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Lumia: Is the light visible?

The following graph shows the history of smartphone volume shipments from Nokia.

Screen Shot 2013-04-18 at 4-18-1.48.21 PM

 

Lumia sales have increased to 5.6 million units last quarter. Up from 4.4 during the previous quarter. Symbian devices have nearly disappeared from the market with only 0.5 million shipped.

This puts an end to Symbian sales after over a decade since sales start and two years after it was declared that sales would end.

The bad news remains that smart devices as defined by Nokia are still not profitable. If volumes grow it’s possible that the cost structure (without further cuts) can be sustained and perhaps the business will get its footing.

The level of 6 million units/quarter is about where HTC and RIM are today but only half of what ZTE and Huawei are probably shipping. As a hardware business it might work, barely. It certainly helps to have $250 million as platform support payments from Microsoft.

As a platform it’s still a very long haul for Windows Phone. Even if we assume a nominal $15 revenue/ Windows Phone license and ignore the kickback, at this level of sales the platform generates less income than what Microsoft gets from licensing IP to Android vendors.

  • http://twitter.com/portfolio14 John

    Why do graphs on asymco always look like coming from Minecraft? The same graph posted on twitter looks better. :-p

    • http://www.asymco.com Horace Dediu
      • http://twitter.com/albertcuesta Albert Cuesta

        Agree. Count me in for stacked bars.

      • handleym

        That was a really well-explained complaint which clarified the vague unease I’ve always had with stacked area graphs.

        Thanks for posting it, and thanks for modifying your work flow to deal with it.

  • http://www.isophist.com/ Emilio Orione

    I would like to reflect on why after great marketing effort Lumia (and Windows Phone) is still so low.
    Nokia distribution is great, they work with almost all carriers of the world.
    Nokia brand was on top in 2010, Microsoft and Windows brand are anyway valuable.
    Marketing has been well financed, at Apple’s levels not at Samsung’s levels, but anyway enough for a brighter start.
    The products is inferior to iOS or Android but I believe that only pundits are aware of the differences.
    Customer for Nokia are the carriers. Carriers have worked well with Nokia in the past decade and are willing to have more platforms to sell, they should give Lumia a try.
    What holds carriers must be end user who don’t buy the phone.
    So the question is: why end users don’t buy Lumia phones?
    Brand, price, value (quality).
    I believe the fault is the value of the product. Even if end users don’t know the technical details they feel the platform as inferior to competitors.
    Nokia knows how to build hardware, it is the software that makes the feeling that holds sales.
    Customer have not been well supported from the start (see incompatibility of WP 7.5 phones with WP 8) so returning customers are not a strong point for the platform.
    New customers do not buy the Lumia, they don’t feel equal or superior value versus the dominant iOS or Android.
    The problem for Nokia is that they not control the software side of their devices so they do not control their future.
    Is it to late to build an Android Lumia?

    • Tatil_S

      Tomi Ahonen believes carriers are boycotting Nokia, because WP comes standard with Skype app. I suppose carriers are also not happy with a platform whose phones they cannot customize. They probably miss that aspect of Symbian, that they now can get from Android. I think T.A. also claimed that the return rate of WP7 was too high.

      My main beefs with the GUI seems fixed with WP8 and I know quite a few people who switched from iOS to WP8, but apparently they are not a good reflection of the market at large. Still, I guessed last quarter’s WP Nokia sales more correctly than the consensus professional estimates of about 2.5 to 3 million based on observing my friends. I did not act on it and buy any Nokia shares before earnings were announced, so I cannot crow that much though. :)

      • http://www.isophist.com/ Emilio Orione

        In US Nokia sales declined, they are selling in China.
        I believe carriers are concerned by depending on Apple. They cherish iPhone money but Apple leave only a role for them, network management.
        Android has been pushed hard to have an alternative to Apple and it is now well established in the low cost segment of the market.
        Yet I don’t think carriers can be safe betting only on Android as an alternative. Android is only Samsung for the time being so they are depending on one supplier + Apple.
        A wider panorama can empower carriers well better than current one. It is the third leg that is missing, not carriers will.

      • Tatil_S

        Samsung may be the only Android OEM with large profits, but carriers need not worry about that. They can sell Samsung’s non-custom Galaxies all the while selling customized one from an endless list of other suppliers. Why should they worry if they go from razor thin margins to a few quarters of loss every now and then. Even the situation does not seem ideal, it makes no sense to support a third platform that does not offer any customization.

      • Flowchartman

        Blackberry 10, Tizen, FirefoxOS, Jolla Mobile, Ubuntu Phone. Looks as there are plenty 3th ecosystems already there or coming soon. I doubt WP is it since it had two years time now and didn’t made it. Its going to become even more difficult now for Microsoft and Nokia.

