Gartner: Apple #4 Mobile Phone Maker in the World

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Apple’s iPhone sales grew to propel the company to be the #4 mobile phone maker on the planet during the September quarter of 2010, according to a new report from research firm Gartner. That’s mobile phone maker, not just the smaller sub-market for smartphones, where Apple is a much bigger player (Gartner only ranked smartphone OSes, not individual manufacturers of smartphones). Gartner’s figures show Apple with 13.5 million iPhone sales, enough to capture 3.2% of the cellphone market.

Apple’s own sales figures for the quarter put iPhone sales at 14.5 million, but both Gartner nor IDC use their own proprietary methods for accounting for sales in their market share reports.

Apple’s share grew from 2.3% to 3.2%, the only vendor in the top 8 to show an increase in market share in cellphones. That’s because of a new factor in the cellphone market, white box manufacturers, that has caused the “Other” category to explode from 16.1% to 33% of the market.

Like their PC distaff cousins, white box cell phone markers are small companies that make limited runs of very cheap, very generic low-tech cellphones. These companies long proliferated in China, but have expanded their reach into other emerging economies in Africa, India, South America, as well as Russia.

Accordingly, Nokia’s marketshare fell from 36.7% of the market to just 28.2%, even though the company sold four million more devices year-over-year (113.5 million in Q3 2009, up to 117.5 million in Q2 of 2010). Samsung’s unit sales leapt from 60.6 million in 2009 to 71.7 million in 2010 (propelled in part by Android devices), but its market share fell from 19.6% to 17.2% during the quarter.

Table 1
Worldwide Mobile Terminal Sales to End Users in 3Q10 (Thousands of Units)

Gartner Global Mobile Phone Marketshare Chart

Source: Gartner (November 2010)

Smartphones

Like NPD, which released its own report on the September quarter earlier this month, Gartner based its rankings in the smartphone market on operating system, and not manufacturer, this despite the fact that three of the top four operating systems in this market are proprietary, whole widget solutions (Nokia’s Symbian, Apple’s iOS, and Research In Motion’s BlackBerry).

Be that as it may, Apple ranked #3 in the world in smartphone OSes with 16.7% of the market. Symbian remains the world’s top selling smartphone platform with 36.6% of the market, while Android is #2 with 25.5% of the market. Research In Motion slipped to #4 with 14.8%. Trailing a distant #5 is Microsoft’s Windows Mobile platform, with 2.8%.

Gartner took time to praise Apple’s performance, and to highlight the advantage the company has with its iTunes/App Store ecosystem. The firm also noted that Apple could have sold more iPhones during the quarter except for the constraints on supply the company dealt with throughout most of the quarter.

“Apple’s dramatic expansion of iOS with the iPad and the continuing success of the iPod Touch are important sales achievements in their own right. But more importantly they contribute to the strength of Apple’s ecosystem and the iPhone in a way that smartphone-only manufacturers cannot compete with,” Carolina Milanesi, research vice president at Gartner, said in a statement.

She added, “To a developer, the iPod Touch and iPhone (and to a lesser extent the iPad) are effectively the same device and a single market opportunity. While Android is increasingly available on media tablets and media players like the Galaxy Player, it lags far behind iOS’s multi-device presence. Apple claims it is activating around 275,000 iOS devices per day on average — that’s a compelling market for any developer. And developers’ applications in turn attract users.”

Table 2
Worldwide Smartphone Sales to End Users by Operating System in 3Q10 (Thousands of Units)

Gartner Global Smartphone OS Chart

Source: Gartner (November 2010)

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Comments

wab95

Fascinating.

Apple had to build it before anyone could see, let alone imagine, the power of an integrated ecosystem. Apple is playing a long game on a steep and far-reaching trajectory. That a firm like Gartner recognises the uniqueness of Apple’s position is evidence that this is now plainly obvious.

What distinguishes Apple, at this point, is that the company is not only addressing a specific need, such as smart phones or a music players, but is actually cultivating a market for multifunctional devices that, progressively, are acquiring the power and utility of the modern PC with the convenience of ultra-portability.

I believe that market is fundamentally different from the one that seeks a stand-alone device.

Amazed.

Fascinating.

Android jumps from 3.5% to 25.5% within 12 months.

themrwhite

@Amazed

Not really fascinating, when a company floods the market with cheap knock-offs and offering your OS free to manufacturers, it’s pretty easy to do. Remember Microsoft with Internet Explorer? Same thing. But like the article said, the top 3 OS’s are from proprietary vendors, not open source. And like the article said and which I agree with, only Apple has a complete ecosystem consumers like. If your 14 to 21, then Android may be appealing.

skinnybear

If your 14 to 21, then Android may be appealing.

I thought Bosco was older. <g>

Bryan Chaffin

Now now, let’s not launch a new round of ad hominem attacks.

I disagree with Bosco frequently and often, but i respect his opinions.

