Bloodbath Update: Smartphone Market at June 30, 2011

Let's do some Bloodbath news. How is the smartphone market doing mid-way in this Year 2 of Smartphones, the Electric Boogaloo? The weather report for the summer is sunny for some, shady for others and stormy for some. Let's start with the two who already reported.

RIM IN TURMOIL
Blackberry maker RIM reported second quarter 2011 results first. That was the first quarter for ages that RIM reported a real units decline in smartphone sales (not just a decline in market share, which RIM had reported for several quarters while still growing total unit sales). RIM sales hit 13.3 million units, down from 14.5 million in the previous quarter. The market share for RIM is now down to 13%.

The staff at RIM is panicking, seeing what happens over at Nokia, and feeling that the management is not focusing on the right problems. An open letter by an anonymous employee has attracted a lot of attention by the industry. Meanwhile there is now speculation if and when RIM will fall behind HTC in total smartphone sales (it is taken as a given that Samsung has now passed RIM already). Well, we have the actual reported 2Q numbers from HTC, so let's see.

HTC GROWING STEADILY: 114% May YoY, 88% June YoY growth
The biggest Android manufacturer, HTC keeps growing. They just reported 2Q numbers at 11.0 million smartphones sold. That is a strong growth of 13% from 1Q when they sold 9.7 million smartphones. HTC has picked up another market share point and now their market share in 2Q is 11%. But clearly they did not catch up to RIM yet. If these trends hold, they would be neck-to-neck by 3Q and HTC should pass RIM by fourth quarter. That is assuming that RIM cannot turn around their sales during the autumn sales frenzy.

HTC gives us an very interesting glimpse into their split of handsets by operating system. They said that in 1Q HTC sold 9.3 million Android-based smartphones. Why is that interesting? Because the total first quarter HTC smartphone shipments were 9.7 million. So 'all other' smartphone platforms - Windows Mobile and Microsoft Windows Phone 7 - combined - sold for Microsoft's strongest partner, HTC - a total of 400,000 units. That's nothing! So smartphones made by HTC, sold by HTC and running Microsoft's two operating systems, sell so poorly that HTC's own Android based phones outsell them by 23 to 1 - this is exactly why HTC had such a disappointing quarter in 1Q, and why they said they will shift their emphasis away from both Microsoft operating systems to Android.

And to show they know how to do cool funky future tech phones, HTC is now showing their newest model that has 3D display and dual cameras for stereoscopy 3D capture. Similar to what Sharp first did out of Japan and LG has been starting to sell this Spring. So HTC is the third smartphone maker with 3D displays and 3D cameras.

APPLE RUMORS
Apple didn't give us a new iPhone 5 for June. Its delay is rumored to be because Apple designed the iPhone 5 to have a virtual SIM card, and the operators/carriers were having none of that. So Apple redesigned the iPhone 5 to have a microSIM card and this redesign caused the delay to around September. It's all rumors, but we do know that Apple submitted to ETSI the standardizing body for such things in mobile telecoms as SIM cards, a new specification micro SIM in May for which Apple got Orange UK to support it.

We have no official word when the iPhone 5 (or whatever the next iPhone will be called) will be released but Apple analysts expect late September launch to help boost 3Q sales, then offer strong iPhone sales for a strong Christmas quarter. There is growing speculation that Apple will split the iPhone into two products, a premium iPhone like the ones we have had, that is a showcase of Apple excellence at roughly the 600 dollar unsubsidized price range; and a cheaper iPhone 'Nano' with smaller form factor and more modest tech specs, to sell at roughly half the price, for the entry level model and intended in particular to help Apple sell in the Emerging World markets. (Regular readers remember I have been advocating Apple to do exactly that for more than a year now, it's high time!).

Those who estimate iPhone sales seem to be converging on a 2Q sales level of about 16-17 million iPhone units, thus about 16%-17% market share if that happens. We will know later this month when Apple reports.

SAMSUNG STRONG
So we then hear from the raging bull of the smartphone market, Samsung. Samsung seems to be giving the industry nothing but news of big successes. The latest is that their newest model of the Galaxy, the Galaxy S2, has set a Samsung record for fastest sales of a new Samsung model ever. The previous Samsung record was with the Galaxy S which sold 3 million in 85 days. Samsung is now performing better than the best Nokia could do who did 4 million with the Nokia N8 in 4Q of last year (3 million in 55 days is the speed of about 4.5 million over 3 months). But the grand master is still Apple, the iPhone 4 sold 3 million units in only 30 days. But Samsung is catching up and growing by leaps and bounds. Oh, and as usual, the newest phones don't launch in the USA, Samsung's Galaxy S2 is coming to American shores... 'later' this year - with all four operators.