      • Enzos

        My 27 y.o. daughter switched from iPhone to a Lumia: she liked it for about a week and now hates it for it’s comparatively poor every-day ease of use.

    • handleym

      My vote would be that the problem is 100% WP. People don’t like it, as evidenced by the fact that they’re equally unenthusiastic about Win8.

      Why don’t they like it? Here’s where the opinions differ; and who knows the truth?
      My personal opinion is that the UI is too low in information density; or, more broadly, that it cares far more about “looking cool” than about being functional. This low information density means the UI has little appeal for power users, which in turn means they don’t evangelize the OS to anyone else.

      This particular model of UI success suggests that the way you make your product successful is to
      – figure out which subset of power users you want AND
      – also be able to appeal to the broad user base.
      Both, not one or the other.
      Apple snagged the power users who value aesthetics, consistency, ease of use; Android those who value tinkering. MS apparently doesn’t give a damn about power users of any sort.

      (I’m aware that this is what people have said about Apple for years but, again, IMHO, the difference is the people complaining about Apple as selling “toys” were speaking from a point of willful ignorance, whereas those complaining about the low information density of WinP/Win8 actually have a very valid point.)

      • JohnDoey

        People don’t like Windows Phone because it looks like a cross between a 1998 Web page and 1988 MS-DOS and it has almost no apps and because it is from the hated Microsoft and because iPhone is about 10,000 times better in every way.

      • Xynos

        I’m as much of an Apple fan as the next guy, but I like the Windows Phone UI. Very futuristic and people-centric, it focuses on content, not chrome. It’s true that there are less apps, and that is WP8’s most glaring disadvantage.

      • flowchartman

        I think Microsoft was never any good at UI. After 30 minutes of Metro I had the impression of a 90′ blink-tag rivival with 80′ disco music cut down to 2010 metro-station like functionality and beauty. Those crazy colors and minecraft blocks are different, yes, but not in a good sense. Just being different isn’t it. It needs to be good.

        I contrast that with my newest toy, a Z10, not being a comoany-fanboy but a tech-fanboy. Its fluid. Handling and UI design. There is nothing crying at me and nothing where I was left with the impression its to many touches, missing something essential. My various Android devices top that by just allowing that I can change all aspects. My iPhobe is just good out of the box. UI, design, handling. Simple, appealing and yet powerful enough for my daily tasks.

        Microsoft was never strong or even good at that. What was there winner is the ecosystem. Windows desktop is that good because of all the 3th party apps, the ecosystem buildup over a decade long.

        WP doesn’t have that. They cut all ties to Windows desktop. Rewrite from scratch for what? WP is so different from all other mobile platforms and even from Windows desktop, eg no OpenGL and no POSIX, that its a totally new platform. They just throw away a decade of investment done on Windows desktop. They just throw away the WP7=>WP8 upgrade-path. That’s not a save place for investment.

      • mjw149

        Well, Elop created some distribution challenges by selecting WP7. It didn’t scale down as well as Android, and apparently some Chinese and Japanese carriers didn’t want it at all due to concerns about support costs. Also, anecdotally, a franchise of Nokia-based stores in Russia switched to Android overnight.

        This is a case where even good software can be bad for business. Android allows more tinkering, customization, freedom in hardware, all of which appeals to resellers and carriers and Symbian’s hardcore fan base. WP fit Nokia’s legacy business and customer base like a square peg in a round hole.

    • http://twitter.com/juancho Juan

      Users that have been exposed to iOS are VERY aware of the shortcomings of WP, many people had an iPod before a Smartphone.

      My girlfriend for example keeps carrying her iPod together with her WP because:

      She cant figure out how to share correctly

      WhatsApp works really bad, cannot share videos and sometimes it cannot receive media.

      Facebook app sucks.

      Cannot lower games volume without lowering ringer

      Twitter for WP sucks

      No Instagram

      No Foursquare (really, the version in the store is a joke)

      Stock weather app (that had to be installed first, anyway) doesnt recognice several cities (had to install something else)

      Cannot block calls or numbers.

      And a huge etcetera. She WONT BE EVANGELIZING WP for sure, but she DOES evangelize iOS from her iPod experience, wich is really solid.

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  • mjw149

    Their increase was the first really good news for Windows Phone, like, ever, but seeing Nokia still lose smartphone customers while they transition to a supposedly superior WP8 is stunning. On the face of it, this is good news for Nokia, but your chart really drives home the point that Symbian/Meego customers are not WP8 customers and MS and Nokia hasn’t fixed that.

    • Sander van der Wal

      Nokia never had any Meego customers to speak of.

      And in 2009/2010 they lost their Symbian customers in the Western European markets where Lumia was introduced. Why would these people return?

