Wireless Smartphone Strategies

The industry’s most comprehensive set of critical market statistics and qualitative analysis, tracking and reporting on smartphones.

May 30, 2013 15:39 khyers

According to our Wireless Device Strategies (WDS) service, global mobile phone industry revenues grew +11% annually in Q1 2013. Profits increased annually due to a greater proportion of 3G and 4G models in the mix. Samsung and Apple dominate the industry and they are tightening their grip on value share, squeezing out almost all other rivals. Our new report provides quarterly global mobile phone ASPs, revenues and profit metrics for multiple major mobile phone OEMs from 2007 through 1Q 2013. Revenue share and profit share are also supplied. The published report can be downloaded by clients here.


January 12, 2011 21:17 Alex Spektor

After years of public speculation, AT&T has finally lost its US exclusive on Apple’s megastar smartphone. As consumers prepare for the arrival of the Verizon Wireless (VZW) iPhone, we address some questions about the impact of this development.

Just how many iPhones will they sell?clip_image002

AT&T customers bought an average of around 4 million iPhones per quarter in 2010. Even if VZW achieves a conservative half of that run rate, it could mean 8 million CDMA iPhones shipped domestically in the first year. In addition to newcomers from other carriers, buyers will include existing subscribers, whose contracts will steadily come up for renewal over the next two years.

Of course, no longer the only option for iOS enthusiasts, AT&T volumes of the iPhone are likely to suffer this year. We can reference the end of iPhone exclusivity in Western Europe for an example of what may happen. As our Handset Country Share Tracker service shows, Apple’s peak share at exclusive carrier O2 UK was 10%. By the time the phone was also introduced at Vodafone and Orange, Apple’s share was roughly just 5-6% with each carrier.

Thus, while Apple’s total volumes are going to benefit as a result of this week’s announcement, neither carrier should expect to see the iPhone account for anywhere near the huge 70% of smartphone volumes that AT&T recorded in Q3 2010.

What impact will the network have?

Aside from a revised radio section and some cosmetic tweaks, the availability of a Wi-Fi hotspot feature is the only official new feature of the VZW iPhone. But AT&T defectors may find one other difference – the inability to simultaneously use voice and data on a CDMA network. As Droid users know, Wi-Fi data access can be used as a limited substitute, but expect outcries of a “lesser” experience from some frustrated buyers. Of course, the inevitable LTE iPhone (in 2012, perhaps?) will eventually equalize this matter.

Unlike AT&T, VZW does not have a bandwidth cap on its US$30/month plan. AT&T’s US$25/month plan provides just 2GB, which protects the carrier’s pipes from overloading, but prevents carefree use of compelling, but bandwidth-hogging apps like NetFlix. Coupled with broad perception that VZW is more reliable, it could mean an upside for the phone’s new carrier. However, we can expect AT&T to send a heavy message about its HSPA network being faster than its competitor’s EV-DO Rev. A.

How will this impact the competition?

AT&T has been preparing for the loss of exclusivity since at least early last year, adding a broad range of Android (and later Windows Phone 7) models. Expect an onslaught of high-end Android handsets (such as the Motorola Atrix 4G) to quickly replace lost iPhone volumes at AT&T, benefitting the likes of Samsung and HTC.

Meanwhile, VZW’s strong Droid brand of Google-phones is likely to take a hit. VZW subscribers looking for a less complex experience than Android’s will find the iPhone to be a gem, cannibalizing the carrier’s own volumes. The real impact, however, will be felt by RIM. The BlackBerry portfolio still lacks a solid full-screen touchphone, and unless the Canadian vendor comes up with one soon, it stands to lose further share with VZW.

-Alex Spektor

USA Smartphone OS Marketshare by Operator: Q3 2010

Global Smartphone Sales Forecast by Operating System: 2002 to 2015


December 8, 2010 13:12 Alex Spektor
In recent years, the titans of the handset industry have been surprised by the success of newcomers. First, Apple – a computer vendor – shook up the smartphone market by storm, taking Nokia’s profit crown in the process. Then, Google – an advertising/search firm – brought to market a new mobile operating system, quickly overshadowing historic leaders RIM and Microsoft. Now, Google’s Android has also become the fastest-growing major smartphone platform, having shipped more than twice as many handsets in the first eight quarters.

