Wireless Smartphone Strategies

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

June 10, 2014 11:27 nmawston

According to our WSS (Smartphones) research servicesmartphone revenues will grow +16% worldwide during 2014. At the same time, the four BRIC countries combined -- Brazil, Russia, India, and China -- will all grow at rates well above the global average.

Led by China, BRIC countries will generate 36% of all global smartphone revenues in 2014. Among the four countries this year, China will experience the highest revenue and ASP growth rate, propelled by the decrease in the ultra-low-tier market and the increase in other higher-price-range segments.

Meanwhile, we forecast China will surpass the US to become the largest smartphone market by revenue this year.

This extensive published report, available to clients, forecasts BRIC country smartphone sales volume, wholesale revenues, and wholesale ASPs across 8 price-tiers from 2009 to 2020. In-depth analysis of the premium, high, mid, entry and ultra-low price-bands is included. The report is a valuable tool for device vendors, operators, component manufacturers, software developers, financial analysts, car makers, and other stakeholders who want to measure each country's smartphone market by value, and benchmark their pricing strategies.


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

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? )

January 13, 2010 16:01 Alex Spektor

As usual, this year was a fairly quiet one for mobile phones at CES. Hot consumer electronics products, like ultra-thin 3D TVs, e-books, tablets, and netbooks, all overshadowed phone announcements from the likes of Palm, LG, and Motorola.

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But one bit of important news came from an event that was held in parallel with CES. At the AT&T Developer Summit last week, the big news centered on the impending rollout of Qualcomm’s Brew Mobile Platform across the carrier’s messaging phone portfolio – complete with an app store (AT&T App Center) and “standard” 70-30 revenue sharing. AT&T’s target is 90% Brew MP penetration on mid-range featurephones by end-of-2011.

So, who benefits from the AT&T announcement?

Clear winners

  • US Carriers: Presumably, the most compelling apps would be data-enabled, so the development would drive data plan take-up. Verizon Wireless is already requiring a data plan on a number of its messaging phone models, and is rumored to expand the policy to more non-smart devices.
  • Developers: Improved revenue sharing, a unified platform, and a well-supported SDK make developing apps for multiple devices easier and potentially more profitable.
  • Qualcomm: Prior to this announcement, we were predicting the slow demise of Brew. Although it avoided the fragmentation issues of Sun’s Java ME, the relatively closed nature of Brew caused it to have narrow penetration. Breaking in at AT&T is an important win, though convincing Western European operators will remain a challenge.

Mixed impact

  • Consumers: Apps on phones mean a more powerful device, but if a consumer is ready to buy apps and pay for data, why not get a smartphone, which (after subsidy) is unlikely to cost much more? And what about consumers who might not want a (potentially required) dataplan?
  • Device vendors: A new platform can help vendors with smartphone-weak portfolios compete better, but also means more R&D work, further compliance testing, and potentially longer development cycles.

Strategy Analytics forecasts that 45% of the world’s mobile phones will have application store capability by 2014. While smartphones will account for a large chunk of app store-enabled devices, the fast-growing categories of touchscreen and QWERTY handsets are becoming the leading featurephone categories to embrace the app store business model.

Brew MP on AT&T’s messaging devices and other similar developments all point to the blurring of lines between smartphones and their less-capable featurephone cousins. While benefits of this activity extend to all involved parties, they do so to varying degrees. It remains to be seen how AT&T’s relationship with vendors, consumers, and developers evolves as a result.

-Alex Spektor


January 11, 2010 22:01 David Kerr
Afte the inevitable wave of irrational exuberance has come the equally inevitable correction and flow of negative comments regarding Google Nexus One.
  • We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.
  •  Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.
Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:
  • Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end.  If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies.  Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.
  • Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google.  Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.
  • Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.
  • Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.