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Saturday, November 26, 2011

The AMP Index for Q3

The AMP Index for Q3:

The Asymco Mobile Performance (AMP) index is an unweighted average of:

  1. Share of all handset units sold (global)

  2. Share of smartphones

  3. Share of value (revenues)

  4. Share of profits

For major phone vendors. The raw data for each share is shown in the following charts (note change of vertical scale: each gridline represents 10%).

Note that the vendors are arranged in a particular way: top row are entrants, bottom row are incumbents with late incumbents from Korea arranged in the middle.

Taking the average of each of the lines above, the unweighted share index (Units, Smartphones, Value and Profit) is shown below:

And here it is in sparklines:

Like many indices, this is a generalization that measures a section of reality. The value is in its use as a benchmark and trend analysis.

Apple could buy the mobile phone industry | Updated

Apple could buy the mobile phone industry | Updated:

The last time I did this comparison (Apple could buy the mobile phone industry | asymco) was in June after the end of the second quarter. The following chart is an updated look.


Here is a discussion of the changes since the last analysis:

  • Sony Ericsson was valued through its acquisition by Sony. We did not have a way to value the enterprise before as it was not traded independently. Last June I estimated a 14x multiple on its trailing twelve months’ profits and got $3.0 billion. Since then half the company changed hands for about €1.05 thus yielding a total company value of $2.8 billion. The enterprise value should be therefore slightly lower but I’ll stick with the current transaction value as the EV.

  • Motorola Mobility has entered into an agreement to be acquired by Google for $12.5 billion by Google. The company’s enterprise value jumped as a result to about $8.6 billion.

  • RIM’s share price collapsed and it’s now also trading at an EV of about 7.3 billion (Yahoo finance).

  • Nokia’s price has also dropped and it now has an EV of about $13 billion (Yahoo finance).

  • HTC recently dropped significantly in price and is now worth about $15 billion EV. (Note that pricing of its equities is subject to suspended trading due to drop limits).

  • LG’s phone business is still losing money and it’s still difficult to value. In November it was revealed that the company was seeking to raise $890 million in capital to fund new initiatives including smartphones. The share price fell by 14%. In June I suggested a nominal value for the phone business of $10 billion. I think that’s very generous and with recent events I would place that value at $9 billion today.

  • Samsung’s fortunes have increased. In June I applied a 14x multiple to their trailing 12 months’ operating earnings. Given overall discounting of the sector I applied a multiple of 13 today. That yields a business value of $78 billion. Interestingly, that is larger than the value of all other competitors apart from Apple. That also makes it six times more valuable than Nokia.

  • Apple’s cash and cash equivalents and investments grew by about $12 billion and were worth about $82 billion as of October.

In summary, in June Apple’s cash was about 53% of the sum of competing phone vendor enterprise values. Today it’s about 61%. Excluding Samsung, Apple could buy the industry and still have $25 billion left over. This makes the claim that “Apple could buy the industry” even more believable.

This analysis is mainly academic. It does not imply that any such transaction will take place. As the purchase of Motorola shows, control has a premium and individual buyers may be less “rational” than markets. What it does show however is that the entire industry is in a state of crisis. Valuations for phone companies are collapsing and two major brands (Motorola and Sony Ericsson) are being absorbed and could disappear.

At the same time entrants are arriving with completely different business models. Amazon, Facebook, Baidu, Alibaba are intent on selling phones or platforms to be valued as enablers for asymmetric business models rather than as phones. One could argue that what Apple itself sells is more than hardware and that its value-add “on top” of hardware is increasing. This is a sign of commoditization. Certainly the voice business is well beyond that point but it now appears that even the smartphone business is already in an advanced state of value compression.

All the while the overall market is growing. I had separately looked at the profit pool and concluded that the brands are suffering. Summing up the votes from stock markets, the sentiment is even worse. 2012 is looking more and more as a year of inevitable and dramatic industry change.

