Category: Industry

Mobile Computing Industry

Is an iPhone worth 8 Nokia phones or 2 Blackberries?

Pricing is a leading indicator of value. Some might argue price and value are often out of whack but, in the long term the two converge.

So it’s instructive to measure how a vendor creates value by what it’s able to charge for its goods. In the case of mobile phones, price is summarized by something called ASP (average selling price) which is measured each quarter across a vendor’s entire portfolio.

Again, there might be local fluctuations, but the trend is your friend here.

Take a look at these charts I prepared based on the group of seven vendors I previously analyzed in terms of their sales and volume performance.

First, a history of pricing since Q2 2007. All figures are in US dollars current as of time of reporting.

Continue reading “Is an iPhone worth 8 Nokia phones or 2 Blackberries?”

In phone sales, RIM plus Apple equals Nokia

Following up from the last article on the global phone units sold over the last three years (Visualizing the winners and losers of three years of smartphone share growth), we take a look at the sales in dollar terms over the same period.

Remember that in the article on units, the pure-play smartphone entrants HTC, RIM and Apple grew from a combined unit share of 1.3% in Q2 2007 to a combined unit share of 7.7% in Q2 2010.  That’s a 6 fold increase in volume share. Quite remarkable for companies lacking the vast resources and industry connections of the incumbents.

However, when we look at their performance in value (dollar sales) vs. units sold, the performance of the entrants begins to look miraculous.

Continue reading “In phone sales, RIM plus Apple equals Nokia”

US as epicenter for mobile data utilization

Japan and Korea have further 3G reach but use it significantly less.

His findings support notions that Android and iPhone are controlling data use in the US. The iPhone’s current exclusive home, AT&T, and Android-favorite Verizon both make up 75 percent of American data use

via Smartphone data use up 50% in just six months | Electronista.

Is there any surprise that in the country where the iPhone and Android are most popular there is the highest data usage even though it has one of the poorest mobile data infrastructures in the developed world?

What does that say about the importance of the device (and not the network) to the adoption of data services.

There are implications about the relative power shift between operators and device vendors. Within the mobile value chain, as mobile data overtakes mobile voice, the economics and value propositions will shift. The motivation of participants will begin to diverge and a schism will occur.

70 percent of college freshmen are entering school with Macs [Updated 2]

Increasingly, companies are giving their employees a choice to either use Microsoft Windows PCs or Apple Inc.’s Macs, the analyst said. And, increasingly, employees are choosing Mac over Windows. To boot, Chowdhry said 70 percent of college freshman are entering school with Macs, up about 10 percent to 15 percent from a year ago.

via Microsoft shares retreat after downgrade.

Remarkable indeed.  I remember when in 2007 40% Macs was headline news at Princeton, having quadrupled from 10% in 2003.

[Update] Chowdry’s estimate seems an exaggeration but Mac share on campus seems to be growing. The most current data shows a probable 50% penetration in private colleges (my estimation is 70% is accurate for Ivy League schools) but a probable 20% penetration at public schools.  Still way above retail share in the US (10%) and way above corporate share of practically naught.

[Update 2] According to survey data from Student Monitor, among those who planned to purchase a new computer, 87% planned to buy a laptop. And among those students 47% planned to buy a Mac.
47 percent of 87 percent is a lot more believable. The chart from Fortune Tech shows that intent to buy for Apple went from 14% to 47% since 2005.

More data, some courtesy of Macobserver readers: Continue reading “70 percent of college freshmen are entering school with Macs [Updated 2]”

RIM's decomposing innovation

It’s hard to get excited about the new RIM Blackberry Torch.  It’s not exciting in a positive way and not exciting in a negative way. It’s just more of the same and the same is not all that bad. Then again, the same is not all that good either. Every piece of the Torch product is playing catch-up with others’ innovations without enhancing the core innovation RIM itself brought into the market years ago.

