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Biggest mobile loser? The non-smart phone

Yesterday comScore published survey results for EU5 (France, Germany, Italy, Spain, UK) on smartphone use and installed base. The headline is very similar to what would be written about the US: Android had phenomenal growth over the last twelve months. I also noted that the apparent growth of Google (16.2% share change) seemed to be matched by an apparent decline of Symbian (-16.1% share change.) However the reading of the data is not so simple.

In order to understand what has happened to usage, it’s much more valuable to look at consumption and the actual number of users rather than change in share of a subset of the market. Consider the following charts:

The bar chart shows that three platforms gained users in the last year (ending July) and that there were negligible losses in users by others. Negligible except for non-smart phones. A remarkable 29 million users moved from non-smart phones to smartphones. Those switchers switched into Android (16 million), iPhones (6.3 million) and RIM (3.4 million). Symbian even gained about 330k users. Microsoft lost about 1 million but its platform has not been actively promoted in that time.

When seen as a pie chart, you can see how the usage shifted from non-smart to smart even more clearly. It does not appear that Android took share from Symbian at all. Android took share from non-smartphones. The table in the link from comScore leads one to conclude otherwise.

I took the same approach to look at the US data (also from comScore). It shows a similar pattern.

In the US, RIM was a net usage loser but its losses also paled to the losses of non-smart devices. In comparing with EU5 the pattern is very similar.

I then combined the EU5 and US data and provided a view into the combined markets (note scale change from previous two charts.)

This shows the change in platform phones more or less being from non-smart to Android and iPhones. The total population is 470 million people–not insignificant. The total number of non-smart devices abandoned is nearly 60 million in one year, which equals the total number of new smartphone users. That’s 12% of most of the developed world switching in one year. If this keeps up, the “tipping point” when smartphones will outnumber non-smart phones in use in these large markets will be in another year.

In terms of sales rate, the tipping point has already happened. Sales of smartphones crossed over in the US and Europe several quarters ago (November 2010 in EU5) and the trend is accelerating. Furthermore, if patterns of mobile technology adoption repeat as they have for the last two decades, emerging markets will follow in two to three years.

This tipping point observation has been repeated on this site a number of times when reflecting on the data in the US. Now it’s becoming clear that the same pattern has been underway in Europe as well.

The big picture from the survey data is just how vast the demand for smartphones is. Some platforms are benefiting more than others in terms of share of growth, but the biggest mobile loser is clearly the non-smart phone. Not only is it an unprofitable product for almost every vendor, it is also being increasingly shunned by buyers.

At the same time, at 450 million users we’re still only looking at less than 10% of the market. As this pattern spreads globally the platform install bases will be measured in the billions of users.

  • Anonymous

    ‘At the same time, at 450 million users we’re still only looking at less than 10% of the market. As this pattern spreads globally the platform install bases will be measured in the billions of users.’
    Horace, given the huge numbers of the potential smartphone market, notwithstanding Apple’s disproportionately high share of industry profits, will this enable the other players to raise their profits accordingly? Or do you expect the spread to remain unchanged?

    • http://www.asymco.com Horace Dediu

      Theory suggests that smartphone entrants will sweep aside the incumbents going forward. Believing the alternative implies that there is a way for Nokia, Samsung, LG, Sony Ericsson and Motorola to regain pricing leverage. The more likely outcome is that they will face pricing pressure from newcomers like ZTE and Huawei and some other vendors we have never heard of.

    • http://www.asymco.com Horace Dediu

      Theory suggests that smartphone entrants will sweep aside the incumbents going forward. Believing the alternative implies that there is a way for Nokia, Samsung, LG, Sony Ericsson and Motorola to regain pricing leverage. The more likely outcome is that they will face pricing pressure from newcomers like ZTE and Huawei and some other vendors we have never heard of.

    • http://www.asymco.com Horace Dediu

      Theory suggests that smartphone entrants will sweep aside the incumbents going forward. Believing the alternative implies that there is a way for Nokia, Samsung, LG, Sony Ericsson and Motorola to regain pricing leverage. The more likely outcome is that they will face pricing pressure from newcomers like ZTE and Huawei and some other vendors we have never heard of.

  • Anonymous

    Great work, as usual. I have long disliked comScore’s tables. One, they do a 3-month average, the smoothing obscures any recent trends; and two, they show percentage share, and don’t give the actual units, so that you get the kind of mistaken results that Horace has highlighted. I can’t quite believe they actually stated that Symbian’s share loss was Android’s gain. They had the units to see for themselves. Percentage share tables are misleading when the market is growing so fast. Third, I can’t quite believe comScore’s US data, when they show the total cellphone market has not changed in size in ages. It’s always the same size.

    As for the rest, it increasingly seems that carriers are using the opportunity to push people from lower ARPU handsets into higher ones, and manufacturers are hoping to profit from selling more profitable smartphones over commodity feature phones. I think if you look at Samsung’s last quarter, they showed a drop in total phone sales, but a large increase in smartphones, but profitability only increased modestly, (vague recollection). I think ASPs were only up 10%, even with their significantly higher mix of smartphones.

    • http://www.asymco.com Horace Dediu

      To be fair, they did not say that Symbian and Android traded users but one would be forgiven for guessing this from the data.

  • cherog

    Horace, nice work.
    Does this mean that Aplle is growing in relation to Android faster in US then in EU5?
    I came to a rough estimation of 36% Apple comparing to Android in US and only about 28% in EU5.