Tuesday, November 08, 2011

Generation App: 62% of Mobile Users 25-34 own Smartphones

Generation App: 62% of Mobile Users 25-34 own Smartphones:

Nielsen’s third quarter survey of mobile users reveals that while only 43 percent of all US mobile phone subscribers own a smartphone, a mobile phone with a powerful operating system, the vast majority of those under the age of 44 now have smartphones. In fact, 62 percent of mobile adults aged 25-34 report owning smartphones. And among those 18-24 and 35-44 years old the smartphone penetration rate is hovering near 54 percent.

Other groups show slightly lower penetration rates. Around 40 percent of 12-17 year-old teens and 40 percent of 45-54 year-olds reported owning a smartphone, as opposed to a more basic feature phone.

After younger adults, the segment with the second fastest-growing smartphone penetration rate is those aged 55-64. Smartphone penetration among this older group is only 30 percent, but it jumped 5 percent this quarter.

As the smartphone market continues to expand, Android remains the most popular smartphone operating system in the United States, with 43 percent of the market, while Apple is the top smartphone manufacturer, with 28 percent of smartphone consumers sporting an Apple iPhone.



4G marches on – LTE soon to reach majority of world’s population

4G marches on – LTE soon to reach majority of world’s population:

Fourth generation or 4G mobile networks promise faster connections enabling users to do more while on the go. There’s quite some confusion about what 4G actually is and what technologies can be called 4G or not. 3GPP Long Term Evolution, or LTE for short, seems to be the technology that currently shows the most promise to be able to cut the Ethernet umbilical cord and set us free. Other than the promise of speeds in excess of 100 Mbps, why should you be excited about LTE coming to where you live?

Fresh numbers [PDF] from Informa Telecoms & Media show a majority of the world’s population will have the the option of LTE for mobile broadband soon, with around ten percent already living where LTE is running. We crunched the numbers and here are the key facts:

  • Around 13% of the world’s population live in countries where there are already running LTE implementations or where LTE is being deployed.

  • Another 41% of the population live in countries where LTE is in trials, including countries like China and India.

  • Finally, another 24% of the world’s population are awaiting LTE, with planned or launch to be decided status on LTE in their countries.

Note that this doesn’t take into account how widespread the actual implementations by operators are.

Out of all mobile subscriptions, LTE will for the foreseeable future account for only a small percentage of worldwide subscriptions. Less than 1%, in fact, and, according to Informa Telecoms & Media, LTE will account for just 8% still by 2016. If we put this in terms of actual subscribers instead, ABI Research predicts that there will be 16 million LTE subscribers by the end of 2011, which, if true, is a drastic rise from the 1.9 million subscribers in the second quarter of the year, stated by Informa Telecoms & Media, out of which 1.8 million are in the US and Canada.

Clearly the largest growth potential for LTE is outside traditional markets such as North America and Western Europe.

Picture courtesy of LTEMaps. In the picture, a red marker per country for all operators to show commitments and a blue marker to show actual deployments.

4G devices slowly emerging

The Global Mobile Suppliers Association (GSA) published an update to its Evolution of LTE report, confirming that 248 operators “have committed to commercial LTE network deployments or are engaged in trials, technology testing or studies.” GSA also stated that 197 LTE devices aimed at users have been announced, spanning 48 manufacturers.

So far we’ve not seen a huge amount of 4G-capable devices but major manufacturers such as Motorola and Samsung have already introduced both smartphones and tablets supporting 4G, and more is coming from them and others. In the “Worldwide LTE Mobile Phone 2011-2014 Forecast”, IDC analyst Ramon T. Llamas predicts that by end of this year, mobile phone vendors will ship a total of 5.5 million LTE mobile phones worldwide. That is still dwarfed by the worldwide shipments of an expected 420 million smartphones in 2011.

At Pingdom we’ve seen real life LTE demonstrations with download speeds of around 82 Mbps and upload speeds of around 67 Mbps. That’s not far from the stated LTE peak rates of 100 Mbps down and 50 Mbps up. To put that into perspective, Akamai’s most recent State of the Internet report for Q2 2011, shows an average connection speed from South Korea, the country usually rated as having the fastest Internet speed in the world, of almost 14 Mbps and 58% of connections to Akamai from there running at speeds over 5 Mbps.