      • Klaus

        Reality is different as can be seen in the chart above. Fact is Nokia was growing quarter after quarter till… the burning memo.

      • mjw149

        You can nitpick, but that was exactly my point. They had a few Meego/Harmattan/Linux-esque platform customers, whatever you call it, they have had many Symbian or Symbian+, whatever you want to call the ‘smart’ version of Symbian, and they weren’t transitioned to a completely alien OS and ecosystem, go figure.

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  • Carpenter

    There is some interesting stuff in the report.
    Smart Devices EUR ASP 191
    Lumia ASP EUR 182

    Because Lumia volumes were so much higher, Symbian ASP has been much higher than Lumia. I’m just reading the report, haven’t done the math yet. This is very surprising.

    Also there is bizarre statement in the report regarding the issue:
    “The year-on-year increase in our Smart Devices ASP in the first quarter 2013 was primarily due to a positive mix shift towards sales of our Lumia products which carry a higher ASP than our Symbian products”

    This must mean that last Symbian products sold have been high end devices.

  • capnbob67

    Nice work as ever.
    Just using some eyeball math, it looks like they have sold about 118M Symbians since Elop announced in Q1 2011 that they had another 150M Symbians to sell. That is if you count all the sales in Q1 11 (he made the statement in February). If you don’t count that Q we are down to under 100M. Anyway, it is interesting to re-read this column and would be great to see the Nokia actuals vs. forecast as Horace laid them out here

    http://www.asymco.com/2011/02/14/who-will-buy-the-next-150-million-symbian-smartphones/

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

      Total Symbian sold from Q1 2011 (inclusive) to end of Q1 2013 was 98.9 million.

      • capnbob67

        Thanks. I double counted 2011 Q1 when eyeballing. Shows I should always write it down! I think the interesting analysis here is to use this as an example of the mechanics of platform death maybe comparing the Osborne effect on Symbian (thanks Elop) vs. the “unannounced” declines of WinMob, RIM/BB, Palm etc. Just a thought.

  • Walt French

    I’m quite amazed in not seeing any comments about the fact that Lumias are essentially version 1.0 phones — yes, I count the non-upgradeable WindowsPhone 7.X as 0.9 beta versions that Microsoft was extremely dishonest by releasing while knowing they’d never get any upgrade love — approximately 6 years after the iPhone.

    No ecosystem. No momentum. No network of satisfied users telling friends. Et cetera, et cetera.

    If the issue were one of quality, I’ve heard enough people opine about how well the OS works, that you’d think they’d be taking off. So “quality” as defined by cohesiveness, capability, etc., isn’t what matters. It’s that Microsoft took so many years to get it out to the public, and hasn’t yet been willing to create the buzz by giveaways, contests, whatever works in different markets.

    All the more amazing that Microsoft is repeating its Zune playbook. They defined a bit better tie-ins to the desktop, but that hasn’t won it many fans, either.

    • obarthelemy

      But, it’s not a v1. If you waat to be nice, it’s a reboot, but the “WinPhone” franchise even predates iPhones, and has been rather bad since day one.

      From personal experience, the OS doesn’t work that well. First, it fails at running the apps I need, because the apps aren’t there, and running apps is really an OS’s basic job. Second, the apps that *are* there are mostly sub-par. And finally, the OS as an OS is lacking: alerts, widgets, customization, ergonomics…

      Plus the hardware is low end. No power users want it, and many regular users follow power users’ advice. The only person I know who got a WinPhone is my brother, because he was working for an MS partner, and that was the political thing to do. He got rid of it quickly after changing jobs (and now sports an iP5, which.. is deeply hurtful ^^)

      I think the people who say they like WinPhone are mostly exhibiting Stockholm’s syndrome. Few people are strong enough to acknowledge they made a mistake, especially when they’re in for 2 years.

      In the overall scheme of things, neither the users nor the sector’s other stakeholders are anxious to put MS in any position of power, given what the results have been with desktops PCs and servers.

    • JohnDoey

      No, Windows Phone is not version 1, it is version 7 and 8. Microsoft has been making phones for twice as long as Apple and Google and there is absolutely no excuse. And Nokia also has been making phones like 10 times as long as Apple. No excuse.

      • Walt French

        Well, you can call ‘em what you want. After all, the first version of Mac OS X, (Server 1.0) supposedly a successor to OS9, was completely incompatible*, the same way that WP7 and WP8 are utterly incompatible with Windows Mobile.

        As you know very well, the differences between WM6 and WP7 were profound and I would be surprised to hear that a tiny fraction of apps were ported — it’d have made more sense to rewrite them from scratch.