RIM has a significant but deteriorating share and is a company that has done very well as an entrant in a space dominated by larger incumbents.  But there is a strong smell of Palm about it.  The musty smell of decomposing innovation. Wall Street seems to smell it too (two year stock price chart relative to AAPL below)

The problem seems to be that, like in Palm’s case, mobile computing is a game for big companies.  If you ask why Palm and RIM became uncompetitive you get two different reasons. Palm could not do hardware and distribution well and RIM can’t do software well. But these reasons have remedies which neither company can bring to bear: resources and processes. Palm did not have the resources for distribution and production and RIM did not have the processes to be a software platform company.

Their values and priorities are adequate but competitiveness today, in this market, requires projecting market and development power.

I can only conclude that RIM is simply too weak to make it in the long run.

Global mobile phone sales, the full picture

After piecing together the global smartphone shares, it’s time to take a look at global mobile phone shares. That’s all phones from all vendors that matter.

Unfortunately, just like there are only fragments available from Canalys about smartphones, there are only partial lists from IDC (IDC – Press Release – prUS22441510).  Missing are numbers from Apple, Motorola and HTC.  But fear not, those can be obtained from company earnings reports.

So here is the full picture for 2Q10 vs. 2Q09

The year-on-year growth for the vendors above is:

The source data is:

Observations:

  • The pure play smartphone vendors (HTC, Apple and RIM) are growing rapidly and capturing most of the profits.
  • LG and Samsung are taking share from Nokia but losing margins.
  • “others” are doing well at the low end.
  • Sony Ericsson and Motorola are transitioning from mass market vendors of commodity voice products to niche vendors of Android commodity data products.

The deterioration of Nokia's core business

The saga of Nokia’s challenges has been well documented in this weblog.

For this quarter, we take a look at the sequential deterioration in Nokia’s bottom line and draw causal inferences to its lack of competitiveness in mobile operating systems.

First, the bottom and top lines are shown below (in blue) and compared with Apple (in orange):

The charts show how Nokia’s bottom line (left) collapsed while the top line (right) remained relatively solid. By comparison, Apple remained consistent in revenue with slight dip in profit as it transitioned to a new model.

The top line (sales) is the product of units sold and their average selling price (ASP). Here are these two quantities side-by-side:

Note how Apple’s units are hard to discern relative to Nokia’s volume and how the opposite is true for the selling price. These values include all phones sold by the companies.

The story is a bit more clear when comparing the smartphone part of Nokia’s business, again with units and ASP:

The story here is telling: even in smartphones, Apple’s ASP is dramatically higher and much more resilient.

The question has to be why: Why can Apple retain not only higher prices (and hence margins)? The answer is competitiveness. Margin is an indication of value created and value differential is competitive differentiation. All the user satisfaction surveys, the reviews and tests boil down to these hard numbers above. The deterioration of Nokia’s business is directly traceable to its historic failure to embrace mobile software as a disruptive force and instead using it to sustain a hardware business.

LG joins Nokia in missing estimates due to competitive pressures

Losses from mobile phones totaled 120 billion won ($101 million) in the second quarter, compared with profit of 620 billion won a year earlier, Seoul-based LG said in a statement today. The loss, the division’s first in four years, was triple the size projected by the average estimate of five analysts surveyed by Bloomberg.

via LG Posts Record Handset Loss on IPhone, Smartphones – BusinessWeek.

Preference of next device by current smartphone owners

MacDailyNews – Yankee Groups Howe sets the record straight on Apple iPhone and Android devices.

• No other manufacturer can claim nearly the loyalty of iPhone owners. RIM BlackBerry owners see a touch-screen device as the antithesis of their hard keyboards. However, even in this category, 23 percent of respondents plan to buy an Apple iPhone. We see similar results with all other mobile phone owners. In fact, 36 percent of Google-branded Android phone owners say they plan to buy an iPhone, surpassing the 32 percent of Google-branded phone owners who intend to buy another Android phone.