Also, the Pingdom office is located in an area where a 4G network was launched over a year ago, promising speeds of up to 80 Mbps.

Real benefit or buzzword?

But is LTE just the emperor’s new clothes, dazzling us with faster speeds but offering little else?

There’s no denying that not being tied to the ethernet jack in the wall is a great attraction but what’s interesting will be what that speed offers us in terms of what we can do with it.

On a country level, something like LTE can mean the ability to develop telecommunications and skip ahead. Already back in 2008, China was reported as having surpassed the US as the number one country in the world in terms of Internet users. Earlier this year, Forbes reported that, according to China’s Telecommunications Administration Bureau, there are 477 million Internet users in the country. But as amazing as those numbers may be, China still lags in the backwaters of the Internet when it comes to connection speeds. Akamai’s figures show that the average connection speed in China climbed to just over 1 Mbps, with an average peak connection speed just over 4.6 Mbps. Also, the high broadband adoption speed (connections to Akamai faster than 5 Mbps) is lingering in low single digits (0.5%) and even broadband adoption (speeds of more than 2 Mbps) is very low at 9.3%.

On a user level, higher mobile broadband speeds offer the possibility of new applications like virtual and augmented reality, HD video streaming, and HD video conferencing. The development toward faster mobile broadband speeds go hand in hand with the development to faster processing power and more storage capacity in mobile devices. With dual-core processors and gigabytes of space, that part of the equation seems to be solved. Apps and other software that take advantage of the new speed and power is arguably the next frontier.

Next: will telcos manage?

With increased speed comes increased volumes of up- and downloads. Telcos around the world have already been complaining about smartphones and tablets sucking up too much bandwidth, and more recently about “chatty” apps that poll in the background, taking up even more of the scarce space in the wireless pipes. Will telcos manage with users filling up the space as LTE rolls out around the world? That’s a question for another blog post.

This was a post from the guys at Pingdom, a site monitoring service that makes sure you're the first to know when your site is down. Check it out for free.

The end of the independent phone brand

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. 

The solid areas representing profit are operating profit/phone in the vertical axis and volumes shipped in the horizontal. The blank areas above are the cost of goods sold per phone and the combined solid and blank represent the average revenue per phone.

Some of the areas are over-represented due to the lack of resolution available.

Using before-and-after pie charts for positive profits, we can see how the entrants (RIM, Apple and HTC) went from 6% of profits to over 73% four and a half years later.

I feel that this is somehow the end of an era. I’ve written before about the brutality of this market, listing 13 companies which were either merged or acquired or disappeared in the last decade. Now both Motorola and Sony Ericsson will soon be added to the list. On average, it’s as if one phone vendor has disappeared every year for fifteen years.

And it’s still not over. RIM is also becoming a going concern issue, and LG has a big question mark above it.

Of course, ZTE and Huawei and Lenovo are joining the list of competitors but I note that they are not focused on mobile phones. They are opportunistic phone vendors, depending on other businesses to compensate for the risks inherent in phone sales. It’s interesting to note that neither Apple nor Samsung are pure phone plays.

In fact, of all the phone brands only RIM and HTC are exclusively phone-only companies. It may indicate something profound is happening. The notion that the development and marketing of phones as an activity independent of other business models may be coming to an end.

Android OS Fragmentation: Gingerbread Rising To 44.4% – Overtaking Froyo

Android OS Fragmentation: Gingerbread Rising To 44.4% – Overtaking Froyo:
Google regularly releases a chart concerning the distribution of Android platforms amongst active devices. According to the newest chart, which came out last week, Gingerbread has overtaken Froyo in terms of market share.

The histotical distribution clearly shows the very steady increase of Gingerbread (2.3) throughout the past 6 months, and at the same time a more and more decreasing growth of Froyo (2.2).

Below you can see the exact percentages for each platform. For those who did not know the sweet codenames of each version by heart, Google has inserted an extra column with the dessert names.

