Dispatches From The Mobile Wars: Notes From Various Smartphone Makers
8/8/2012 by: Tomi Ahonen
The time has come to publish an update from the smartphone wars. As we await the final numbers from Gartner (the other three: IDC, Strategy Analytics and Canalys have already published their Q2 total count of smartphones sold/shipped) we have plenty of interesting news. Where should we start? Let's start with the world leader - Samsung.
SAMSUNG STRONG, STRONGER, STRONGEST
Samsung believes in the exact opposite of 'only one iPhone model for everyone'. The Galaxy series is extremely diverse, including a range of massive screens, pico projectors, slider QWERTY keyboards, and discount versions. Now Samsung is even offering a built-in TV tuner. The fifth largest mobile network in the USA, MetroPCS has just begun to sell the Samsung Galaxy S Lightray 4G with a built-in TV tuner. It is a free digital TV service rather than a subscription service. Samsung released the Galaxy Lightray in time for the Olympics. More than half of all mobile phones sold in Japan and South Korea already have built-in digital TV tuners - they were introduced in middle of the past decade. So again, the USA lags behind Japan and South Korea in handsets by at least seven years.
Now Samsung offers to buy your existing smartphone. You don't need to hand it in immediately when you buy your Galaxy, they let you transfer your files and contacts, then Samsung will accept it via an online form. You send it in, then they send you the money. Samsung will not pay as much as you might earn from selling a used smartphone on eBay, but it is decent money nonetheless. This will no doubt help people who want to switch to a Galaxy but have recently purchased a smartphone and don't want to 'waste' that investment.
ALL QUIET ON THE iPHONE FRONT
There isn't any news as far as the next iteration of iPhone goes. The expectation is that around mid-September some details will be released about the iPhone 5. The strongest rumor suggests the screen size will grow to 4 inches. This rumor is based on stories from Sharp, who apparently will manufacture the iPhone 5's screen.
BLACKBERRY 10 COMING
Some recent news about RIM is that they considered using Android OS at one point, but decided not to. The new CEO Thorsten Heins has poked fun of Nokia CEO Stephen Elop now many times, including an announcement that the Blackberry platform is not on fire. The target date for Blackberry 10 launch is January of 2013 which cannot come soon enough for RIM. Meanwhile more turbulence at RIM, Hampus Jacobsson, a top Blackberry 10 designer left the company.
NOKIA NOKIA, DEAR DEAR NOKIA
Nokia's news is all bad news - or weird news in this case. Nokia released a nail polish in the pink color of the Lumia series. After the smartphone is dead, they are now trying to sell it to shallow people who would rather have their nail polish match their smartphone, than care about the fact that they picked the wrong smartphone. I think this was a 'bold' idea that should have been killed before it got to the commercial stage, especially after Nokia heard that the whole Lumia series would be killed by Microsoft.
We heard that the US retail price of the Lumia 900 has been lowered again, from $49 to $19. AT&T who was so excited about how well the Lumia initially was supposedly selling, has refused to give an actual Lumia series sales number - but they were happy to report their iPhone sales number for Q2. That should tell us something.
Also, there were some silly rumors two months ago about Windows Phone outselling the iPhone in China. We now have Canalys numbers for Q2, Windows Phone sales don't even come close. Canalys counted 2.5 million Nokia smartphone sales in China in Q2, while my estimate was 2.9 million in 'Greater China' as Nokia reported in its quarterly data. When adjusted to report the same region, the two numbers are within 5% of each other.
Nokia's market share is dropping because of retail outlets refusing to sell Nokia smartphones since the Elop Effect. There has been global reaction against Nokia. Some of the regular readers of this publication continue to feud with me, even after Nokia's CEO admitted there is a retail problem. Today, Business Week reported, to reiterate, that this is a real problem. A Manhattan AT&T store didn't even have Lumia phones on display and never mentioned Lumia as a choice. This comes after AT&T's Lumia launch turned out to be the most AT&T had ever spent to promote a new phone model. Now Jo Harlow, the boss of Nokia handsets, told Business Week "I don't want to characterize the retail sales associates as if it's an insurmountable challenge..." Harlow bravely says the problem is 'not insurmountable.' It is however, perhaps the toughest climb in all of mobile.
