According to the latest research from our Wireless Smartphone Strategies (WSS) service, global Android smartphone profits reached US$5 billion in total during the first quarter of 2013. Samsung dominated and captured an impressive 95 percent share of all Android smartphone profits.

We estimate the global Android smartphone industry generated total operating profits of US$5.3 billion during Q1 2013. The Android platform accounted for 43 percent share of the entire smartphone industry’s operating profits, which reached US$12.5 billion worldwide in the first quarter of this year.

We estimate Samsung’s Android smartphone shipments generated US$5.1 billion of operating profit worldwide in Q1 2013. Samsung captured a huge 95 percent share of all Android smartphone industry profits. An efficient supply chain, sleek products and crisp marketing have been among the main drivers of Samsung’s impressive profitability. LG followed in second place and took 3 percent global profit share. LG delivered a small profit during the quarter, but it currently lacks the volume scale needed to match Samsung’s outsized profits.

Samsung is, for now, the undisputed king of the global Android smartphone industry. We believe Samsung generates more revenue and profit from the Android platform than Google does. Samsung has strong market power and it may use this position to influence the future direction of the Android ecosystem. For example, Samsung could request first or exclusive updates of new software from Android before rival hardware vendors.

Exhibit 1: Global Android Smartphone Profit Share in Q1 2013 [1]

Nokia revealed the latest iteration in its flagship smartphone range today, in the form of the Lumia 925, and our Wireless Smartphone Strategies (WSS) service attended the event. As the name implies this is a refinement of the Lumia 920 concept rather than a ground-up redesign, but there are still plenty of new features to explore.

The most striking tweak is the case. For the first time with the Lumia range Nokia has incorporated aluminium into the case design. There is now rounded metal around the entire edge of the Lumia 925, blending into the screen on the front and a polycarbonate backing. Going hands-on with the Lumia 925 we found this to be a positive development as it adds a degree of sophistication and apparent durability to the device.

The whole unit now feels thinner and lighter too, which is mainly a product of the decision not to incorporate wireless charging into the core design and instead offer it as an optional, clip-on back plate. This adds a bit of extra bulk, but not prohibitively so. Nokia claims 80% of Lumia 920 consumers use wireless charging, but will this remain the case when people have to pay extra for an accessory to enable it?

The other notable industrial design tweak is a slight bulge for the camera, which may be due to the thinner body, or due to a ‘6th lens’ which is included to improve bright-light performance. Among a number of other camera tweaks in the impending Lumia Amber software update is Smart Camera, which enables a ‘burst mode’ capturing ten 5MP images in quick succession.

The premium-tier Lumia 925 will debut with Vodafone in mid-June and will appear at T-Mobile USA, China Mobile and China Unicom, among others, soon after. While still reliant on Windows Phone traction and retail execution in a bid to restore some of its lost smartphone market share, Nokia will also be partnering with the latest Superman movie, which premiers at the same time as the hard launch, for a bit of extra buzz.

Our Wireless Smartphone Strategies (WSS) service today published our latest report: North America Smartphone Vendor & OS Market Share by Country: Q1 2013. There has been shakeup in the US markets as it is slowly being dominated by Korean and Chinese vendors growing faster than market and earlier strong players such as BlackBerry, Motorola and HTC. Following is the summary of top five US smartphone vendors and their annual growth performance in terms of smartphone shipments. ZTE for the first time has surpassed Motorola to become the number 4 smartphone OEM in USA while Apple's growth has slowed significantly coming from a holiday season quarter.

The heat is on as the US mobile industry enters a very important quarter. Important product launches in Q2 2013 from Samsung Galaxy S4, HTC One, BlackBerry Q10 and Z10, LG Optimus G Pro to low-cost Nokia Lumia 521. On carriers' front, T-Mobile merging with MetroPCS plus giving up subsidies looking to shake up the industry in addition to Sprint contemplating over Softbank vs.Dish deals, intersting quarter indeed.

