Even without the iPhone or Android, we'd have seen major hardware improvements, given the increasing power and falling costs of semiconductors, memory, and batteries. But smartphones are the future of the industry, and companies outside the traditional handset business offer the big growth platforms, as you can see from Gartner's table below:
Phones running smartphone operating systems saw increased unit movement of 23.8 percent between 2008 and 2009. However, overall handset sales dropped by almost 1 percent. (The data from IDC that I looked at early this month roughly agreed with Gartner's numbers, so there's some corroboration.)
Symbian remains the dominant player, obviously, but even with its strength, it remains vulnerable for a number of reasons. One is declining intererest. Unit shipments grew by only 10.9 percent -- hardly shabby, but well behind the category as a whole. In the process, it lost 5.6 percent of sales market share, dropping significantly below the 50 percent mark. More importantly, Nokia (NOK) and Intel (INTC) have announced the MeeGo operating system. Nokia seems to be moving away Symbian, which could quickly undercut Symbian's dominance.
Linux handsets took even more of a hit, dropping in absolute numbers as well as relative market share. Similarly, Microsoft (MSFT) Windows Mobile lost unit sales and market share. The three big growth winners were RIM, Apple, and Google. Here's a summary:
Achieving high growth rates is much easier when the base of sales is small. And yet, I'd argue that the change for these three is significant, as are the unit volumes. Their expansion is coming at the expense of the incumbents and they're also garnering a considerable amount of public attention, which will only fuel additional growth. RIM lags the other two in market expansion but still significantly outsells either of them. The question is how customer segmentation will drive continued sales. RIM is more oriented toward the corporate market, although available to consumers, and both Google and Apple seem more intent on courting consumers. We may see an increasingly polarized industry, with corporate buyers looking at RIM and Microsoft and consumers considering iPhone and Android, with Google potentially on track to surpass Apple.
There are potential challengers. Anything backed by Nokia will be a factor. Palm's (PALM) webOS is a special case, as its an even newer entry, going from zero to almost 1.2 million units. However, this won't satisfy Palm, as its competitors are quickly leaving it in the dust and some analysts are already cutting their ratings on the company.
The interesting rumor, particularly in the face of talk about Microsoft releasing its own branded handset, is whether the company is planning to buy a handset hardware manufacturer. I suspect not. Microsoft has long worked to leverage many manufacturers, and at the moment the phone vendors include HTC, Samsung, LG, and Motorola (MOT). Focus on one company to the extent of owning it, and chances are Microsoft would scare off its other partners. It could be that Microsoft is considering a branded phone for the same reason that Google apparently wanted one: to goad partners to do more with the operating system. However, the company still faces competitors giving away operating systems, and that's a tough act to follow. And with Nokia apparently uninterested, Microsoft needs all the hardware friends it can get.