Business Week tells us that in a major Manhattan store of AT&T there are no Lumias to be seen, and the sales guys ignore the brand altogether. This is what is killing Nokia, the refusal of retail outlets to sell Nokia smartphones, reported in countless press stories from China to the UK; and devastatingly, at both the home of Nokia, Finland, to the home of Microsoft, the US.
Meanwhile, back in Europe, Nokia Germany is offering a 50 Euro refund check (about 70 US Dollars) to various retail outlets including Ikea - for anyone who purchased a Lumia 800 or 900 in Germany.
In other news, a story broke that Lenovo might be looking to buy Nokia - that rumor was addressed by Lenovo's European boss (but not Lenovo corporate HQ out of China) who called it laughable. Nonetheless, Nokia share price's downward spiral stalled and the stock began to recover based on the rumor, which may now bring in the real vultures and start a bidding war on the dead mobile giant. I wrote an analysis on who might be interested in bidding on Nokia's different parts, and why.
Nokia also shut down the Qt development unit in Australia, which signals that the Qt developer tools division may be shut down. Again, this would be a competitive advantage for Nokia against all smartphone makers, and a strong 'ecosystem' component required to win in the smartphone market. The only reason a Nokia CEO would shut down the Qt developer environment is because it is in Microsoft's best interest, not Nokia's. Remember, Nokia in Q2 sold more Qt compatible smartphones (Symbian and MeeGo based) than all Lumia Windows smartphones, and Nokia's featurephones running S40 were supposed to be made compatible with Qt as well. Elop prefers to destroy and burn his platforms rather than pursue Nokia's best interests. (An obligatory Anti-Elop comment here - Elop is the worst CEO of all time, he has personally destroyed Nokia, and must be fired immediately).
Speaking of burned platforms, remember a platform called Symbian, which in 2010 sold more than all iPhones and Blackberries combined. Today it has more global users than all iPhones and Blackberries combined. It is second only to Android in terms of installed base. Many call Symbian obsolete, yet it delivered such a 'superphone', that the world's biggest telecom event, the Mobile World Congress, just this spring awarded Nokia the best phone of the event award for the 808 Pureview.
News came from Finland that demand for the 808 Pureview is far outstripping supply (in Finland). Various Finnish handset outlets from network stores to independent stores say that they are in short supply or sold out of 808 Pureviews. Nokia's spokesperson Tapani Kaskinen told Finnish television broadcaster MTV3 that "Nokia has been very satisfied with the demand of the 808 Pureview, and that the company has not been able to deliver enough phones to match demand. The problem is not a component shortage or any other production issue, simply that Nokia underestimated the demand for this phone model." (The translation is mine, the original story by MTV3 is here in Finnish).
While Nokia CEO Stephen Elop pushes the undesirable and unwanted Lumia series, with massive price cuts, refund payments and a custom nail polish line, the better-selling Symbian still produces highly desirable smartphones. Due to Elop's mismanagement, while the Nokia smartphone unit overall is unprofitable, this highly profitable 'superphone' is still being under-supplied.
HTC VANISHING PROFITS
HTC has reported that they will see a huge drop in the current quarter's profits. The HTC series is undesirable and has to be sold at big discounts. Their sales are falling, while the market for phones running on Android is massively growing. How is it that Samsung can produce massive growth and profits with Android smartphones, and HTC is spectacularly unable to replicate that? It does not compute.
GOOGLE 100 M ANDROIDS
Google has passed a huge milestone. They are now activating over 100 million Android devices per quarter. Even after you remove the modest numbers of Android tablet sales, that means that the Google Android ecosystem activates one million Android smartphones every single day of every month, Saturdays and Sundays included. So Android has over 60% market share already, this means it is truly massive.
I think we are nearing the end of needing to monitor this part of the mobile sector, the future is clear, Samsung and Google are dominating. The Apple iPhone has secured a safe second place. The rest of the market is fought over by surprisingly weak combatants, considering how strong some of them were as recently as a year to 18 months ago (HTC, RIM, Nokia, Microsoft, LG etc). I am expecting to end the deep 'Bloodbath Analysis' series that I put each quarter, by the end of this year. The details of how these other companies are doing in the mobile market don't really warrant the attention. However, we will still monitor the 'Digital Jamboree' unteil the end of the year and make a decision then.
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