As we can see from this table, Froyo still holds an impressive 40.7%, but has been pushed back to second place by Gingerbread, which accounts currently for 44.4% of all active devices. Gingerbread has overtaken Froyo for the first time since its release in December 2010.

Eclair, although falling back 4.5% in the last 3 months, still reigns 10.7% of the market, although having been released more than 2 years ago, in October 2009.

Tablet-oriented Honeycomb is currently at 1.9%, showing a modest increase from 1.1% in August. It might not go any further up, as version 4.0, a.k.a. Ice Cream Sandwich is on its way, which was built to function well on both smart smartphones and tablets. It made its debut on October 19th on the Galaxy Nexus, and should roll out globally throughout November.

Wednesday, November 02, 2011

Millennial Media Releases Q3 Mobile Mix Report

Millennial Media Releases Q3 Mobile Mix Report:

Today, we released our Q3 Mobile Mix Report, which included a special spotlight on Apple/iOS. We took a big picture look at iOS, and saw that over the last year, impressions on the operating system grew 60 percent. Of particular note, iPad impressions have grown 456 percent over the last year!

In our Q3 ranking of the top manufacturers on our network, Apple continued to lead, with a 23 percent share.

Here are a few additional highlights from the Q3 report:

  • The iPhone accounted for 54% of the iOS impressions on our platform, while iPod Touch and iPad combined to make up the other 46%.

  • Android was the leading OS on our network in Q3 with 56% of the Connected Device & Smartphone impressions.

  • Android made up 15 of the top 20 phones on our network. HTC had 6 of those phones, and grew over 100% year-over-year as a manufacturer.

  • When breaking down ad spend on applications, Android apps had a 49% share. This was a 20% growth quarter-over-quarter.

  • Gaming was the number one app category on our network, and grew another 26% in the last quarter.

Download the free full report including the Top 20 Mobile Phones, Top 10 Mobile Application Categories and more.

Mobile Mix complements our monthly mobile advertiser-focused Scorecard for Mobile Advertising Reach and Targeting (SMART)™ report.

Please visit our website to access additional research reports, including the Mobile Intel Series: Automotive guide.

If you have any questions or suggestions for future reports, please send them our way.

A tale of two disruptions

A tale of two disruptions:

Last quarter the iPad had unit growth of 166% with revenue growth of 146%. The iPad is selling more than twice the (also rapidly growing) Mac. The two product lines are shown below:

A big reason the Mac is still growing is that it now consists of 74% portables and the MacBook Air and Pro products are still largely unmatched and have a near monopoly in their target price.

The Mac’s average selling price has remained remarkably steady for three years.

But more importantly the iPad and the Mac both outgrew the PC market. Taken as OS X vs. Windows, the growth rates were 27.7% vs. 2.5%. If iOS is included along OS X, Apple grew its “computer” shipments at a rate of 99%.

The following chart illustrates the growth rates for Windows, Mac and Apple as a combined OS X/iOS.

The Windows platform still ran on 82% of PCs sold in the quarter with iOS taking second with 10.5%, OS X third with 4.7% and Android at about 3%.

Even though Mac OS X grew faster than the overall PC market for 20+ quarters, its market share is still below 5%–lower than what the iPhone has been able to obtain in the far larger mobile phone market.

That share has grown from 3.2% in the same quarter of 2008 but it’s still a very slowly changing landscape.

However, if we include the iPad, Apple begins to not only grow very rapidly, it moves up sharply in terms of ranking among PC vendors.

Last quarter’s 16 million OS X and iOS tablets brought it into second place behind the 16.6 million PCs that HP sold. That was enough to give Apple 15% share vs. 15.7% for HP. Over the last three years Apple has gained nearly 12 points of percentage of share.

The other vendors mostly lost share but the most affected were the smaller OEMs. HP lost 2.6 points, Acer 3.9 and Dell 3.4. However “Other” lost 10.5 points. Lenovo is the only major vendor to gain share (+4.48 points).

What’s interesting about this pattern is that whereas in the phone business “others” is a rapidly growing group of companies, in PCs the smaller vendors seem to be suffering. They still make up about 30% of the market but that’s down from about 40% three years ago.