Bosco (Brad Hutchings)

Bosco is young at heart, and will gladly show you all the things an Android phone can do that iPhone can’t. My phone works how I work. With iPhone, it always felt roped in.

On the ecosystem… there is no real practical, noticeable difference in software other than there are lots of gadgets available for Android that just aren’t allowed on iPhone. On my N1 home screen, I’ve got a WiFi widget that with a couple of taps and without leaving the home screen can cycle through available networks. I’ve got a news/weather widget, and an SMS widget that will read me my last message when tapped. I finally outgrew my 4GB micro-SD card and replaced it with 16GB module yesterday. Copying the old card to the new one took 30 minutes because the new one is class 4 flash memory and doesn’t write terribly fast. Otherwise painless, including a whole bunch of apps I had moved to the SD card.

The hardware ecosystem is a different story. Apple’s iPod connector is ubiquitous. I still have iPod controlling head units in both of my cars and an assortment of left over bedside clock/radios with iPod docks. The good news is that more stereos, clock/radios, and car units are adopting Bluetooth audio.

I still think it’s amazing how Android phone has gone from zero to “objects in rear view mirror think they are larger than they appear” in about a year. Next year, we’ll be evaluating the same story about Android tablet. Bet on it.

wab95

Android jumps from 3.5% to 25.5% within 12 months

Quite true, but as themrwhite points out, there is nuance to this story, which is illustrated in Table 1 of the Gartner report.

While absolute number of unit sales for manufacturers using Android OS increased, such as Samsung and LG, their market share actually decreased. HTC managed a market share increase, but in much smaller volume.

The article suggests two things contribute to this, both of which have been featured in this and other sites:

1) Some manufacturers, like Samsung, are selling high-end Android devices, while others, like ZTE are selling Android at the low end. These may in fact be cannibalising high end sales for those other manufacturers. For any manufacturer, at the end of the day, it comes down to profitability. If they cannot make enough profit to provide growth for the company while fuelling research and development - the source of innovation - the venture becomes non-sustainable. This leads to the second point raised in the article, which is salient enough to quote verbatim:

2)  ?Any platform that fails to innovate quickly ? either through a vibrant multi-player ecosystem or clear vision of a single controlling entity ? will lose developers, manufacturers, potential partners and ultimately users.? Attributed to Roberta Cozza. The emphasis is on ecosystem and single controlling entity. While Google have created somewhat of a system, it is nothing like that of Apple’s, a single controlling entity that controls both the soft and hardware, all of which are designed to provide an integrated user experience. The hardware deploying Android is not only made by different manufacturers, they compete against one another - hardly a recipe for integration.

Further, the upcoming tablets that will use Android have yet to deal with the fact that Google have advised to wait and deploy a separate OS. Will that system be compatible with the Android OS on the smart phones? If it is to compete with the iOS user experience, it will have to be.

The challenge for Android OEMs remains to not simply increase unit sales and market share, impressive as these are, but profitability and building an integrated user experience that people are willing to pay for. To do this, as many, including Gartner, have suggested, they will need a single controlling entity.

However they manage it, here’s to hoping they succeed.

wab95

I should add, Gartner does allow for an ecosystem evolved from “a vibrant multi-player” milieu, however there seems little evidence of this for the moment, and there is little precedent to suggest that this will occur.

We do have the successful model of the single controlling entity.

Bosco (Brad Hutchings)

@wab95a: You’re not allowed to misinterpret point (2) and reconcile with the fact that Android zipped past iOS in one year. Cozza’s either-or is “Android model or iOS model”, not “iOS is better than Android”. Combined, Android and iOS have severely beaten RIM and Symbian over a short time. But Android is also beating iOS grin.

Android absolutely does not need a single controlling entity. It is very common to Apple fans to assume that because Apple is a single controlling entity, anything else that succeeds must be in that image. In fact, the reason Android went from zero to past Apple in a year is because there is so much freedom to all players to innovate, from Google to handset makers to carriers (yes, carriers) to developers, and even to users. This is a feature, not a bug. The quicker Apple fans come to grips with this, the quicker they can provide appropriate feedback to Apple that might help stem the slide against Android. If Apple fails to get that message from its customers, the slide will just get worse. Bet on it.

wab95

You?re not allowed to misinterpret point (2) and reconcile with the fact that Android zipped past iOS in one year

Point taken, and no attempt at misleading was intended, hence the subsequent post regarding ‘vibrant multi-player ecosystems’. I had thought that the description of the potentially adverse competition between Android vendors was sufficiently implicit regarding the absence of such a multi-player system in the Android universe, but on re-reading, felt the need to be more explicit, hence the subsequent post.

That said, I do not believe that we are describing the same things. What I understand from your post, and your other discussions, is that Android is a freer platform, more susceptible to innovation, and by virtue of its openness, will attract more manufactures, developers and users, and be more successful in the smartphone arena, the chief indicator of which will be greater market share than that of the iPhone. Bryan Chaffin and others have, on numerous occasions weighed in and also predicted greater market share for Android in near term, which by all indications, has occurred.