Cumulative Shipments, First 8 Quarters

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Google’s successful growth has been enabled by strong support from its many partner vendors. As the first Android handset maker, HTC long enjoyed top market share, steadily broadening its portfolio across protocols (including hot “4G” technologies like HSPA+ and WiMAX), global carriers, and retail price points, staying ahead of Android competitors Motorola and Samsung. Historically, Samsung’s smartphone share had been disproportionate to its successful position in the overall market, and we had long commented on the matter. However, starting in Q3 2010, Samsung became the world’s largest Android vendor. Samsung accomplished this by launching an all-out assault across the globe with its Galaxy S family of handsets. For example, in the fickle US market, where each carrier has demanding compliance and customization requirements, Samsung launched a Galaxy S phone with each major carrier. Samsung’s share of the global handset market has tripled since 2001, when it was already a third-ranked player. Given that historic show of determination, the vendor’s leap to first place in Android smartphones should not at all be surprising. Expect Samsung to expand this leadership position in 2011 and beyond, riding Android’s coattails to huge smartphone volumes. -Alex Spektor Samsung Overtakes HTC to Become World's Largest Android Vendor in Q3 2010 Global Smartphone OS Market Share by Region: Q3 2010

October 12, 2010 04:10 David Kerr

sa photo dk

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

  • it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
  • it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

 

David Kerr

dkerr@strategyanalytics.com


August 11, 2010 14:08 Alex Spektor
It may be the exclusive iPhone carrier in the US, but AT&T is also becoming an attractive option for consumers looking to buy an Android handset. Though things weren’t always as they are today. If T-Mobile was the clear early leader in Android adoption among tier-one US carriers, then AT&T was the clear laggard. Let us quickly recap highlights from the US Android timeline:
  • T-Mobile launched the first Android phone in the world in late 2008.
  • It took approximately one year for Verizon Wireless and Sprint to bring to market their own models, in time for the 2009 holiday season.
  • AT&T began selling its first Android handset quite recently: in March 2010.
Less than six months later, AT&T will have as many as five Android phones in its portfolio. This won’t be quite as many as Verizon Wireless and T-Mobile, but it will put AT&T roughly on par with Sprint. AT&T will also be a leader from a variety standpoint, offering smartphones from vendors Motorola, HTC, Samsung, Sony Ericsson, and Dell.

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So, what are the key drivers for the ramp-up?
  • Catering to consumer tastes. Despite what Apple might tell you, not everyone wants an iPhone. Consumers looking for alternative features, such as a bigger screen, memory expansion, a more customizable UI, HDMI, etc., can find them among Android handsets.
  • Lower subsidy levels. Now that AT&T has lowered its monthly data plan rates, there is less revenue to offset the subsidy burden. Paying $200-$300 subsidy for an Android handset seems more attractive than Apple’s $400+ subsidy.
  • End of iPhone exclusivity? The Internet is always abuzz with rumors, and AT&T shifting its focus to other platforms is yet another sign that a Verizon Wireless iPhone is potentially in the works. The carrier may be strengthening its portfolio to offset potential losses once the exclusivity ends.
Regardless of AT&T’s underlying reasons, broadening the options available to consumers is a good thing for many of the involved parties. For example, shoppers get a wider selection of handsets and emerging vendors like Dell get exposure to a growing market. However, AT&T will need to be careful in managing the persistent issue of fragmentation. While developers and content providers will be happy to have a larger Android installed base for which to create applications and services, they will also be faced with the cost of addressing multiple models/processors/resolutions/etc. -Alex Spektor

June 11, 2010 18:06 Alex Spektor
Bluetooth profile implementation in handsets is a pretty dry subject. But with Bluetooth capability available in six out of every ten handsets sold worldwide this year, the subject is an important one for product planners. clip_image002Even the savviest consumers likely only know to look for a few key profiles when buying a phone. A2DP is one that has received some attention, as it allow the delivery of stereo music to Bluetooth headphones or Bluetooth-capable vehicles. According to our latest forecast, A2DP support will be found in three-quarters of all Bluetooth phones sold this year. Another profile, AVRCP, was designed to allow Bluetooth devices to remotely control each other. The Bluetooth SIG’s example is an outdated scenario, where a PC controls a supposedly Bluetooth-capable VCR. However, where AVRCP really shines is as a companion to A2DP. A common usage scenario is in the vehicle, where a consumer can listen to music through the speakers (A2DP) and change tracks via the car’s controls (AVRCP). I can say from personal experience that at least one user was delighted to learn that he could advance tracks streaming to his BlackBerry’s Pandora client via the car’s steering wheel. The potential impact on stickiness is quite powerful when a handset feature can delight a user. PBAP is a profile that still has fairly low penetration around the globe (the highest is in Western Europe, by the way), but it will experience strong growth in the coming years. The profile allows the transfer of phonebook data to other devices (e.g., to an in-vehicle display). Carmakers, such as BMW, Ford, and Nissan, are increasingly supporting PBAP in their vehicles, and this trend should give long-term uplift to the profile’s penetration in handsets. Not all profile implementations were “created equal,” however, and simply having a profile does not necessarily mean that it will work as expected. Apple, for example, supports AVRCP on its iPhone, but it does not support audio track advancement, which is surprising for such a media-capable device. The inconsistency of implementation among vendors can be a disappointment and a point of frustration to users. The lack of consumer awareness of Bluetooth profiles and their benefits remains an issue for the technology, largely because of cryptic, unmarketable names. Perhaps key industry players could rally toward using more intuitive names (e.g., “In-Car Audio Control”) to help illustrate use cases and engage consumers. Ultimately, we expect handset vendors to prioritize the profiles that drive stickiness and can be directly associated with carrier ARPU. This can mean simply enabling in-vehicle calling with profiles like HFP or even, ultimately, helping to link the phone to a multi-platform connected device framework. Bluetooth Phone Sales by Profile -Alex Spektor