        Hence, my designation of 1.0. Yes, Microsoft was in the business a long time, but while WP reflects Microsoft’s technical talents, you couldn’t tell that they were experienced players from the quality of their business decisions.

        * Yes, subsequent versions of OSX included Classic compatibility. Apple, anyway, was aware how at-risk their user base would be from forcing them to buy all-new apps, some of which wouldn’t have been available at the time the user bought a spiffy new box, putting the entire Apple-customer relationship at risk.

      • Stone

        > the differences between WM6 and WP7 were profound and I would be surprised to hear that a tiny fraction of apps were ported

        Because that wasn’t possible. While WP7 was CE under the hood Microsoft didn’t gave access to the internal API. Just like WP8 is win32 under the hood and Microsoft doesn’t give access to the API again! But there own IE and Office are allowed to use that API.

        > it’d have made more sense to rewrite them from scratch.

        How much apps got rewritten? Close to zero! Telling if even Microsoft isn’t able to rewrite IE and Office to Metro and ports over using APIs others are not allowed to use.

      • ???

        If you have to rewrite anyways then why should you rewrite for a niche platform rather then Android or iPhone?

  • obarthelemy

    This kind of drives home the point that distribution and advertising are not key success factors: Nokia have probably the best distribution relationships, and MS + Nokia have been spending lavishly on advertising. Yet uptake is very low.

    Obviously, this could not overcome the negatives: the OS is rather lacking compared to iOS and Android, the hardware is low-to-mid range at best, the ecosystem is missing lots of apps and most peripherals.

    Let us not forget that next time we try to attribute Samsung’s success solely to advertising and distribution.

    • jb

      I believe it’s been clear in that discussion that the question was about why Samsung dominates over other Android manufacturers, where the OS, hardware and ecosystem is largely the same. So I don’t understand what point you are trying to make.

      • obarthelemy

        Exactly. You’re only 2/3rds right.

      • jb

        Which third do you disagree with?

      • HClimb

        OS and hardware the same? I found Samsung devices to be a lot different from HTC in both aspects. The Galaxy Range is just very good and there is no good competition to that. Samsung did increase there brand, customer-loyality and experience in huge chunks last years. One a Nokia always a Nokia became once a Samsung always a Samsung. Customers stay if you do good products and switch if you don’t. Marketing is only to make them aware what you need to a lesser degree once you have and keep them.

    • Kizedek

      Your statement about the “lavish” spending of MS or Nokia does nothing towards proving that Samsung’s spending is *not* a significant contributing factor to Samsung’s “success” — because Samsung spends far and above all others on an unprecendented scale. Samsung’s spending is lavish even compared to Coca-Cola.

      Samsung are certainly successful at making more money and more profit than any other phone OEM (Android or Windows, etc.) — at the moment. At least part of the discussion revolves around how sustainable Samsung’s “success” is, however.

      So, Samsung’s marketing spending has yet to shake out as to how much it contributes to Samsung’s “success” — it’s unprecedented, and quite arguably and possibly unsustainable, as Horace has begun to investigate and theorize.

      We have yet to see exactly what is most attributable to the “success” of Samsung. Some theorize that it is Samsung’s ability to be a fast follower or copier of Apple (who else saw the signal that Apple was gearing up in such volumes, for example, as Horace has put forward?).

      At the same time, Apple has spent similar amounts (12 billions or whatever) on production capacity instead of marketing. Also, it looks like Apple is withdrawing its component manufacturing business from Samsung and taking it elsewhere. That will contribute to Samsung’s bottom line (and make it more difficult for Samsung to copy Apple ;) ).

      Certainly, Samsung’s actual devices and their quality and features ARE *a* factor in their success. No-one is trying to deny that. But it is just one factor among many, and likely not the main one. We’ll see. Actual device and build quality, etc. are probably LESS a factor in Samsung’s “success”, and at the same time, MORE a factor in Apple’s than you would like to portray or admit.

      I mean, come on: despite the obvious focus of Apple on build and usability and experience, and putting money into real equipment and new processes, and despite the highest customer satisfaction ratings in the industry, all you want to see is “marketing” and “coolness factor” in Apple’s case; and despite the documented astronomical marketing spending by Samsung, and despite its getting caught and fined for shady astro-turfing practices, etc., all you want to see is how good the devices are. What’s up with that? Let us not forget that next time you attempt to make a rational point.

      • obarthelemy

        I know than Apple fans like to harp on how Samsung is copying Apple, and stealing their success, but that argument is seriously misguided. Samsung is one of the Android OEMs that diverges most from Apple: very different industrial design (plastic), very different sizes (what would Jobs have said about 4.3, 5, 5.5 and 6.3″ phones ?), very different features (Samsung are about the only ones still sticking with the basics: removable battery, SD card… also, AMOLED screen, pen…). Contrary to what you’re saying, Samsung is one of the less Apple-aping OEM. HTC, Sony, … are much worse offenders. To what result ?

