November 2011
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Month November 2011

The US smartphone landscape

comScore published the latest data regarding US smartphone installed base. To summarize:

  • Penetration reached 37.4%, an increase of 2.9 million or 1.24 points of percentage.
  • Approximately 650k consumers switched from non-smart to smartphones every week during September
  • Based on trailing average of six months’ growth, 50% penetration will be reached by end of September 2012, though the trend is for accelerated adoption (see chart below).

Of the platforms available, Android reached

The end of the independent phone brand

As shown in the yesterday’s post, in the third quarter, overall mobile phone profitability declined. The eight vendors I use as a proxy showed a total net profit of $8.51 billion, down slightly from $8.57 billion and a drop of $9.01 billion in the first quarter.

Overall, the industry dropped by 1% sequentially but is still up 30% over last year and has a 20% compounded growth rate over a three year period.

  • Nokia returned to profitability, though at $180 million it’s only about 2% of the top eight.
  • Motorola remained in the red with a small loss of $20 million, an improvement over the $90 million loss of the previous quarter. Motorola is being acquired by Google after an accumulated mobile operating loss of $4.69 billion since the beginning of 2007. It’s unlikely we’ll receive any updates on performance thereafter.
  • Samsung had a great quarter with a sequential increase of 19% and year-on-year growth of 130%. The total profit amounted to 25% of the peer group.
  • Sony Ericsson broke even with about $50 million in operating profit. Like Motorola its performance was barely break-even during the last four years and its also disappearing from our list of independent vendors as it becomes part of Sony.
  • LG had its sixth consecutive quarterly loss and is now appealing to investors for more capital to continue operating as a smartphone vendor. Raising dilutive capital seems a radical approach and not one that inspires confidence.
  • RIM had a sequential reduction in profit of 35% and y/y reduction of 30%. The company is exhibiting clear signs of decay and the stock market is valuing the company below book value.
  • Apple profit dropped by 19% but grew 43% y/y during a transitional quarter. The growth remains 43% compounded over three years.
  • HTC has a 1% sequential increase but a 78% y/y growth.

To illustrate the performance in terms of profit, pricing, volumes and margins, I developed the following chart. 

Sponsor: Billings Pro from Marketcircle, now with cloud

I want to once again thank Marketcircle for their support and for their great software.

Marketcircle develops business applications for small businesses and individuals who use the Mac, iPhone, and iPad.

In a previous sponsorship I mentioned Billings Pro. It’s their multi-user time tracking and invoicing solution for the Mac and iPhone. They’ve since added Marketcircle Cloud. With Marketcircle Cloud you get the Mac and iPhone experience with the convenience of web access. They take care of setup, hosting, and backup of your data, while you focus on your business.

As I’ve mentioned in my stats round-up Mac and iOS users make up a majority of the audience for Asymco. As I also expect many of you are using Macs in a working environment and are either self-employed or work in small firms, Marketcircle’s applications could be a valuable addition to your operations.

Strongly recommended. They offer free trials. Read more here.

Revolutionary User Interfaces

A few years ago, around the middle of the last decade, the mobile phone market was characterized by the rivalry between a few established vendors. These were Nokia, Samsung, LG, Motorola and Sony Ericsson. These incumbent companies had a broad portfolio of devices including smartphones and feature phones and basic phones. Many also sold networking equipment and were deeply engaged with their customers, network operators.

There was also a set of entrants who offered only smartphones.  They were quirky. HTC was a a prominent “ODM” or original design manufacturer who built phones for companies who added their brands and sold and supported the product. HTC made phones and PDAs for operator brands and for some large PC companies. It also began to sell phones under its own brand. RIM was also offering products that had evolved from pagers into email appliances with added voice capabilities. But RIM’s products were not very good as phones. Voice was so poorly integrated that many people carried both a BlackBerry and a voice phone. Then there was Palm with something called a Treo which promised many things but did not quite deliver.

In 2007 something happened which changed the industry. It took a few years to even realize it was happening but by the time it was obvious, it had changed to such a degree that huge companies found themselves in financial distress. This chart illustrates the effect.

In a few short years

5by5 | The Critical Path #12: Back to the Future

Episode #12 • November 2, 2011 at 5:00pm

Dan and Horace talk about the tension between relying on data and using intuition to make strategy decisions. We also apply this dual approach to think through the next evolution of user interaction and the jobs we might hire mobile computers to do for us.

via 5by5 | The Critical Path #12: Back to the Future.

Dirk tweets an alternate description:

“The iPhone prepaid availability is not the key to emerging market. It’s Siri suiting high illiteracy rates.”

Regarding the title: Asymco in DeLorean | Flickr – Photo Sharing!

 

Apple Investor Summit

This is a quick note that I’ll be speaking at the Apple Investor Summit, March 15-16, at the Los Angeles Convention Center. My topic will be the analysis of Apple’s capital structure for strategic insight.

Apple co-founder Steve Wozniak and Walter Isaacson, Steve Jobs’ Biographer, will be keynote speakers.

The organizers are offering a Friends, Family & Followers VIP discount pre-sale from today until Friday, November 4th. Go to www.appleinvestorsummit.com to register at the discounted rate and check out the other speakers.

 

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.