Motorola ships 3.8 million smartphones

Sales from its handset business climbed 20 percent to $2 billion last quarter, helping to narrow its loss to $43 million from $216 million a year earlier. The division had an operating profit, excluding some charges, of $3 million. Motorola said it shipped 3.8 million smartphones last quarter.

via Motorola Profit Tops Estimates on Rising Sales of Droid Phones – Bloomberg.

Motorola shipped a total of 9.1 million phones. This is down 33% from the year-ago quarter’s 13.6 million units but up 10% sequentially from 8.3 million last quarter.

I’ll summarize the top tier vendors’ unit volumes, sales value, price and profitability in a few days.

Motorola's Android 2.2 Rollout: What a Mess – PCWorld

From a comment in the article below:

I installed HTC’s leaked version of 2.2 on my incredible last month. It has been noticeably faster, has better battery life, and the extra features are nice. As expected, Verizon put a lock down on the wifi tethering feature, and if I want to use it I have to pay an ADDITIONAL $25/month, which is completely ridiculous. Luckily, my phone has been rooted (it was the only way to get froyo on there) and I can use a number of FREE wifi tethering applications that don’t cost anything extra per month either.

It’s pretty sad that the only way to enjoy an android phone is to hack the crap out of it, and doing so requires relative technical expertise.

via Motorola’s Android 2.2 Rollout: What a Mess – PCWorld.

Reminds me of Windows Mobile in another way: the only real fans were those who could play with cooked ROMs. Conversely, imagine if the only iPhone fans were those who jailbroke/unlocked iPhones.

See also: The Android abdication

RIM now ranked 4th, Apple 6th in phone market shares

First quarter market share ranking of top mobile phone vendors according to Strategy Analytics:

  1. Nokia, 107.8 million
  2. Samsung, 64.3
  3. LG, 27.1
  4. RIM, 10.6
  5. Sony Ericsson, 10.5
  6. Apple 8.75
  7. Motorola, 8.5

These numbers are shipments or sell-in, which may differ from sell-through or end-user purchases.

RIM breaks into top 5 in surging phone market | Reuters.

Apple overtakes Motorola in phone market share

However, it has lost its position as the largest U.S. maker of phones to Apple Inc. Motorola sold a total of 8.5 million phones in the quarter, while Apple sold 8.8 million iPhones. Four years ago, when the Razr was still popular, Motorola sold 46.1 million phones in the first quarter.

via Motorola posts profit, strong sales; stock jumps – Yahoo! Finance.

A year ago, Motorola sold 14.7 million phones in the fourth quarter (a y/y drop in unit volume of 42%). The drop in phone revenue in the same period was 9 percent.

Calibrating iPhone Growth

I calibrate my growth rates on the assumption that Apple will overtake the combined share of the two money-losing handset vendors.

Sony Ericsson and Motorola are the weakest competitors in terms of portfolio and competence with software. Their sales, units and profits shares for 2008/2009 are shown in the graph above (source: Morgan Stanley).

Therefore, my thesis is that Apple could beat these two weakest competitors in 3 more years.

Here is the basic top-down view:

In 2009 174 million smartphones were sold out of a total of 1.13 billion phones (IDC, Strategy Analytics). Using a 10% CAGR on this figure gives 1.65 billion phones in 2013

Apple obtained 2.1% share in 2009 and about 1.5% share in 2008. My forecast share for Apple:

2010: 3%

2011: 4.1%

2012: 5.5%

2013: 7.5%

During the last quarter, Sony Ericsson held 4.5% share and Motorola 3.7% therefore my 2013 target for Apple is a little less than the sum of what these two hold today.

This results in unit sales for Apple of 125 million units for 2013 and a compound annual growth rate of 50% a year.

Two Million Droids

During the reported quarter, Motorola shipped 12 million mobile phones, commanding a global market share of just 3.7%. However, the newly launched two Android 3G smartphones CLIQ and DROID witnessed impressive results. Launched in the fourth quarter of 2009, these two devices generated sales of 2 million units together in the quarter.

Not sure what’s impressive about getting 2 million units sold after $100 million in promotion by Verizon.

Blurry Moto

Earlier today, Motorola unveiled MOTOBLUR, a mobile social media OS of sorts that runs on top of Google Android. The company plans to introduce its first MOTOBLUR handset – CLIQ (and an international version called DEXT) – before the holidays

The assumption underlying this product is that “social networking” as it exists today is a job that people are specifically hiring devices to help them do. There are several problems with this assumption:

  • SN is rapidly evolving. As any new medium, it takes several iterations before it’s “good enough” to solve the underlying problems. Whatever emerges (twittering, fb, or as yet unknown) will be a moving target. Users are moving quickly between these services. Assumptions about value of “stickiness” based on the social graph are proving to be flawed.
  • SN is not a “job” per se. SN is a means by which people communicate and try to get something done in their lives (i.e. getting a job, getting laid, suppressing loneliness, etc.) SN will compete with various other emergent technologies that solve these underlying jobs. These disruptors could be gaming metaphors, media-centric packages, virtual spaces, etc.

Therefore building a hardware product that is positioned and intertwined with SN is highly risky.

By the way, about 1.5 years ago Nokia considered doing the same thing. SN was on everyone’s mind as the next big thing, just like email was 2 years before that. These service fads come and go. It’s no surprise that one product development cycle later the devices are emerging even though the value of the service has rapidly evolved in new directions. This points out the fact that you can’t make hardware dev cycles match service/software dev cycles. The only way to play this from a hardware perspective is with a platform approach e.g. iPhone. Let the ecosystem solve the job to be done and collect rents. I’m always surprised that this lesson from the 90s is still being forgotten by the device guys. BTW, I understand the NOK Solutions logic a bit better. It is not a major departure from the track NOK is on now. The power base remains with devices, as it has for 15 years or more.

On another level, MOT is a going concern issue right now. The approach with CLIQ is, by definition, niche. I don’t see the product as broadly attractive solving MOT cash flow issues. If they sell more than 2 million units, I’d be surprised. (note: N97 got to 2 million on the back of massive distribution power but SE Xperia did not cross 1 million and Pre will struggle to get to 2 million.) The “bet” on Android is weak and not a bet really on anything correlated to earnings growth.