The Mobile Phone Landscape

I collected all the data available so far and created a new graph that illustrates the complete market evolution over a three year period.

I chose a particular color scheme where shades of blue represent non-smart devices (think blue ocean), shades of brown are smartphones with licensed operating systems (Android for the time frame above) and shades of green as proprietary operating system smartphones. Multiple vendors are shown and those which sell both smart- and non-smart phones are shown twice. Note that the legend shows the vendors in the same order as the stacked areas.

There are several observations that are easy to make from this type of view:

  1. The smartphone market is growing rapidly, not surprisingly. However, the overall market is also growing. Smartphones as a percent of total units sold is at around 31%, up from 14% in Q3 2008. Smartphone units however have tripled in the same time frame (from 40 million to about 120 million). This means that almost all of the market’s growth has been smartphones with non-smart units barely increasing from 258 million to 272 million over a three year span.
  2. Non-smart phones are far more seasonal than smartphones. As smartphones increase in share, seasonality should match that of the other phone types.
  3. The number of branded smartphone vendors has increased significantly with “others” becoming a small part of the total. In contrast, the opposite effect is taking place in the non-smart market. Non-smart phone shipments have concentrated in two main brands and a large set of “others”. This bi-polar industry structure points to where the value is migrating and hence where rivalry is increasing. We can use these shifts as indicators of industry maturity.
  4. The opportunity for smartphone growth remains in the 70% un-penetrated blue area. However there is evidence that smartphone “switchers” are increasing with a noticeable decline in Nokia/Symbian and RIM. Apple’s decline in Q3 is likely to be reversed in Q4 but Apple’s share of all phones remains under 5%– a five-fold increase in share from 2008 but a sign of how much is left to be done.
  5. As Nokia shifts its Symbian portfolio to a licensed Windows Phone model the licensed cohort will tip over into an “all but two are licensees” line-up. This should be particularly worrisome as value is shifting to software and services and “super-platforms”. But before the disruption is complete, there are still some cards to play. Samsung and Nokia have vast non-smart volumes to convert and it’s unclear if they will do it with Android and Windows vs. layering their own proprietary Bada and future Nokia Linux platforms.

In the next few weeks I’ll publish details of all the measures of the market but this first “landscape” view gives a good initial perspective. In the mean-time the data is accessible from the Asymco “cloud” here.

  • Anonymous

    Very interesting read.

  • Crazy that 50% of all the “nutrients” (i.e. profit) in that vast ocean is concentrated in just that bottom-most fruit layer.

    • Baxboy42

      How appropriate that he place Apple at the bottom of this graph, since most of the profits drop to their bottom line.

  • Kan

    Where is this data from? IDC Gartner? Canalys?

    • Data is from company filings except for “other” which is derived from overall market size estimates from market analyst firms (and then subtracting published company data.) I average a few and adjust as more are published.

      • AB

        Excellent data set Horace. Do you know where I can get a breakdown by region and country?

      • Canalys sells regional data for smartphones. I don’t know if Strategy Analytics does something with overall phones volumes by region.

  • Daniel

    Very interesting; particularly to see Samsung/Nokia/Moto etc. broken up in their smartphone and feature phone businesses.

    Horace, I wonder: Would you have sufficient data to redo your earlier price&profit-vs-volume diagram (, similarly broken up into smart- vs feature-phone businesses? I’d be really curious how the smartphone-Samsung and smartphone-Nokia would look, vis-a-vis Apple and HTC.

  • Anonymous

    Is the difference between sell-to-provider and sell-to-consumer relevant? For Apple both are said to be identical (are they? does Apple sell to the telco’s as well?), but that is not the case for the others.

    • All the data I have is sell-in or what the vendor can report as revenue. Sell-through is very difficult to measure though some analysts try to report that figure.
      There is always the possibility that items are sold into the channel and stay there for a long time, but that tends to affect sales in later quarters. Channel stuffing is a desperate and always tragic option. Which is why I don’t think it happens unless the company is seriously troubled.
      In Apple’s case, they do have channel inventory, which they report selectively. They have targets for channel inventory and try to maintain them. There are fluctuations but in the long term they smooth out. This is one reason why I report data over a longer period.

      • Omar Grant

        Why is Apple making more money from ios smartphones than its competitors?

      • Anonymous

        Over here in the Netherlands its not that hard to figure that out why Apple’s margins are so good. I have to pay more for an iPhone 4 on a 2 yr contract than an HTC Sensation on a 1 yr contract. Even the Samsung Galaxy S2 costs just €10 more on a 1 yr contract compared to the iPhone 4 on a 2 yr contract.

  • Pingback: OnlineMagazine » Blog Archive » Smartphone shipments tripled since ’08. Dumb phones are flat()

  • John Mac

    Great info. I don’t understand how Apple can have such a small slice of the pie and yet hoover up most of the profits. As far as I’m aware the iPhone is not that much more expensive than the other premium smartphones. How is Apple managing to make fortunes on the iPhone when most of the competition are posting losses?

    • kevin

      iPhone doesn’t look more expensive in most places because the carrier/operator subsidizes the upfront cost for the consumer, while earning it back and more via the monthly plan fee.

      Sprint CEO said iPhone costs Sprint 40% more (estimated to be about $200) than other comparable smartphones, but it’s worth it. Comparisons of average selling prices (primarily paid by the carriers) between Apple and HTC show that this difference could be a bit larger, about $250. Most of the competition also sell featurephones or dumbphones, which have tiny or even negative margins.

      By managing well or owning the supply chain, Apple and Samsung (and possibly Nokia still) have lower costs to produce cellphones than their competitors. Apple also lowers its costs by having fewer models, by leveraging its iPhone software development across iPad, iPod touch, and even Mac units, and by selling through its own Stores.

  • Timo

    Thanks for the great graph! Only the y-axis title should be corrected from “Smartphones shipped” to e.g. “Phone units shipped” 😉

  • Another take-away is that the overall market (non-smart included) continues to grow. The ceiling on phones hasn’t been reached, which implies that the ceiling on smartphones isn’t just the highest point on the graph.