        Also, you’re misrepresenting what I say about Apple’s products.

      • JohnDoey

        None of the Android OEM’s diverges very far from iOS because Android is an iOS clone and Android hardware is an iPhone clone.

        Why do Android handsets have a sleep/wake button on top and a mute switch and volume rocker on the side and a full-face touch screen? Cloned from iPhone.

        iPhone 3G and 3GS were plastic.

        Samsung made their money by meeting iPhone demand in the markets that don’t have real iPhones. Samsung has been making phones for 20 years, they sell in more than twice as many markets as Apple. When iPhone arrives in a market, Samsung sales fall dramatically as iPhone meets its own demand.

        It is great if you like Android. But there is no way to pretend it is not an iOS clone. It started as a Sidekick clone, then became a BlackBerry clone, and then an iPhone clone.

      • Carpenter

        Android is not an iOS clone. Android is based on managed (Dalvik) runtime and is an extremely object oriented system. To utilize native resources, JNI is to be used and it may not be nice and easy. Android is starting to make sense only now when we have multicore processors and >1GB RAM. Windows Phone 8 is quite similar to Android in that sense. Windows phone 7.x is… Well, it’s an UI demonstration.

        iOS is very efficient system that is designed to run native code with wery efficiently in hardware constrained environment. It can be easily utilized for quite different HW due to omission of “hungy” managed runtime. Just like Nokia’s Symbian. It can’t be “cloned”.

        The nature of iOS is the very reason that now makes that plastic iPhone cheapo feasible with a single core Apple A5 SoC. The underlying reason is the same that enabled Nokia to run pretty nice interface on expired ARM11 based HW.

        Isn’t it ironic. Similar technological choices enabled Nokia to make decent cheap devices and Apple to disrupt the whole industry. And it’s not over, just wait for that cheap iPhone It will still create havoc and strike fear in the heats of their competitors.

      • Mark Jones

        Android is an iOS copy primarily pertaining to certain user interface elements, but also to some OS techniques that are used. Other than that, I agree pretty much with the rest of what you wrote.

      • Carpenter

        It’s not really very relevant if they copied some icons with minor modifications. It did not bring them any success. And what might be those mysterious “OS techniques”. Android development was started years before first iPhone was launched.

        From technical perspective it seems likely that Android is part of Google strategy to keep MS from gaining too big market share in mobile. Android is the “windows of mobile”. To me it seems to be perfectly designed for that role. And quite badly designed to compete again iDevices.

        This is not so obvious yet when iPhone Cheap is not yet on the market. But, please consider the following:
        A5 S5L8947 is about 5$ part for Apple. Apple can probably get feasible baseband processor for another 5$. What I still understand about this business, Apple should be able to reach sub 80$ BOM cost for iPhone Cheap. In this business it’s nice if you can se it 3 x BOM, 260$. Nokia was once in similar position with Symbian. But somehow they could not preserve the integrity of their organizations and it all fell apart.

        It would be futile to compete directly with a healthy company that has these integration capabilities. Google decided to against MS and it was the right decision. All this will be much more clear when the iPhone lineup is complete and market share has been adjusted accordingly.

      • obarthelemy

        the A5 isn’t single core.

        Apple disrupted the industry way before they used their own SoCs.

        Current performance tests show similar or better CPU performance from lower-priced Android handsets. Apple do have better margins, and better GPU performance, but Android supports a lot more features.

      • Mark Jones

        Apple now makes a single core A5 for use in the AppleTV.

        You’re correct that the first iPhones used Samsung designed chips, but so what. The Apple Ax chips are optimized for today’s iOS.

        Can you provide a link to support your performance test assertion?

      • obarthelemy
      • obarthelemy

        You’ve got you smartphone history and facts wrong.
        – The LG Prada, which came before the iPhone, had those buttons, a full touchscreen, and the same shape. Don’t remember about materials.
        – Samsung is leading in sales, and/or increasing sales, in many markets that are perfectly supplied with iPhones.
        It is great if you are an irrational Apple enthusiast who likes making up facts. This is not the forum to do that though.

      • Mark Jones

        Obviously, you haven’t looked through the Apple vs. Samsung trial materials. The LG Prada does not have same shape; it is squarer, and has wider borders. Apple used phones and tablets from other manufacturers to show how the Samsung devices were much more closely related to the Apple design patent.

      • Mark Jones

        If we separate Samsung from Google Android, Apple does claim that Samsung is the only one copying the iPhone and iPad design patents. Apple presented material where Google tells Samsung that they’re design is too similar to Apple’s, as well as Samsung documents where a VP highlights specific Apple elements (including icons) that should be replicated in Samsung products.

