First off, congratulations to Nomura analysts. I try to monitor the smartphone space and I did see that Apple seemed to be edging ahead of Nokia for second quarter 2011 and called it, but I missed the simultaneous surge by Samsung. Nomura calls Samsung as the biggest smartphone maker for 2Q'11.
We'll know soon enough, by end of July we'll have the quarterly results from all three companies. But let's read a bit of the tealeaves and see why this is so intriguing right now. Whose comes first?As Recently As
Let's start with how inconceivable this all is. For full year 2010 smartphone market, Nokia towered over its rivals, sold 100 million smartphones and was literally twice the size of number two (RIM: 48 million) and obviously bigger than number 3 (Apple: 47.5 million). Where was Sammy? Samsung was down in 5th place (HTC ahead of it for full year 2010 smartphone sales) and the company sold 24 million smartphones for the full year.
Just six months ago, it was 'fair' to say, that Nokia was twice the size of Apple; and Apple was twice the size of Samsung. And RIM was technically bigger than Apple, and HTC was technically bigger than Samsung, how come we now are considering these three to be running neck-to-neck for the title of world's biggest smartphone maker?
Ah, the volatile world of the smartphone bloodbath. First, RIM (i.e. Blackberry) and HTC have stumbled a bit. By fourth quarter 2010 they had fallen behind their close rivals and by first quarter of this year, Apple had pulled well ahead of RIM; and Samsung had pulled well ahead of HTC.NOKIA
But the big reason why its neck-to-neck is of course the Stephen Elop Nokia smartphone customer give-away of February 11
, when he announced Nokia would end the Symbian platform, abandon Nokia's migration path to MeeGo, and switch to Microsoft OS instead. This meant an instant collapse of Nokia smartphone sales. That is why Nokia is not towering over Apple and Samsung. Still in 1Q 2011, Nokia (24 million) was 25% bigger than Apple (19 million) and almost twice as big as Samsung (13 million).
The big reason why this is even in the cards, is the Nokia global sales channel boycott and smartphone unit sales collapse. We have no idea how low Nokia sales have fallen, but I've done some conservative modeling and figured that Nokia was well below 15 million smartphone unit sales for second quarter 2011. They might be as low as 12 million.
Remember that Nokia invented the smartphone and has led the market ever since its inception. For fourteen years they have been the biggest player in town. That changes now in 2Q, 2011, when they fall to second or even perhaps third in the rankings.APPLE
If its Nokia, the default answer would be - "Gotta be to Apple, right?"
They had 18.7 million smartphone sales in first quarter versus Samsung's 12.6 million and RIM's 14.5 million. If we look at previous years, usually Apple does about the same level of iPhone sales from first to second quarter.
Except, that for this year, that pattern is broken. Before Apple released its new iPhone at the last week of June, which would give several million units of sales (the loyalists who stand in line, you know) - this year we are not getting an iPhone end of June. The gossip now says the iPhone 4S, or 5 or whatever it is called, won't be released until the end of September, on the tailing end of third quarter, meaning sales pattern will be off for Back-to-School
(Aug-Sep i.e. 3Q) too.
Thus, the iPhone sales 'should have been' in the 17-18 million range. If we cut off the June sales of a couple of million, then iPhone sales could be as low as 14-16 million. Well, there also is the White iPhone and the Verizon CDMA etc, but still, most analysts do expect that iPhone sales will be below the level that Apple did in first quarter of this year (counting calendar quarters, not Apple Fiscal quarters, obviously).
When I projected the 'Apple is bigger than Nokia' calculation, I was expecting Nokia smartphones in the 12-14 million range, and iPhone in the 15-17 million range. I was expecting a new iPhone for June. Now I'm cautiously lowering the iPhone estimate to about 14-16 million range. Still expecting it ahead of Nokia, but yeah, what about them Koreans? Can Samsung pull a swift surprise?SAMSUNG SUNG SUNG, SING-SANG-SONG
(Wasn't there some Eurovision song all those years ago, Sing-Sang-Song? Dutch? German?
Honestly, I didn't see this coming, so thanks to the guys at Nomura for spotting it. First, Samsung has recently been strongest growing smartphone maker. In the period from 4Q 2010 to 1Q 2011, when the industry grew by 2%, Samsung grew by 20%. In one three-month period. If we just assume same growth rate, Samsung would be at... 15.1 million smartphones! Just by holding same growth level, they are in the thick of it. And if my other assumptions are roughly correct, they definitely passed Nokia already.
Except that this period usually has growth in it, so if the industry grew 10%, and we add that to Samsung i.e. they grew 20% more than industry, and we try 30% growth from Q1 to Q2, then Samsung would be at 16.4 million! That is well at the top end of where we expect Apple to come in with the iPhone. It is definitely conceivable, plausible, that Samsung Galaxy may have passed Apple iPhone.