That, however, was not my train of thought or my point. Rather, it is that Apple’s focus has been on creating, and cultivating, the ultimate user experience. But even that is not where we diverge, but here. The user experience I refer to is not that of the smartphone, but of the integrated management of the digital lifestyle.

When I look at both my personal and professional assets, the digital assets are the most important, more so than physical assets such as house, car, etc because with appropriate management of my digital assets I can preserve or even augment these, without it, I will surely lose them. This digital lifestyle then is more than about being ‘cool’, but essential to performance, security, and success. Apple figured this out at least a decade ago and has, relentlessly and consistently, built up a system of integrated products (hardware and software) and services that assist me to do this, paying attention to aesthetics, ease of use, robustness of design (options), and relative security (any system can be compromised, but compared to the competition, Apple’s products hold their own and meet an industry standard).

I have said before that Apple is playing a long game, so long that its inertia can be measured in generations, and, were this my personal blog space, I would outline how it has, in the past decade, out-thought, out-manoeuvred, out-flanked, and simply out-performed the competition in this regard, but this is not my space, and others have done this exceedingly well.

Before Apple created this digital management platform, many of us did not know that this is what we were looking for, but recognised it when we saw it. This is what they (Apple) have created, supported by a toolset (PCs and ultraportables) such as no other single company appears to have. This is why I have stated above, and on other occasions, that people in search of a single use device (e.g., a smartphone, tablet, music player, or PC; albeit they can be used for more than one thing, each has its limitations and therefore, its place) and those in search of a digital management platform are not the same market.

This is why any vendor who comes after a person like me with a techspec-heavy single use device, though it may be superior to Apple’s counterpart, is on a fool’s errand, because this is only appealing insofar as it enhances the integrated management of my digital assets. If it is not integrated with that system, it is of no use, and they have targeted the wrong audience. I even question whether the single use vendor is a real Apple competitor, at least for those in search of digital management. To be sure, there are others who are creating such systems (Google, Microsoft), but if they are to succeed, their systems need to be integrated and offer the range of services and capabilities of Apple’s - indeed at this stage, they need to be superior.

I would never presume to speak for anyone, let alone ‘everyone’, but I do think that there is a consensus of sorts among TMO readers who post regularly in this regard, that at least some are people who have bought into an integrated platform for managing their digital lifestyle. I believe that this underlies the dissonance between your correct assertions about the technical capabilities of the Android OS and its supported smartphones and at least some readers’ response.

A final note, I think many readers here, certainly I, am quite sincere about wishing the competition well, because it is only in a competitive environment that we, the users, will get the best products and services on the best timelines.

MacKeeper_fan_Mod

Of course, Apple displaced Sony Ericsson from the fifth of greatest mobile phone producers and ousted positions of Nokia but it won’t dominate in this field. Apple’s “problem” consists in high quality of their products and corresponding price. For many people who are limited in money buying Apple’s iPhone can be only dream, especially in poor countries.

Bosco (Brad Hutchings)

@wab95: What you described is also called “lock-in”. I’ll agree that it’s a powerful play. Dog knows how many thousands of dollars I spent on the iTunes Store in that past decade. But lock-in is also especially fragile. If another company’s new device comes along and offers advantages that Apple’s devices do not, especially in the realm of exclusive content, the value of “integration” quickly becomes the restriction of “lock-in” and the burden of carrying multiple mobile devices or having several boxes (and remotes) connected to your TV.

I know that there is at least a small subset of people who understand the downside of integration by one company. There are plenty of Apple content competitors who are specifically focussed on supporting multiple player platforms so that their customers are not bound to competing integrated models. Amazon gets this best with Kindle.

I’ll give you another observation from my switch from iPhone to Android. I wondered at the outset how I should “manage” my music, since there is no equivalent ubiquitous media organizer to iTunes on Android. The surprise for me, as someone who has dug into the gory details of iTunes database files on iPods and other minutia that ties the whole platform together, is that you don’t actually need that stuff. A searchable and navigable database of music on a fairly large device can be created and maintained on-device by the device in very short amounts of time. Bottom line for users is that you still purchase music from stores like Amazon MP3, and it shows up under the artist and album in the Music app. If you want to back up your music or move to a different device, plug into a USB port and drag a folder. Or use Missing Sync (great product) to sync up with iTunes.

Count me as a former believer in that integrated vision who opened his eyes and saw that it wasn’t really all that. Sorry.

gslusher

“Apple?s own sales figures for the quarter put iPhone sales at 14.5 million, but both Gartner nor IDC use their own proprietary methods for accounting for sales in their market share reports.”

Gartner apparently never bothers to update their estimates with actual data. That puts them somewhere about the pre-school level of scientific analysis. “We estimated it, so it must be so. If the facts disagree, then the facts are wrong!”

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