In contrast, “Other” went from 15% to 24% of the phone market in the same time frame. Part of the explanation is that the entry of the iPad took the wind out of the “low end” netbooks and other cheap PCs. Consumers migrated low-end usage to a product re-built around those jobs.

In the mobile phone market, the disruption is in the opposite direction: communication is moving rapidly up-market from real-time voice to latent messaging and from storage consumption to broadband consumption. The companies being rewarded today in the phone business are those who are leading the charge to new markets.

In other words, on the PC, we are witnessing low-end disruption. On the mobile phone we are witnessing new market disruption. The irony is that the low end PC and the high-end mobile are very nearly the same thing but the industries, channels and incumbent business models are very different.

The 2011 Top 100 Global Brands And Their App Store Status

The 2011 Top 100 Global Brands And Their App Store Status:

It is our pleasure to release our latest Distimo Publication.

This report focuses on brands (as defined by the Interbrand 2011 Best Global Brands report) and how they perceive the fragmented app store space.

The major findings from this report are:

  • Brands have realized that publishing applications in the various app stores offers a viable channel to promote their brand, reach consumers, and for a subset of brands – sell content as 91% of the top brands have a presence in at least one of the major app stores.

  • This is a significant increase compared to 18 months ago when only 51% of the brands published or licensed an application.

  • Looking at specific app stores, we see that the Apple App Store for iPhone is by far the most popular app store for the top 100 global brands. The Google Android Market and the Apple App Store for iPad are both increasingly seen as good app stores for brands to promote their visibility and reach consumers.

You can now download this publication.

The press kit including all image files is also available.

Assessing the Smart TV Opportunity

Assessing the Smart TV Opportunity:

There has been increasing chatter about a new TV being developed by Apple.

My opinion on the subject was summarized in the post called Tele Vision. I contend that a TV cannot be smart until the content it delivers becomes smart. The logical conclusion is that the value chain needs re-integration so that the component which is not good enough (the content) can be improved along the dimensions that users value. And it cannot be improved unless the direction it needs to go into is aligned with the direction of the disruptive innovator. I won’t repeat the theory here, but it suffices to say that whatever will change television will do so by re-defining the core product not just the tools we use to consume it.

But today I wanted to address another question: how do we value the opportunity? In a back-of-the-envelope manner, can we tell if this business is big enough to try to fix.

The answer depends a lot on the business model of the disruptive entrant. The entry could depend on software or advertising or hardware or distribution, and each would have a different valuation.

But for the sake of calibration, I want to start with a proxy. The basic question of how many “terminals” exist to the value networks. How many units of TVs are sold and how many could a new entrant convert to a new paradigm?

I prepared the following chart showing the world-wide TV market with a highlighted subset of so-called “smart TVs” (source TRi). The market is shown from 2010 actuals through 2014 estimates. To make it more interesting I also added similar data for two other markets. Mobile phones and PCs with their own sub-categories of smartphones and tablets as equivalent “high growth” opportunities.

When considering the opportunity, the Smart TV volumes are small relative to either tablets or smartphones. 2011 shipments are expected to be around 25 million Smart TVs, vs. 454 million smartphones and 51 million tablets. Looking forward, it seems that even by 2014, smart TVs will be smaller volumes relative to either (projected) smartphones or tablets.

A reason for this is that the TV market is not that big. It barely reaches 280 million units in 2014. Having reached saturation, the rate of growth is never assumed to be greater than 5%. The growth in the Smart TV business is assumed to be much higher however, being at least 100% in 2012, though off a low base.

But the concept of what “smart” means in this forecast is troubling. Christina Bonnington at Wired highlights many of the failings of Smart TV.

“In most cases consumers are buying a television with Internet connectivity as insurance. In other words, they are buying them just in case they need it in the future,” says Van Baker, a vice-president at the research firm Gartner. “Less than half of Internet connected televisions actually get connected to the Internet so clearly consumers don’t yet see this capability as a must have feature.”

