain their place. What about WP7 and later? Well, it's doing very poorly in the N. American market, which is its native space. Why would IDc and Gartner think it would succeed as time goes on to encompass 20% by 2015? That's hard to say, but I doubt it very much. Nokia has been severely damaged, possibly beyond repair. What reason would people buy WP7 phones in large numbers? I haven't found a good one yet. It's all assumptions, nothing more. I'd don't agree with the one that assumes that Nokia will drag WP7 up with it, and I certainly don't agree with the one that assumes that WP7 will drag Nokia up with it.

    Two losers don't make one winner.

    • davel

      I will agree that Nokia has issues. However it still poses a great brand name as does Microsoft. The users of Nokia are not the customers who use a phone to make calls. The users are the carriers as I believe Horace pointed out some time back.

      Nokia needs to produce a quality phone that runs WP7 well. They need to do this as soon as possible. There are other companies that are also making WP7 phones. Nokia and Microsoft have a lot of money and established channels. Nokia can make a comeback. It may not, but it is not buried yet.

      • EWPellegrino

        Microsoft doesn't have a great consumer brand name. Most people don't buy MS because they feel a great love of the brand, they buy it because it is a requirement.

        Nokia did have a great consumer brand, but it's not clear how much of that nostalgic fondness for their old handsets is still around. History is littered with great brands in mobile that no longer exist, or are much reduced.

  • Pingback: Samsung’s Android vs. Apple’s iPhone - All Phones()

  • George

    Even IF Samsung is passing Apple in smartphone sales (and the numbers don’t indicate that, but whatever…), I am sure Apple will gladly take the #2 seat and continue to make 10x the profit to Samsung, without needing to pay Microsoft $15 per handset, either. It isn’t about Apple having a desire to be the leader in the smartphone sector, nor has it ever been (insofar as the company hasn’t made public statements announcing such a desire). It is about Apple’s desire to create (what they deem to be) the best experience in the product category and to integrate it into a series of products which can broaden the profitability to the company. In addition, the products appeal to a different customer than the average Android customer, in that the latter is less likely to pay for apps (according to developers), which leads to a more robust ecosystem of apps for Apple.

    And before someone trots out the tiresome “fanboy” label, I have used Android phones exclusively for the past 3 years.

    Can we move past this and get back to the substance of the report above?

  • The Green Robot

    Well i am a proud owner of the Samsung Galaxy Tab 10.1 and this tablet is top notch in performance and quality of workmanship. Plus it is very possible to replace the battery myself as the internal components are modularly connected and soldered together.
    The only beef i have with Apple products is that in order for existing and potential customers, Apple continues to dangle a carrot just for one or two new features in their new products! Meanwhile Samsung and HTC sells products that are feature rich right out of the box, running on an open operating system (Android) and the majority of apps are free through the marketplace. Why people continue to pay for music, movies and appls, is beyond me with Youtube, Pandora and AolRadio, Hulu and now even Walmart to name a few!

    • Kizedek

      The other way of looking at this is, of course:
      The carrots being dangled are all the un-usable features on a marketing spec sheet. Consumers buy all these "feature rich" devices, and by all accounts, most owners haven't used half the features and couldn't really tell you how to use the other half. About as far from intuitive as it gets. Hey, but it's open.

      Manufacturers jump on the bandwagon and rashly, ill-advisedly, prematurely and chaotically add 10 new untested, perpetually-beta, never-to-be-improved, un-upgradeable "features" every six months — and what a carrot that is! It seems to work.

    • Niilolainen

      Android vendors have limited ways to differentiate versus each other. They're all using the same OS, have access to the same chipsets and other key components.

      On the other hand, Apple has complete end-to-end control of the product: OS, service layer, CPU. They can differentiate on things apart from just feeds and speeds.

      Not a contradiction, just an observation

    • David

      Well, that depends on your definition of feature rich. If you purchased a iPhone 3GS or iPad, you got a free upgrade to iOS 4 that added a slew of features.

      And both will also use iOS 5. The original Galaxy Tab has yet to see an upgrade and I'll wager that the 10.1 won't either.

      People have beat the open argument to death and as a professional software developer, it just doesn't hold water. You can hack an iOS device if you want, but I don't want to, personally.

      I'd rather have the best selection of software and peripherals which iOS has. Bar none. Without the reams of trojans trickling out of Android world. And Samsung created this proprietary connector that few, if any supports.