- Neil Shah

According to the latest research from our Wireless Smartphone Strategies, global smartphone shipments grew 36 percent annually to reach 210 million units in the first quarter of 2013. Samsung captured one-third of all smartphone volumes worldwide, while LG became the world’s third largest smartphone vendor for the first time ever.

Global smartphone shipments grew 36 percent annually from 153.8 million units in Q1 2012 to 209.5 million in Q1 2013. Growth was driven by surging demand for 4G LTE models in developed regions like North America and 3G models in emerging markets such as China

Samsung grew 56 percent annually and shipped a record 69.4 million smartphones worldwide, capturing an all-time-high 33 percent marketshare in Q1 2013. Samsung shipped almost two times more smartphones and grew nine times faster than Apple during the quarter. With the flagship Galaxy S4 model likely to be in high demand, provided there are no major component shortages, Samsung should continue to deliver strong smartphone volumes worldwide in the second quarter of the year. Apple shipped a lackluster 37.4 million iPhones worldwide in Q1 2013, up from 35.1 million a year earlier. Apple grew just 7 percent annually during Q1 2013, which was the iPhone’s lowest growth rate ever in its history. Apple’s premium-only strategy for the iPhone is approaching a natural ceiling and it will need to expand deeper into large markets like China or launch a lower-priced iPhone model for mass-market users.

LG was a star performer as its global shipments doubled year-over-year to 10.3 million units and it became the world’s third largest smartphone vendor for the first time ever in Q1 2013. An improved Optimus portfolio and expanded distribution have been the main causes of LG’s success. However, LG is still facing strong headwinds in the huge US and China markets and these remain key challenges for the Korean vendor this year.

Other findings from the research include:

Huawei delivered 5 percent share of the global smartphone market in Q1 2013, up from 3 percent a year earlier. Most of Huawei’s smartphone volumes are currently centered around China and Huawei will need to expand internationally if it wants to become an established global player in the future;
 

ZTE captured a record 4 percent share of the global smartphone market in Q1 2013. Like Huawei, ZTE’s growth has been coming largely from the China market and ZTE has a relatively modest presence abroad.

Exhibit 1: Global Smartphone Vendor Shipments and Market Share in Q1 2013  [1]

Apple was in the unfamiliar position of receiving mostly negative speculation ahead of its March quarter earnings announcement, amid fears that the Apple brand was losing its lustre and that it was losing sales to cheaper Android alternatives, especially in developing smartphone markets.

In the end iPhone sales were in line with our expectations at 37.4 million units, while iPad sales were at the top end our expectations at 19.5 million units. Revenues were at the top end of Apple’s previous guidance at $43.6 billion, with revenues from Greater China at an all-time high, while gross margin was at the low end of guidance at 37.5%. This resulted in quarterly net profit of $9.5 billion, down from $11.6 billion in the year-ago quarter, the first year-on-year fall in quarterly profits by Apple for ten years, in spite of record March quarter revenues. Gross margin in the year-ago quarter was 47.4%, meaning margin has fallen by over 20% in the past year.

This margin decline points to a lower average selling price (ASP) for Apple devices. The ASP for the iPhone declined slightly year-on-year, with the lower-priced iPhone 4 contributing a higher proportion of the mix than has historically been the case thanks to being made more available in some developing markets. Furthermore, higher than expected sales of the iPad mini, following supply shortages in the previous quarter, will have been a major contributor to the margin decline by causing a lower iPad ASP.

In conclusion this was a solid quarter from Apple, with revenues beating expectations but profitability falling slightly short. iPhone shipments of 37.4 million units, at an ASP of $613 are in line with expectations, while the lower-priced iPad mini was probably the single most significant contributor to both the higher revenues and the lower profitability. Apple guided around $34.5 billion revenue and 36.5% gross margin for the June quarter, which will have done little to reassure investors concerned about Apple’s declining profitability.