There is vast under-consumption even if the devices are being purchased. This looks eerily familiar to the smartphone market before they became usable by the vast majority through the transformative touch input method.

So this market seems to be ripe for some serious re-definition. It may not be large today because there is nothing worth buying. Absent any innovation the forecasts can only foresee more of the same. If there is a breakthrough which “cracks” this puzzle then we might indeed witness unforeseen opportunity.

Estimating Samsung’s smartphone mix

Estimating Samsung’s smartphone mix:

Samsung no longer reports mobile phone shipments. The company’s phone market performance reporting is limited to the following:

Shipment : High-20%↑YoY (low-20%↑QoQ)

ASP : Slight increase QoQ

As the company did not report volumes or ASP last quarter either, the QoQ (Quarter on Quarter) growth estimates are almost useless. The only fragment that might be useful is the “High-20% YoY” given that they did publish units for Q3 2010: 71.4 million. This leaves the question of what “High-20%” means. Here are some ranges and what the result would be:

  • 92.1 million assuming 29% YoY growth

  • 91.4 million assuming 28%

  • 90.1 million assuming 27%

The “best guess” might be 91.4 million.

As the company also provides revenue for its mobile division (14.42 trillion Won) we can therefore estimate the average selling price: $142. Is this a slight increase? By a similar approach, last quarter’s ASP was $139, and assuming exchange rates did not vary widely, this increase is small enough to be called “slight”.

We also have a figure for the operating margin for the entire Telecom group (16.9%) which gives an operating profit of $2.2 billion.

The last piece of the puzzle is the number of smartphones Samsung shipped. Samsung said smartphones grew “more than 300%” year over year. That would imply 31.4 million. One estimate is from Strategy Analytics that suggests 27.8 but it’s coupled to an overall volume estimate of 88 million (well below the 91.4 million estimated above). The Wall Street Journal published an estimate of 28 million.

I have no idea how to narrow down this estimate, but if we go with the one that claims the highest precision (27.8 million) we get an estimate of about 30.4% of Samsung’s volumes being smartphones (what I call the “smartphone mix”). That is an interesting basis for comparing Samsung’s smartphone business to other companies’ smartphones. I prepared a graph showing how pricing is affected by the increasing mix of smartphones in vendor portfolios.

What the graph shows is the movement of prices as companies have increased their smartphone mix since Q1 2009. For example Sony Ericsson moved from 31% smartphones to 80% smartphones in about a year. Their ASP increased from $184 to $231. Some companies have not changed their mix. Apple, HTC and RIM have maintained 100% smartphones in their portfolios so their pricing has been consistently high ($650, $354 and $357 over last 12 months, respectively). Conversely, Nokia has struggled with its smartphone portfolio and as a result its pricing has remained stubbornly clustered below $100.

But the most interesting companies to watch are Samsung, Sony Ericsson and Motorola. You can see how their “vectors” or price migration point toward the sweet spot where HTC and RIM reside. Ideally, they would be very much better off with pricing in the $300 range.

Samsung is moving quite rapidly toward the sweet spot but the slope is not as steep as the others. That’s may be because SE and Motorola have much smaller volumes but it’s still an open question why, with an estimated 30% mix of smartphones, the pricing remains $60 lower than when Motorola was at the same mix or $40 lower than Se.

Some of the answer might be due to the number of “low end” smartphones (Bada?) that Samsung is selling or maybe their non-smartphone pricing is trending down a lot more rapidly.

Keep in mind that if we change the assumption of the number of smartphones to a lower number (i.e. below 27 million) then the trajectory of the Samsung line in the graph would increase and may match more closely the slope of the other two vendors.

I don’t have any reason to believe that it’s lower than 27 million but I don’t have any reason to believe that it’s above 27 million either. It’s an estimate.

If we believe it then we have to say that with a near tripling of smartphone mix (from 11% to 30.4%), the company grew its overall units by 28% and its revenue by 39% and pricing by 17%. Profits also grew by 130%.

It would follow then that switching to a 100% smartphone mix would make a lot of sense.

The Mobile Phone Landscape

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.