      As for free, well, pay for food, for my car, for clothes. I don't mind paying developers for their work. I mean, don't you want to be paid for your work? And when you are paid, or when you pay, quality improves.

      I'd rather pay for high quality products than have free garbage.

      • EWPellegrino

        Actually the 10.1 just got an 'upgrade' to the latest version of the touch-wiz UX, and apparently this is a required update if you want to get any future 3.2 support from Samsung. Given how unimpressed most android fans are with Samsung's skin this is very much a mixed blessing.

    • MOD


  • Manolo Salinas

    i can almost see Elops face right between Q32010 and Q12011

  • Pingback: The Smartphone Salad Days Are Over | Product Launch Buzz()

  • Ajay


    Everybody seems to be missing the big picture here

    Apple is still not on China's largest carrier.

    Any possibility of extrapolating the impact on growth if iPhone5 gets TD-SCDMA compatibility?

    Could be very interesting

    • asymco

      There are multiple big pictures:(1) Increased distribution (currently less than half of RIM and Nokia),(2) extremely high retention rate meaning iPhone upgrade sales practically guaranteed(3) the question of churn in Android. >90% of Android devices sold are still in use. Will people upgrade from Android to Android or something else?

  • AmitPhatak

    What may be very interesting is to understand is where these smartphones shipped in the last quarter go in terms of emerging markets (largely first time) versus developed (primarily replacements). Most probably Apple and Samsung are replacing existing smartphone as well as adding to installed base. This will mean that the smartphone growth will continue in cyclical nature going forward as replacements start garnering higher share of total shipments.

  • Ajay

    There is also a strong possibility of China leapfrogging US to become Apple biggest market next year.

    It very much looks like Apple's growth story has just began

  • Wego101

    OK, Apple has been gaining big time over the years, they know what they are doing. They have Al gore on their board. not a person who thinks likely. I personally have wanted an iphone for some time now but refuse to pay the $649.99 price. Apple pays around $180 to make an iphone, and that's like a %350 profit for every iphone sold, not to mention the desktops, laptops, MP3 players and Apple TV that make them money, with that kind of doe you CAN buy the best technology, and why not. I'm sure having a larger price keeps the flood of purchases down, which in turn gives them more time to produce them, but in a battle of smartphones, every sale counts. The more you sell the more you make, and smaller prices means more can buy. I know many people who would buy one if the cost a little less, I'm sure that is what most people from all carriers say. On the other hand, Jobs has a lot of experience doing what he does, and never takes it lightly. With the amount of time spent at Apple and being a big part of Disney, (and others) there might be a method to his madness… I'm willing to wait for the iphone 5 to find out just how it all plays out.

    • Kizedek

      You're right that fewer people are able to plunk down 650 for an unlocked phone without a contract (me included). That's why there are carrier subsidies and the carriers are not willing to unlock your phone right away — they want to get their 450 back. This is true to a degree of most higher-priced phones.

      Where people complain, like yourself, that Apple seems to be over-pricing it's devices in comparison with the competition, is because those complaining are fixated on the commodity aspect and the pricing of components.

      Where do you get the $180 figure? I thought the margins we were discussing, and historically with Apple, are in the 30-50% range. Where does 350% profit come from? Do you get this $180 from "tear-downs" on gadget sites? Even so, the cost to Apple doesn't stop there.

      It is precisely this mentality of the phone being a pile of cheap components, with maybe the concession that, "OK Apple may put the pile together in a slightly more pleasing arrangement", that may need to change. This is precisely why all these large companies discussed on this site are in danger of going under! They just dont get what adds value to their phones. With Apple it has always been about the value added.

      If a person is not in the market for something that saves them time and better facilitates their business and activities every time you use it, then they could avail themselves of carrier subsidies like most other people, or, by all means, go buy themselves a pile of parts.

  • asymco

    The chart covers through Q2 2011. The axis does not show Q2 label because it shows only every two labels (odd numbers only).

  • Nam

    Let's pretend we're Steve Jobs and Tim Cook.

    It's obvious that we need a mid/low price unit that is not just a discounted older model phone (iPhone 3GS). This is important for the prepaid markets and to increase market/mindshare vs Android etc.

    What's an elegant solution? Simple. It's the new iPod Touch. The iPod Touch in essence is already a striped down iPhone that maintains the all important iOS compatibility, and has been designed to be price conscious to be purchased outright or with carrier subsidies to be very low cost.

    Introducing the new iPhone along with a new iPod touch, in the traditional fall "iPod" release timeframe makes sense, especially since the new iPod touch will simply add one more radio in order to be 3G capable.