      • obarthelemy

        No, Apple’s only suing Samsung does not mean Apple think the others aren’t infringing. I’ll give you an easy to understand parallel: me drinking red wine does not mean I wouldn’t like rosé and white, too.

        As for the actual patents and copyrights infringed, I think we must let the dust settle on the various lawsuits and appeals worldwide. A few of the patents involved in the US suit have already been invalidated in the mean time.

      • Mark Jones

        As I said, Apple presented examples of competitor products as not infringing their design patents. Can it be any clearer than that for those products?

      • Chaka10

        It’s plain to my eyes that Samsung copied Apple (mimicked, aped, however you might put it — green phone icon with the handle oriented the same way even!!! This link has some great photos — http://www.redsn0w.us/2011/09/did-samsung-copying-apple-or-not.html)

        However, while I personally have a serious issue with that as a matter of principle, it’s not objectively clear to me that it was the main factor in Samsung’s success, which mainly took off last year with the SIII and Note II. Rather, I believe that success was due to quality/innovative products (as Obarthalemey fairly describes) and the resources to operate at massive scale — in this sense (as far as it goes), perhaps not so different from Apple. It seems obvious that other key contributing factors included Samsung’s massive spending and the support from Google and perhaps even some carriers (how can they not be factors?).

        Having said that, I believe Samsung’s success is tenuous, and much more vulnerable than Apple. I have serous doubts for the SIV and not just because as widely reported its a marginal improvement over the SIII — as I’ve mentioned in posts elsewhere, (a) the maturing smartphone market (particularly at the high end and in developed markets) means potentially slower growth in first time smartphone buyers, (b) the ramp of the SIII and Note II likely already addressed the demand from the most obvious Samsung buyers (low hanging fruit, if you like), and (c) the potential replacement demand from existing Samsung installed base, looking at unit sales from 24 +/- months ago (avg replacement cycle) is meager.

        More fundamentally, I believe Samsung and all Android OEMs are much like the PC OEMs or, maybe even closer to home, the original feature phone OEMs — selling products with high risk of commoditization (vis-a-vis other Android phones), and having to rely on fashion or novelty (freshness) to distinguish their offerings (harken to the RAZR, how different was that from other feature phones really, and how long can the cool slimness last before it gets old)? Without the more defensible and lasting moat of a full ecosystem within their control, they are essentially operating in the same hit driven environment as was the feature phone market. (Yes, there is the Android ecosystem, with Google Play and Google services, but the OEMs don’t control that and it’s not something that offers any Android OEM a competitive advantage over any other Android OEM.).

        So, I believe the SIV will disappoint and Samsung is one hit by another Android OEM away from losing its market share dominance on Android. If/when that happens, Samsung’s massive capital infrastructure, currently a key advantage, will instead become a lead weight. Given how I feel about Samsung’s business tactics, I can’t say I’d be too sorry.

        Back to point, Nokia and the Lumia — a more rosey reading of the chart would focus Nokia having stabilized the decline in its smartphone sales in the last 3 quarters.

      • Mark Jones

        Because Samsung closely mimicked iPhone, they could more credibly claim they were just like iPhone (meaning just as good as iPhone) in those markets where they compete with iPhone. With that now raising the prestige of the whole Samsung brand, it helps sell the lower-end smartphone models in emerging markets where iPhone is just an expensive aspiration for most.

        I am not as pessimistic about Samsung because they are fast learners and followers, who will do anything, legal and illegal, to dominate. But now that they’ve decimated Nokia, they will need to fend off the smartphone/featurephone makers (Huawei, ZTE, and a host of others from China) who have lower production costs and are rapidly expanding globally. (But that’s another topic.)

        Nokia’s Lumia sales may have stabilized but at a level 1/3 of where they need to be. And their featurephone business is accelerating in its decline (shrinking market, but also more capable competition). Similarly recognize the Nokia brand used to have prestige earned primarily from their high-end (N-series), which was carried down to their cheapest phones. That prestige is gone because Nokia took too long to sell an “iPhone”, and in many emerging markets, one would know that Nokia’s Lumia is still not an aspirational iPhone.

      • Chaka10

        It’s plain to my eyes that Samsung copied Apple (mimicked, aped, however you might put it — green phone icon with the handle oriented the same way even).

        However, while I personally have a serious issue with that as a matter of principle, it’s not objectively clear to me that it was the main factor in Samsung’s success, which mainly took off last year with the SIII and Note II. Rather, I believe that success was due to quality/innovative products (as Obarthalemey fairly describes) and the resources to operate at massive scale — in this sense (as far as it goes), perhaps not so different from Apple. It seems obvious that other key contributing factors included Samsung’s massive spending and the support from Google and perhaps even some carriers (how can they not be factors?).