Meanwhile I am still hunting for those elusive bada OS shipment numbers. My projections say they should have passed 10 million bada devices sold already, but Samsung has not released the number. Is bada not selling as well as we expect, or are Samsung waiting to surprise us with a massive number at their next quarterly results later in July. We have to see.

And while I projected that Apple has grown past Nokia for 2Q, Nomura analysts have calculated that Samsung has passed Nokia in 2Q. It suggests it's a close three-way race who is first, second and third. My gut says Apple is still ahead of Samsung in 2Q, but yes, Nokia may well have fallen behind both. Then the big race is for 3Q and as Samsung is in a strong growth trajectory, it is up to Apple, can they release the iPhone 5 in the final week of 3Q to jump their sales. It will be interesting times.

NOKIA KILLS MEEGO AGAIN, AND AGAIN, AND AGAIN
Nokia had its biggest buzz and positive press reaction to the MeeGo powered N9 smartphone that Nokia had seen for years. It was a massive positive story for Nokia. Even the stock market loved the story and Nokia's share price got a jump. MeeGo was slick and sexy, the N9 was a hot phone with excellent specs. Any CEO who loves his company would celebrate and cherish the moment and do his best to promote and prolong that success. But not Stephen Elop. No. What did he do. He immediately moved to quash any possible good will that the N9 and MeeGo were generating. He first 'revealed' the first look of a Microsoft Windows Phone 7 based phone - which looked to most analysts identical to the N9 except for one mysterious button. And he did it in a most clumsy way telling a packed audience "don't show these pictures" while at least two news outlets were videotaping his presentation. The stock market rewarded Stephen Elop's new Microsoft Phone 7 based Nokia phone preview with a share market decline. He stole all the thunder and bizarrely for a CEO, he actually stifled a stock market rally. What is wrong with this guy Elop? Who does he work for? He certainly doesn't seem to be working for Nokia.

If that's not enough to help kill Nokia N9 and MeeGo, Elop went in public to say that "even if the N9 and MeeGo were a success, there will be no more MeeGo devices". What? Even if this totally new Nokia product is a market success, the CEO will kill it. That's a very special kind of love, isn't that. It's not euthanasia, which one might argue, Stephen Elop was doing for Symbian. No, it's pure murder what Elop is now committing to MeeGo.

And to be absolutely sure, that MeeGo has zero chance of even a 'fair fight' - Nokia has since kindly announced to us which markets will get MeeGo. The N9 will not be launched in.. the UK, Germany, France, Italy, Spain and the Netherlands (and several other major Nokia markets). That's the 'big six' Western European markers where most of European smartphones are sold! Not a one of them gets to play with MeeGo, none of them get to buy the N9 ! This is Nokia's way of killing Me softly with Microsoft, killing Me softly, with Microsoft, killing Me softly, that's Elop! And by weird coincidence have a guess what are the six European countries that will be the launch markets for the new Microsoft WP7 phones? Yes, the UK, Germany, France, Italy, Spain and the Netherlands! Is Elop really this afraid of MeeGo? He has to sterilize Western Europe against MeeGo, keep it pure, so it's not 'polluted' by the better OS that Nokia's own designers created, so that Europe would be willing to buy Microsoft's OS. Who is Elop working for? This is not in Nokia's interest, this is a CEO who is working for the best interests of a rival corporation! Elop is not looking after Nokia's best interests, he is looking after Microsoft's best interests.

Furthermore, it emerged that Nokia has cut its prices across the whole range of its smartphones, as high as 15% at the top end - the top end - of its smartphones. Nokia is already at about zero profit or making a loss in 2Q which ended June 30. Now for the start of July we hear that Nokia cuts the prices of its biggest source of any remaining profits - top end smartphones by a sixth! That is massive. It means Nokia is STARTING the race into 3Q with far deeper losses already. The reseller boycott is really hurting Nokia and now its obstinacies to not even release the much-loved N9 into those markets that refuse to sell Symbian only shows that the CEO prefers to damage Nokia than let a Nokia-built hit product help rescue the company. Stephen Elop is destroying Nokia as we speak. This price cut across the board now by Stephen Elop is EXACTLY what got Olli-Pekka Kallasvuo fired last summer! What madness in Nokia management and the Board of Directors allowed this Microsoft Muppet to REPEAT a FAILURE that almost destroyed Nokia just LAST YEAR... Duh? What part am I not understanding in this?