    This is the year that the "iPhone nano" (I.e. iPod touch with 3G) will be released thus finally changing up the "single model" lineup to a full multi-model price range lineup for Apple phones.


  • berult

    In Google's universe, everything -hardware, software, data, information, ideas, bandwidth- and everyone-vendors, providers, developers, advertisers, users- is meant to be processed as a vectorized commodity. The value-subtracting dimension of the process acts upon directional flow; its value-adding dimension acts upon surface tension and content fluidity.

    This "field" is meant to be experienced as emotionally neutering and rationally neutral.

    In such a 'real Universe-like' model, neither action nor actor is inherently 'functional' other than moving smoothly and irreversibly in one direction, and one direction only… The genitor's leitmotiv in shaping the event horizon.

    There is the elusive 'God's Higgs subatomic particle' and then there is the reclusive 'Geek's economic principle. Making sense of it all must imply for the observer and the experience seeker …by intelligent design, be it otherworldly or in residence, a free fall into mindset subservience and profitable alienation. 

    That being said, the smart phone market is fast approaching the threshold mass of a fully determined, geometrically coalescing, 'elementary particles' universe. Android's massive input simply accelerated the expansion phase towards a fully deterministic environment, engaging the model up a classical pathway to end-of-cycle development.

    The market will further expand, albeit weighed down, constrained by the henceforth predictable effects of 'enclosed system' entropy, the residual fundamental  condition of the ongoing 'agents accretion' process. Apple "poles" well here, …so does non-Apple 'caco'phony… 

  • I just don't think a comparison on shipments/sales, or even market share, paints the true picture.

    Realistically Apple has 2 phones for sale right now— iphone 4/3GS. The Iphone 4 is by far the best seller. But despite only having two phones for sale (yes, I know the 3G is still available in some cases), they still have an unbelievable market share for such a limited number of products for sale.

    Now look at these two links-

    Samsung has something like 32 smartphones to compete against the designs of their major competitors. HTC rolls out what seems like a new phone a minute. Comparing sales of 32 products to the sale of two products just isn't a real indicator of where things stand.

    Going forward I think it's the emerging markets that will be the big difference. People who buy a smart phone and use it as their computer and phone since they can't afford both. Apple may still make the product they want, but an android phone will be available for much cheaper. New users of smart phones will be growing at an incredible rate in the next 1-5 years in SE Asia, Africa, India, China. It will further change the market shares/dynamics, but there's an excellent chance that the latest version of the Iphone will remain the overall best seller.

  • Pingback: The Smartphone Salad Days Are Over | Information Technology Leader()

  • Eoulim

    As far as I know, samsung's recent rise has been mainly due to Galaxy S. This phone has not arrived in US. Next quarter will be about iPhone 5 vs galaxy s ! The battle will distance others further away from apple and samsung.

  • Interest to read "The end of easy growth in smartphones" , i agree that weaker platforms and vendors will come under increasing pressure.

  • Google and Apple HAD an excellent working relationship all right. But despite the explosive growth rates, nobody can take anything, especially your profits versus another's, for granted— you end up like RIM. I think Google was absolutely right that if Apple got to > 50% share of mobile internet, Apple would have significantly re-negotiated their terms.

    And even if Jobs decided he wanted to compete for the Nicest Guy in the Valley Award, the risk that another firm (Microsoft, RIM, it hardly matters) would leapfrog Apple and compete on profitability of search, Google could've found itself reduced to being some vendor's in-house ad server, squeezed to no profits at all.

    Horace has opined that Google has precluded business opportunities by emphasizing Android, and that surely is right. But Google has also protected itself from being marginalized with Android.

  • n13l5

    quoting from your text:
    "But it’s at least very clear that BlackBerry OS and Symbian are now a burden to their owners."
    I'm not so sure that that's "clear" from these charts.

    I'd really like to buy a top specced phone with MeGoo, but there isn't one.
    I might have bought Apple if their hardware specs weren't behind.
    I would have preferred to buy Sony, if their hardware specs weren't behind.
    I looked at Rim phones and found their hardware to be behind.
    I really didn't want to buy Samsung, but their hardware was top notch.

    I figure Samsung picks up all the buyers who care about specs and those influenced by spec focused buyers like me, or those who want/need a specific feature, like 1080p video or Amoled screens.

    Like with computers, when the operating system is commoditized, you buy the best hardware you can get.