        Having said that, I believe Samsung’s success is tenuous, and much more vulnerable than Apple. I have serous doubts for the SIV and not just because as widely reported its a marginal improvement over the SIII — as I’ve mentioned in posts elsewhere, (a) the maturing smartphone market (particularly at the high end and in developed markets) means potentially slower growth in first time smartphone buyers, (b) the ramp of the SIII and Note II likely already addressed the demand from the most obvious Samsung buyers (low hanging fruit, if you like), and (c) the potential replacement demand from existing Samsung installed base, looking at unit sales from 24 +/- months ago (avg replacement cycle) is meager.

        More fundamentally, I believe Samsung and all Android OEMs are much like the PC OEMs or, maybe even closer to home, the original feature phone OEMs — selling products with high risk of commoditization (vis-a-vis other Android phones), and having to rely on fashion or novelty (freshness) to distinguish their offerings (harken to the RAZR, how different was that from other feature phones really, and how long can the cool slimness last before it gets old)? Without the more defensible and lasting moat of a full ecosystem within their control, they are essentially operating in the same hit driven environment as was the feature phone market. (Yes, there is the Android ecosystem, with Google Play and Google services, but the OEMs don’t control that and it’s not something that offers any Android OEM a competitive advantage over any other Android OEM.).

        So, I believe the SIV will disappoint and Samsung is one hit by another Android OEM away from losing its market share dominance on Android. If/when that happens, Samsung’s massive capital infrastructure, currently a key advantage, will instead become a lead weight. Given how I feel about Samsung’s business tactics, I can’t say I’d be too sorry. In any case, the competitive threat Samsung poses to Apple is way overstated.

        Back to point, Nokia and the Lumia — a more rosey reading of the chart would focus Nokia having stabilized the decline in its smartphone sales in the last 3 quarters.

      • Johnny

        Please stick to discussions relevant to business analsys, not tech specs.

        This is a business blog and many of your posts seem to change things to Team Google and Team Apple.

        Your posts over the last few months have been ruining the quality of the comment section. The comment section has ballooned by your baiting people. Please stick to business and fact, or intelligent observations, without platform bias, or otherwise please go back to Ars or TheVerge, wherever I saw your huge platform bias.

        You can like one platform or another but your posting is ruining the quality of comment section for months.

      • obarthelemy

        I don’t think so. There’s a huge bias here about business success being only about marketing and distribution, and about Apple products being intrinsically superior.
        I know it’s uncomfortable for the likes of you, but the most important factor in commercial success is actually the product, and Android in general and Samsung’s in particular are superior in many cases, in many ways, for many customers.
        I’ll keep repeating that until at least that basic fact in somewhat taken into account. That’s necessary to actually understand and anticipate what is happening.

      • Kizedek

        What “business or commercial success”? Hello.

        There is no business success to Android to be seen anywhere, except that Samsung happens to use some version of it on some proportion of their phones.

        Samsung is the only phone company showing ANY business success, and it is a fraction of Apple’s despite its portfolio of products. Hmmm, I wonder if it has anything to do with Apple’s product? No, wait: Samsung has far greater distribution and spends far more on marketing. Hmmm, I wonder if THAT contributes to Samsung’s having greater business “success” than other Android or Windows OEMs? (Particularly when one considers their competitors’ products, such as the HTC One or whatever other commenters here prefer over the Galaxies). Hmm, I wonder if there is some combination of factors at play here?

        I guess Horace and other commenters will have to keep repeating at least the basic fact that there is little business success to be seen outside Apple and to a much lesser degree Samsung, and maybe someday you will actually take it into account. That’s necessary to actually understand and anticipate what is happening.

      • obarthelemy

        If Android were Samsung-only, do you really think HTC, Sony, LG, Motorola… would fare as well as they do today ? hint: look at Nokia.

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

        The most important factor in commercial success is that the product works for the job it’s hired to do. There is no good or bad product. A camera in a phone is superior to a studio camera when the job is always having a camera with you. Being successful means avoiding competition in the first place by re-defining the basis of competition.

      • Kizedek

        Thanks for the added dimension once again. I forgot to pick up on “jobs to be done” (in my longer comment below), even though that is what I really love hearing about and come back to this site to read about.

        In the phone as camera example, I guess one way to discover some measure of the commercial success that the iPhone has had in just this one aspect, just this one job to be done, is to note its dominant usage on such sites as YouTube, Flikr, Instagram, Twitter, Facebook, 500px, etc. — that the iPhone accounts for X percent of the media creation and uploads to these sites, despite its “market share as a phone” and despite other phones possibly having “a better camera”.