Let's do a bit of sanity checks here. Google's Android numbers. Google tells us that Android activations now in June passed the rate of 400,000 per day... That's a quarterly level of around 36.5 million. There are five major handset makers doing Android phones plus many smaller ones. HTC is the biggest, not Samsung. I estimated that Samsung had a quarter of all Android activations in the first quarter. If we say it's the same now in Q2, then that would be only nine million Samsung Android phones.
Then for us to hit the over 15 million level, we'd need another about 6 million Samsung smartphones sold using bada, Microsoft Windows Mobile (the old OS) and Microsoft Windows Phone 7 (the new OS). In first quarter, the total sales of bada OS devices were about 3 million. So that could have grown maybe 50% from then, and be in the 4.5 million range. Sammy would still be 1.5 million short just to be 'in the game'. And total Microsoft based smartphones were just around 3 million. However, in second quarter we've heard there is a silent telecom boycott because Microsoft bought Skype. Also some Microsoft vendors have been reducing their support of Microsoft most visibly HTC who said they are moving their capacity to Android. The Microsoft OS might see a flat or even declining sales. And it's not likely Samsung could have half of that business.
So Samsung is a bit short, by this 'bottom-up' analysis. We're not saying it can't happen. First, it obviously depends very much on exactly what number Apple reports, the lower the better for Samsung (obviously).
Secondly, Samsung seems to be hot in Android. It could have sold more than 9 million Androids, that is the 'easiest' way to get Sammy to the about 16 million they need. And they might be having a monster quarter over at bada, but here my gut is a bit queasy. You would expect Samsung to have celebrated its 10 millionth bada handset and if that didn't happened already, then we're not in the 4M or more sales. But Samsung could also have deliberately waited with the announcement, to splash big, when they announce a world-record number and claim top dog status! We'll have to see.RIM-RIM-RIM?
Is there room for a RIM in this thing? Ring-ring-ring? Well, RIM did issue a warning that they expected market share losses in this current quarter (they report already this week so we'll know soon enough). I don't see RIM in the running to win it, but they might just make it to kick Nokia down yet another notch. It will be close again, but if RIM is marginally down from 1Q (14.5 million) to say 13 million, that is smack-middle or where I expect Nokia smartphones to come in for 2Q. Could go either way, could go either way. Nokia might make the biggest tumble in a single quarter; from world's biggest to second, third or finally, fourth biggest. But I don't see it in the cards for Blackberry to fight for the lead (just watch me be proven wrong).If I Had to Call It...
Obviously I don't have enough granularity and real time data across all markets to call it at this close a race. If I had to try to guess second quarter, I rank them like this: Apple biggest, Samsung second (on an overtake course for 3Q), Research In Motion third and Nokia down to fourth. But some of these can be split by less than a million units so it really is too close to call until we have the numbers.
But into the end of the year? I projected the Nokia Elop give-away to run Nokia into this level towards the end of the year. With the global Nokia reseller boycott, the damage to Nokia is far worse, they are headed to single digits before the year is done, easily. That means far behind HTC, and wrestling with the 'usual gang' of the other makers who report losses most quarters: Motorola, SonyEricsson and LG... we're not calling for Elop's departure because we love Symbian (Quite the contrary, Ed.), but rather Nokia's sales are tumbling down and competitors are getting an unexpected gift to the tune of millions of potential customers that are not going to buy a Nokia. Believe us, competitors are not looking in (Finnish) horses teeth.
RIM should hold 'steady' but not grow, so they're falling into the aim of HTC and by fourth quarter HTC will have passed them. Apple? The delay with iPhone 4S/5 is very bad news, that means that even if Samsung runs even with Apple, Sammy will pull ahead strongly by 3Q and by 4Q is far ahead of Apple, even as the iPhone should have a spectacular Christmas. So for the fourth quarter ranking (which is about as accurate as forecasting the US presidential elections of 2020) I'd rate Samsung biggest, Apple number 2, HTC number 3, RIM number 4, and likely LG pulling away from the pack into number 5, as they get their Android act together and use their scale. Nokia-Moto-SE would fight for who gets to be 6th biggest at year-end. So in other words, whether Samsung now passes Apple or not, the Samsung trajectory is strongest and they should end the year far ahead of the pack as the biggest smartphone maker. What is their Android/bada OS split, that is perhaps the most fascinating issue to monitor as the second half of this year unfolds...
But right now, mid June, it's too close to call between Apple and Samsung. It is safe to say, Nokia is no longer on top. We will know soon, it's a dynamic market and exciting time in the Smartphone Bloodbath this year 2. Stay tuned.
© 2009 - 2013 Bright Side Of News*, All rights reserved.