  • cherog

    Horace, nice work.
    Does this mean that Aplle is growing in relation to Android faster in US then in EU5?
    I came to a rough estimation of 36% Apple comparing to Android in US and only about 28% in EU5.

  • cherog

    Horace, nice work.
    Does this mean that Aplle is growing in relation to Android faster in US then in EU5?
    I came to a rough estimation of 36% Apple comparing to Android in US and only about 28% in EU5.

    • http://www.asymco.com Horace Dediu

      Apple has 27% share in US and about 20.3% in EU5. It grew share by 3.2 points in US and about 1.3 points in EU5. However, Android grew 16.3 points in EU5 and 24.8 points in the US. Basically the US grew a bit faster and both platforms benefited more.

  • Michael WS Stone

    Hello Horace,
    I am a long time reader of your excellent blog but I am also averse to commenting so this will probably be a one-off.
    I think that in Europe the adoption of Android is more passive than the terms ‘sales’ and ‘took share’ imply. Here people mostly buy the plan or pre-paid SIM from the telco of their choice, not the phone. Unsurprisingly the telcos tend to offer the cheaper end of the Android phones or their stock of old Nokias with their cheaper plans so the customer who wants mobile internet access goes into the store and emerges with a plan and some phone the OS of which they care not. There are also those who are renewing current contracts who get a new phone at the same time. As an indication of this when one watches an ad from Vodafone, Orange, Movistar etc. it will be for a service plan and the final 2 seconds and the freeze frame will contain a picture of a phone and the invitation to get this “from €0″. If you are lucky they might mention the make or OS.
    iPhones, on the other hand, are more likely to be sought out by a buyer who will purchase the phone first and then the plan. The ad tells the story again – it is about the iPhone, it is Apple’s ad and the freeze frame will be a picture of the device with one of the carriers’ logos at the bottom of the screen.
    In summary, most Android phones tend to be acquired by default but iPhones are more likely to be bought specifically. (There will always be more Bic ballpoints about than Staedtler ink pens.)
    Mike WS

  • Ronin

    Great analysis as usual.

    How about the same analysis for profits instead of users/unit sales?

    Thanks!

  • http://twitter.com/ChrisRedpath Chris Redpath

    In the UK at least, you have to try reasonably hard not to buy an Android smartphone now – where previously there would be a whole range of feature phones and camera phones around the £100-£150 pre-paid market, a huge percentage of those are now Android phones. They are even available free (some with up to £100 cash back) on the £15pcm pre-pay contracts – a market previously occupied almost exclusively by Nokia in terms of smartphones.

    I firmly believe that the huge growth of Android is largely made up of this market – and they aren’t classic smartphone users either (a pattern everyone knocked Nokia for for years). These users are concerned with looks and price, and will no doubt experiment with apps and further usage of their devices as they discover the features, but primarily they are not looking for those smart attributes. Personally, I think it’s increasingly obvious that the old smart/non-smart semantic separation is not terribly useful but I haven’t come up with an alternative which can be applied so easily.

    You really can buy a low-end Android with a 2 year contract for a total “voice service+data service+phone” price of £280. Not only that, you still have a choice of operator and device at that price too.

  • Chad

    While the principle of a “tipping point” has been discussed quite a bit on this site, has it been specifically defined? Many people think of the tipping point in a similar context to the “crossing the chasm” stage of product adoption, when the transition occurs from early adopters to the early majority of a market. Horace seems to mark the tipping point as the time when fewer non-smart phone users exist when compared to smart phone users in “developed markets”. This is the product adoption transition between the early and late majority.

    This transition appears to be happening exceptionally fast as, in the developed countries, adoption is well into the early majority. With this being the case, smartphone adoption must cease it’s acceleration unless global markets, outside developed markets, can expand the eligible market in the near future.

    Great analysis as always Horace.

  • Anonymous

    With Apple releasing a cheaper phone for the pre-paid market next month and adding more carriers throughout the next year, my bet is the Android and Apple bars will swap size next year, with the scale doubling. So in the [US+EU5] chart, Android will add 32M, Apple will add 82M, and the Non-Smart will lose 114M.

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  • Tom

    interesting article. i was wondering whether you included s30 in your grouping for Symbian? I’d question whether this counts as Smart (how smart is smart?).

    • http://www.asymco.com Horace Dediu

      The data is based on the methodology of comScore but I assume that S30 and S40 are not included as Symbian since they are not Symbian based.

      • Tom

        shame on me. the s stands for series not Symbian. d’oh! thanks for clarifying though. incidently, i recently read BCG’s next billion reports. there’s an interesting interaction between what you are saying here and their conclusions… not entirely sure what though, i’d need to think about it.

  • davel

    I have been reading that Android is making big gains in Europe. Why is that? I find it interesting that Apple is the leading device maker at ATT and Verizon and since Apple is in most of the big markets in Europe I am surprised that Android is making the gains that it is.

    I would think the smartphone consumer in Europe and the USA is very similar. Since your data shows Only a handful of vendors make money and Apple is rumored to be hitting Sprint soon that Apple will erode Android in the USA.

    I understand Samsung seems very good at copying Apple, but the impression I get is the acquisition cost of a Samsung/HTC phone is very similar to Apple so I would guess that price is not the issue.

    The only thing I can think of is the number of choices available and 4g. People in the smartphone space want 4g because it is new, but 4g kills your battery and many do not understand that.