      • Johnny

        The website claims to examine the mobile industry thru an analsys/lens of Apple. The bias is plainly stated, why are you complaining? Where is the Android version of Asymco? Maybe you should start one? No one would be interested?

        Why don’t Samsung state their numbers? Or HTC, or Amazon, etc…
        We could do more accurate analsys if Samsung told us their numbers…

        So you are going to keep spreading propaganda and misinformation until we submit to your Android bias. Thanks for playing, you can take your ball and go home.

        Grow up.

        This website is about facts, not your android GoogleTV thumb drive you made for your parents.

    • Noah Berlove

      No, it highlights that you need more than just distribution and advertising. It works for Samsung because they also make desirable/marketable products. The market is telling us Nokia does not, or perhaps, Nokia’s distribution relationships are not as great as they once were. In any case, takeaway their distribution and advertising advantages and Samsung would sell far fewer devices regardless of good they were.

    • Walt French

      In this rapidly-changing industry, the dynamics have evolved. In 2005(?), Verizon wanted nothing to do with a promise of always-online users if it had anything to do with Jobs & Apple; AT&T was desperate enough — hemorrhaging users after the awkward AT&T-Cingular merger — to take the chance. By 2009, Verizon had acquired the Droid brand and worked closely with Motorola to have a capable competitor. History buffs can find a great reads at http://www.wired.com/gadgets/wireless/magazine/16-02/ff_iphone?currentPage=all and http://www.wired.com/magazine/2011/04/mf_android/.

      I don’t know the dynamics in other nations, but in the US, Verizon pushed its own brand aggressively well before Samsung became prominent; Samsung was a huge manufacturer of featurephones and so didn’t have the need to put all its eggs into the Android basket, as Moto did.

      Samsung is now in a position not unlike what HP’s was in the early phase of the Windows dynasty. They make a quality device and capture a large part of the profitability. Their distribution, advertising and manufacturing expertise facilitates their positioning as the quality/scale Android brand.

      In contrast, Nokia is famous for never having strong carrier relationships in the US, despite its high level of engineering talent. Before the iPhone took off, Nokia had a very modest share here despite the product quality. Also in contrast, Apple had negative assets in its carrier relationships before creating a hugely successful program with AT&T.

      Today, Apple is a tough partner for carriers but seems to have established itself, while Nokia’s apologists badmouth Microsoft’s ownership with Skype as the deal-killer in their lack of distribution. And Samsung is a reliable seller, willing/happy to do business on terms the carriers find comfortable.

      I’ve only played briefly with WinPhones; I don’t have strong opinions about the OS. I just think the main theme, of disruptive business models combined with ability to perform at scale, explain the rise of Apple and Android, plus the flat-lining of Nokia.

    • Walt French

      If Nokia has ever had any better than modest carrier relationships (“distribution”) in the US, the premier market for smartphones, it’s been invisible to all the commenters I’ve been following.

      I think the argument stands: marketing, distribution are necessary, but not sufficient keys to success. Nokia’s troubles with WP are the same as Microsoft’s: too late, insufficient critical mass of reason to purchase, causing chicken-and-egg problem for developers/customers.

  • Jerome

    The root cause of WP is quite simple to understand. Apple re-defined what a smartphone can do and what it is supposed to look like. Android is a clone of the iOS paradigm, and can tailgate on Apples success. The market has “learned” what a smartphone is, how it looks like, ans what to expect from it. The other me-too mobile OS are keeping as close as possible to iOS, Firefox being almost ridiculously slavish in maintaining the iOS look.

    WP is completely different. It does NOT look like iPhone, therefore the market has no simple way of recognising it as a smartphone. It is different. It’s in the same corner where MacOS was in the late 90s – an odd system, that looks unfamiliar and leaves people asking themselves: but can it do facebook? And email? Or browse the web?

    This means that the main challenge is to educate the market and redefine the concept of “what a smartphone is supposed to look like”. This requires a LOT more marketing effort than what has been done so far.

    • obarthelemy

      I don’t think that’s the issue. The issue is that mainly due to network effects, consumers are not interested in multiplying mobile OSes for the sake of it. The mainstream one is both easy to use and feature-rich, and open and free so barriers to OEM adoption are essentially zero. New OSes must find an unmet need, either from OEMs aor end-users, and erase their latecomer handicap.

      I can’t think of any new need that WinPhone 8 fills. Once you get past the novelty of more-than-icons, less-than-widgets Live Tiles, what does it do that iOS/Android don’t, or what better way does it have to do it, that would convince us to forgo a lot of useful or fun apps, hardware choices, and OS services, and risk becoming beholden to MS the same way we have on the desktop ?