Last Updated Jun 28, 2010 12:14 PM EDT
When you do, the picture of the world turns upside down within a year. Android will be at the front of the pack, with Apple second, Nokia third at best, and Microsoft and RIM fighting hard for fourth place.
On the surface, unit numbers seem to indicate something different. Apple's iOS is selling wildly, both on the iPhone 4 and the iPad. However, as I mentioned last week, Google is probably ahead on unit sales. But there's more to a simple unit count. Major handset vendors such as Motorola (MOT), HTC, and LGhave focused on using Android, which is feature-competitive with the iPhone and is free. Expect use of Android to expand. In addition, the quarterly growth rates have been so steep that the bulk of purchasers must be new to the system, as there hasn't been a large enough established base for sales to be mostly upgrades. Therefore, Android is greatly expanding its reach into consumers, and not primarily moving units into its existing customer base.
Apple, on the other hand, supposedly has a high upgrade rate -- upward of 77 percent of the people waiting online for an iPhone 4 were existing iPhone users, according to Gene Munster , a Piper Jaffray analyst. As I've mentioned before, Munster can be an Apple cheerleader and his estimates aren't necessarily accurate. Add to that the self-selected nature of the sample (people who decided to wait hours online for an iPhone), and the number doesn't statistically project to a broader populace.
However, It raises the question of whether Apple will once again be a niche player -- successful, but within a specific market segment and falling behind on the broader front. A rabid fan base is great, because the company has lower costs to acquire customers and a more efficient marketing engine. But some of the advantages that Apple seems to hold will begin to fall away.
For example, the app store size doesn't really matter. Psychologically, it's great, but as with all retail, the money is concentrated in a small percentage of apps, and so most developers will be interested in other popular platforms -- namely, Android. And the iPhone 4 problems during the roll-out may well tarnish the Apple engineering reputation.
RIM shipments have continued to grow, but on the same straight line they've seen for years. In the quarter that ended in May, RIM sold 11.2 million BlackBerrys. That's a better than the 10.9 or 11 million I estimated, but it's nothing when you consider how quickly the entire smartphone market is growing. In a world that offers 60 percent or greater quarter to quarter growth for Android, RIM continues along the path it's followed for years. The number of units is nothing to sneeze at, but in context, it shows a market that quickly moves away from the company.
RIM executives talk of looking to global markets for growth, but why would that suddenly happen now? The answer is that it won't. the company will have to deliver something outrageously compelling to accelerate growth in the second half of the year, as co-CEO Jim Balsille indicates that it hopes to do. Talk of how AT&T's tiered data pricing will help because consumers will want "more efficient" devices is wishful thinking. As AT&T pointed out, 98 percent of its current customers can do just fine with the 2 gigabyte monthly cap, and that plan is less expensive per month that the previous so-called unlimited one (though it actually had a 5 gigabyte cap). Expecting that RIM's new models will be a "quantum leap" past anything else on the market strains credulity and suggests more corporate happy talk and wishful thinking.
Microsoft talks of selling 30 million Windows Phone 7 copies by the end of 2011. It's doable, but would still leave the company far behind RIM, even if its current pace doesn't increase. That's clearly better than the 20 million Windows Mobile units sold in 2009, but unless Microsoft has deliberately underestimated what it can do (and it may well be trying to set low expectations so it can then claim triumph), it will become marginalized.
Nokia is the real question mark. The company is the leader in the smartphone market, though I'd argue that calling previous versions of Symbian smartphones, compared to Android or iPhone, unreasonably stretches the definition. Now Nokia is moving to MeeGo, the platform that resulted from Nokia and Intel (INTC) combining their Linux-based mobile operating systems. I wouldn't expect other manufacturers to pick it up, but Nokia is big enough that it could drive sales past anyone else on the market --if the platform is highly competitive.
If within a quarter or two of MeeGo-based devices shipping, Nokia can sell 12 to 15 million a quarter, that will be a good sign. I think it will have to ramp up that quickly to keep its share of the smartphone market. There is a strong set of cross-platform development tools, but it's for the combination of Windows, Linux, Mac OS X, Symbian, and MeeGo. It doesn't get you software that runs on Android or the iPhone. It's difficult to tell at this point whether the Windows support will also include Windows Phone 7, or even Windows Mobile 6.
That's not good for corporate customers that want to developer their own applications for both desktop and mobile, because it assumes that everyone is on a Nokia-sold platform. For third party app developers, forget it. They need to become more efficient in developing software, and this turns Nokia into the start-up equivalent of a business opportunity.
Until enough MeeGo users are out there, the app developers will focus on the strong growth platforms. Without the apps, Nokia will have a hard time selling enough of the devices, because, after all, smartphones have become app phones. My gut feeling is that Nokia has screwed itself with this move and within a year will lose its smartphone supremacy.
- Google, Apple, and RIM: Win, Place, and Show in the Smartphone Horse Race
- 30M Windows Phone 7 Handsets by 2011? Yup -- It's Math, not Magic
- Google and Apple: Soon at 100 Million Operating System Copies a Year