May 28, 2010 02:05 tkang
Nokia has started a new market sizing exercise from the beginning of this year. With refreshing candor, they have increased the base market size over 10% for 2009 shrinking their own market share to 34% from the previous 38%.
  • Nokia announced their market share in Q1 2010 was 33%, which is probably the lowest number they’ve had in 5 years. Why would they play themselves down?
I think Nokia is accepting the hard truth that the market is bigger than we all were willing to admit. However, I don’t think that the Shanzhai (Chinese Grey Market) impact has been fully baked into many estimates.
  • Since 2007, numerous unknown small assembly factories have been springing up in China and rapidly growing. There are more than 500 companies now.
  • As urban areas in the Emerging Markets reached saturation the rural users were the next frontier but distribution, after sales support and driving down cost was a challenge. This market was successfully addressed by the so-called Shanzhai or Chinese Grey Market handsets as they evaded tax, regulatory requirements, IPR and any brand related issues giving them an advantage to the ‘I-don’t-care-about-quality-I-just-want-a-phone-that-doesn’t-look-too-cheap’ audience in the Emerging Markets.
If we look at the Chinese market it seems that foreign brands like Nokia killed the Local brands but in reality if we include the Chinese Grey Market, Local vendors have started to come back since 2007.
  • Nokia hunted down Local vendors between 2004 and 2005 but they’ve come back and without admitting that the Chinese grey market exists there’s no way you can compete with them.
clip_image002[6] Looking at the situation, I think history repeats itself. Starting from 2000, Local Chinese vendors rapidly took share from Motorola and at that time the R&D was provided by R&D houses in Korea packaging Texas Instrument basebands into modules.
  • Companies like Bellwave once exported $400M worth of GSM modules to China a year, this was the time TCL, Bird, Amoi were on the top 10 vendor list.
  • Now it’s Mediatek providing R&D expertise: the baseband and also assistance with the module packaging.
Our Wireless Device Strategies Team is preparing a report that explores the Chinese Grey Market in more depth as it is now more than 12% of the market, a market to keep track of. I think the handset market is bigger than Nokia thinks. Their market share in Q1 2010 should’ve been 31% including the total grey market.

May 7, 2010 17:05 nmawston

The big two Chinese vendors, Huawei and ZTE, have initially focused their handset activities on emerging markets, such as ChIndia, Africa and Latin America. Enabled by MediaTek, Qualcomm and Via chipsets, the two handset brands have achieved solid shipment growth in GSM and CDMA since 2007. Both vendors will ship tens of millions of units in emerging markets this year, mostly for low-end prepaid users, giving them a base for scale and buying power. This is phase 1.

Phase 2 of their growth targets mature regions, such as Western Europe and the US. ZTE and Huawei are using their success in emerging markets as a springboard to attack developed markets. The Chinese rightly believe carriers are king in developed countries, and they are quietly partnering with a growing number of the biggest players to deliver carrier-branded hardware. Vodafone recently unveiled 8 new Vodafone-branded models across low-, mid- and high-tiers for its European markets, 6 of which are manufactured by ZTE and Huawei. For example, the Vodafone 845 3G touch-smartphone with Android 2.1 is built by Huawei. The Vodafone 547 EDGE touchphone is made by ZTE. In the US, Huawei made the popular mid-tier Tap touchphone for T Mobile. Carriers like the cost-competitiveness and flexible customization offered by the Chinese brands, and they are useful alternatives to the European, American and Asian vendors such as HTC.

Phase 3 will eventually require a more-complex five-pronged strategy to defend against existing or potential new competitors in the operator-branded handset industry such as Sagem or  Foxconn. Huawei and ZTE will need to upgrade their companies’ competences in:

1. branding;

2. industrial design;

3. portfolio management for build-to-plan products;

4. software usability;

5. content and services.

For now, both Chinese vendors are happy to provide 3G handsets mostly as a delivery tool for operator services. For example, the Vodafone 845 from Huawei is optimized for Vodafone 360 services. But ZTE and Huawei will arguably struggle to sustainably differentiate their own brands on pricing and hardware alone. Developing a software and services (S&S) strategy beyond hardware will therefore become an important value-add for Chinese vendors to attract and retain affluent users in mature regions. An S&S strategy will subsequently open up opportunities for Chinese services brands to partner with ZTE and Huawei to showcase their products in new markets abroad. We have a Google phone and a Microsoft phone; how about a Baidu phone?