Here I am discussing Apple earlier today as part of a Bloomberg TV roundtable:

According to our Wireless Smartphone Strategies (WSS) service, shipments of smartphones through operator-controled channels, like China Telecom, will rise sharply in 2013. The landscape for smartphone distribution is changing rapidly in China, the world's largest smartphone market by volume. Clients can view more analysis and forecasts in this published report.

HTC中国从4月15号起在自己的网上商店开始提供手机定制服务，顾客可以根据自己的星座和性别来选择颜色, ROM，照相机的像素和配件。目前此服务只针对E1这一款机型。

电商渠道在中国的智能手机市场发挥越来越大的作用，我们的 Wireless Smartphone Strategies (WSS) services 预测今年将会有17%的智能手机通过电商渠道进行销售。在竞争激烈的中国智能手机市场，通过提供定制化的电商服务无疑是一个有意义的尝试。但是对于HTC来说，如何进一步降低售价，切入中低端市场才是其在这个竞争白热化市场的生存之道。不过如果有一天，当更多的手机功能都可以通过个人定制化的服务来选择的话，那现在这个黑白平板一统智能机天下的格局是否会变得更加人性化和差异化呢？

Facebook Home, announced last week and due to be released on Friday April 12, occupies a space somewhere in-between an app and a bespoke user interface, or ‘skin’. Unlike OEM skins, Home is optional and requires manual download by the end-user, but unlike most apps, Home is intended to supplant the native user interface of the device.

The potential positives for end-users revolve around easier access to Facebook from your smartphone and a deeper, more intuitive integration of Facebook services such as photo sharing, instant messaging and event notification. However this is a double-edged sword, and all but the most committed Facebook users may view such a comprehensive change in the user experience as a negative, especially if native apps such as Maps, Gmail, search, etc are made more difficult to use. We believe this will result in a large proportion of the initial installs of Facebook Home after its release this Friday will subsequently be uninstalled.

The potential positives for Facebook will come mainly from greater user-engagement with Facebook on mobile and an enhanced ability to monetise that activity - through targeted advertising pushed to the ‘Cover Feed’ for example - which Facebook is under considerable pressure to achieve. The main threat to Facebook from Home will be in the form of potential negative publicity regarding the user-experience compromises the app requires and, of course, privacy concerns arising from such deep Facebook integration.

Among the major smartphone OSs, Facebook Home is likely to be restricted to Android, as iOS, Windows Phone and BlackBerry make no claims to being ‘open’ and are under no obligation to accommodate Facebook’s attempt to replace their own UI. While we expect the majority of users to continue to access Facebook via a browser or the less intrusive native mobile apps currently on offer (assuming Facebook maintains them), if even 5% of Android users retain Home as their UI that would give Facebook tens of millions of Home users in 2013. Facebook may attempt to increase this proportion through revenue-sharing arrangements with OEMs and mobile operators (most likely tier 2 and below), but the more coercive it is in encouraging end-users to use Home, the greater the likelihood of public backlash and consequent damage to the Facebook brand in general.

According to our Wireless Smartphone Strategies (WSS) service, smartphone sales volumes will surge +56% in Africa Middle East this year. The rate of growth in Africa is almost two times higher than the global average. Growth will be driven by first-time buyers and 2G handset upgraders in major countries such as Nigeria, Egypt and Saudi Arabia. More details can be viewed by clients in this published report, which forecasts worldwide smartphone sales for 88 countries globally, including Brazil, Spain, Russia and others.

According to our Wireless Smartphone Strategies (WSS) service, smartphone sales volumes will surge +69% in India this year. The rate of growth in India is two times higher than the global average. Growth will be driven by a wave of low-cost Android and Microsoft models for prepaid users from companies like Samsung, Micromax and Nokia. More details can be viewed by clients in this published report, which forecasts worldwide smartphone sales for 88 countries globally, including India, China, US and others.