April 29, 2010 06:04 tkang
Apple’s profit hit a spectacular 30% operating profit margin and this is probably one of the highest levels a hardware manufacturer has ever or will ever achieve. We’ve seen these ratios in the services and software industries but not in hardware. Below are Apple’s operating profit margins by quarter. Q1.2009 : 26% Q2.2009 : 27% Q3, Q4.2009, Q1.2010 : 30% (Revenues are growing 20~40% year on year) How did Apple pull this off and how can this be getting better every quarter now? Apple is an innovation company and they concentrate on delivering high quality products. This is the case of the Mac PC and many other products. The big disconnect is the price of these machines, they are good quality products but they also come with a high price tag which is a big obstacle for consumers. Without huge volumes there is less scale of economy and the cost can’t be driven down. But when it comes to mobile handsets there’s a different factor called operator subsidies. This is where the magic starts for Apple. The typical handset in the US cost about $150 in wholesale price and with the typical $50~$150 subsidy the handset was sold to end-users at about $90. The most expensive phones were around $350 at the time and these were sold at $199. Apple first introduced its iPhone at this price range but gradually raised the price of each new device. With the help of operator subsidy, the iPhone could be continuously sold at an acceptable price: $99~$199. As the iPhone broke the ceiling price of high end phones each year, operator subsidies increased. Apple is enjoying the fact they can deliver products with superior quality to more people at a moderate price point, at the expense of some one else. They didn’t have to push the price down to create demand. They even did the opposite: raise (wholesale) price, improve quality, increase profit. If your local car dealer starts giving away BMW 7 series at the price of a Honda, it’s hard to resist. Of course you have to buy gas at the designated gas station for the next 2 or 3 years but I’d do it. Steve Jobs said in 2004: “Apple's market share is bigger than BMW's or Mercedes' or Porsche's in the automotive market. What's wrong with being BMW or Mercedes”? Steve Jobs must be very happy now. He has finally found a way to sell his BMW like a Toyota or Ford without comprising quality, (wholesale) price, or even any profit. “Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.” - Steve Jobs, 2003Congratulations Mr. Jobs you’ve proven yourself right but you wouldn’t have made it without the operator subsidies.(Related report: Is Apple iPhone a Panacea for Operators? )

April 29, 2010 06:04 tkang
Apple’s profit hit a spectacular 30% operating profit margin and this is probably one of the highest levels a hardware manufacturer has ever or will ever achieve. We’ve seen these ratios in the services and software industries but not in hardware. Below are Apple’s operating profit margins by quarter. Q1.2009 : 26% Q2.2009 : 27% Q3, Q4.2009, Q1.2010 : 30% (Revenues are growing 20~40% year on year) How did Apple pull this off and how can this be getting better every quarter now? Apple is an innovation company and they concentrate on delivering high quality products. This is the case of the Mac PC and many other products. The big disconnect is the price of these machines, they are good quality products but they also come with a high price tag which is a big obstacle for consumers. Without huge volumes there is less scale of economy and the cost can’t be driven down. But when it comes to mobile handsets there’s a different factor called operator subsidies. This is where the magic starts for Apple. The typical handset in the US cost about $150 in wholesale price and with the typical $50~$150 subsidy the handset was sold to end-users at about $90. The most expensive phones were around $350 at the time and these were sold at $199. Apple first introduced its iPhone at this price range but gradually raised the price of each new device. With the help of operator subsidy, the iPhone could be continuously sold at an acceptable price: $99~$199. As the iPhone broke the ceiling price of high end phones each year, operator subsidies increased. Apple is enjoying the fact they can deliver products with superior quality to more people at a moderate price point, at the expense of some one else. They didn’t have to push the price down to create demand. They even did the opposite: raise (wholesale) price, improve quality, increase profit. If your local car dealer starts giving away BMW 7 series at the price of a Honda, it’s hard to resist. Of course you have to buy gas at the designated gas station for the next 2 or 3 years but I’d do it. Steve Jobs said in 2004: “Apple's market share is bigger than BMW's or Mercedes' or Porsche's in the automotive market. What's wrong with being BMW or Mercedes”? Steve Jobs must be very happy now. He has finally found a way to sell his BMW like a Toyota or Ford without comprising quality, (wholesale) price, or even any profit. “Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.” - Steve Jobs, 2003Congratulations Mr. Jobs you’ve proven yourself right but you wouldn’t have made it without the operator subsidies.(Related report: Is Apple iPhone a Panacea for Operators? )