asymco

Curated Market Intelligence

• Home

• Speaking of…

• ADDs: Asymco Data Downloads

• What we do

• Sponsorship

• Archive

• SEARCH 620 ARTICLES

Top of Form

Go

Bottom of Form

CATEGORIES

• ADD4

• Financial115

• Industry199

• iPad content9

• Legal6

• Market184

• Nostalgia16

• Sponsor5

• Technology13

• Theory49

• Uncategorized65
• All Categories11

The symmetry of share shifts in mobile phones

OCT 5, ’105:52 PM
AUTHORHorace DediuCATEGORIESIndustry

Thanks to a reader’s suggestion, I took another look at the profit and market share data from the mobile phone
market overview posted last quarter. This time to compare the vendors on two dimensions at the same time.
I plotted the vendors on share of market and share of profit axes in two different points in time: Q2 2007 and Q2
2010. I further broke the chart into four quadrants as shown:
I chose to label the quadrants to indicate the possible categorization of the companies.

• Dominant: large market share and large profit share

• Star: low market share with large profit share
• Fading: high market share with low profit
• Marginal: low market share and low profit
It’s interesting to note the shift over the time period of the eight vendors. Whereas Nokia moved from Dominant to
Fading, only Apple rose from Marginal to Star. The Marginal players dispersed their placement with Samsung
moving laterally toward Nokia while RIM followed in the Apple trajectory and increased profit share while
maintaining relatively low share.

Thinking about motion around these two dimensions could be reduced to a vector model. If each vendor is
represented by an arrow showing direction and distance moved, we can compare each vendor vs. a symmetric
competitor which might account for the loss or gain of share.

The vectors can be paired as follows:

Although the data does not contain all market participants, the shifts in share are quite closely conserved with the
vector magnitude (arrow length) and angle (direction) paired. Note how Nokia and Apple swapped Profit without too
much impact in Units volume. Similarly, RIM and Sony Ericsson traded profits and volumes quite symmetrically.
Samsung also took volume while Motorola lost it. HTC and LG did not change positions dramatically.

Finally, moving all vectors to the same origin leads to this view of share gain/loss over three years in two
dimensions:
 It becomes quite easy to see who the winners and losers are and by how much.

This model is only an observation of the shifts in market power and is not conclusive about where share was gained
or lost, however there is compelling symmetry which also matches the intuition of observers.

‹PREVIOUS POSTNEW COMMENT SYSTEM IN USE

NEXT POST[SPONSOR] AUTHENTIC JOBS ›
Login
Follow the discussion
Comments (72)
Sort by: Date Rating Last Activity

+13

ks ago

Beautiful, just beautiful. Data visualization truly is a form of art, and you are a master at it.

Reply

0
K· 4 weeks ago

I am discounter, so I feel Nokia's pain. I however, do not understand why they would make so little profit.

In discounting the most important measure after margin is stock turn. So, if a product is a low margin
product, what we then try to influence is its turn. I am wondering how you treat this Horace.

If their margin is low (given) and their turn is also low (don't know), why are they bothering?

Apple should be a case study in all business school. They are doing something very different, totally
unconventional.

Reply
1 reply · active less than 1 minute ago

+1

· 4 weeks ago

So Sami is on the board-line of FADE. The more Android they pump out, the quicker they slip into fade.
Correct?

Reply
2 replies · active less than 1 minute ago

+5

ks ago

Surely those manufacturers with near zero volume and near zero profit (mostly Android supporters) are
not simply marginal, they're totally fucked.

Reply
1 reply · active less than 1 minute ago

+5

· 4 weeks ago

Great graph, Horace.

In the context of Android, what's interesting to me is that Android is turning some winners into losers and
 vice versa. Motorola has had a great run with the Droid, so even while their unit sales are way down, their
profit is way up (positive now, finally!)

In essence, when I look at this graph I see proof of what I'm noticing: that Android has created a product
that can compete with Nokia on volume, price, and carrier selection by letting talentless software
designers at manufacturing companies stand on google's shoulders, and thus give them a shot at selling
lots of phones to the 80-90% of people using bad phones.

In my opinion, Android isn't really going to be much competition with Apple on ANY carrier that sells both
phones. Look at AT&T, look at the European carriers. Find any carrier whose iPhone sales lag their
Android sales.

When Apple busts out of AT&T exclusivity, they better have their supply chain ready to explode. There
was a lot of talk about how Apple went after a license to use LiquidMetal technology, and after reading the
interview with the FoxConn CEO on how difficult it was to make the iPhone 4 case, my guess is that
they'd need LiquidMetal just to produce them fast enough to meet widespread demand.

Reply

+1

kShift· 4 weeks ago

Billy, Yes you are right.

It reflects Google's strategy; make the handset (profitless) "free" and run suite of Google applications.
The handset makers have little choice;
(a) Adopt Android and have chance against Apple, or
(b) role their own (ex. Palm, Nokia), or
(c) get out of smartphone market (get our handset market altogether).

Handset market will end up like the PC industry ( Intel and MS taking +80% of industry profits), a very few
players will take majority of profits.

-Tek

Reply

+3

weeks ago
 At one point in time, Samsung had absolutely no idea when it comes to product focus, specifically for
mobile phones. They are better today, but still confused.

Ironically, Samsung has the financial resources to enable them to play the trial-and-error game endlessly,
hence why they were the only phone maker who’s had products based on almost every smartphone
mobile platform known to man — with the exception of iOS, of course.

I have absolutely no respect for Samsung as a phone maker. They lack any real creativity and succeed
thanks to the merits of others (the Galaxy S is a perfect example of how they do things in the mobile
division, and I have no hopes on the Galaxy Tab either).

As for their semiconductor division, I believe it is doing a far better job. If they're able to produce good
quality products, which Samsung are actually capable, then by all means Apple should keep them as their
component supplier. There are only so many manufacturers out there who are able to churn out the
quantities required in the fast-paced CE world we live in today,

Reply
1 reply · active 4 weeks ago

+2

n· 4 weeks ago

The summary of all summaries! The vector plots show the trends clearly.

Reply

Mobile phones: Who's up, who's down and who's moving sideways | All in one Articles |
Submit free articles
[...] It’s a lovely piece of work and quite easy to follow. You see it here. [...]

weeks ago

Great graphs that succintly summarize the market players. Only suggestion I would have in the vector
graphs is to show different colored arrows (may be red) for total market growth/units shipped and total
profit growth over the same time period, just to see how the overall smartphone market did compared to
each of the individual players.

Reply

+1
eeks ago

It will get worse for the Android makers.

While Apple has a distinct brand and unique set of benefits, Android manufacturers have little to set one
apart from the other. When the pie stops growing, they'll have to compete against each other on price.
That's a path going nowhere.

Reply

+2

eld_IL44p· 4 weeks ago

I know they are a distant 3rd or 4th in mindshare, but it is interesting to see RIM succeeding along with
Apple. Obviously their star doesn't burn as bright, but they are the only other manufacturer with a truly
differentiated product and ecosystem (BBM, hosted email, etc.). I wonder what this portends for WebOS
when HP finally decides to start making product.

Also, MOT has probably made their entire upward move on the profit share axis in the last 9 months. I bet
this graph would look different on a shorter timeline. I for one would love to see this as a regular (quarterly
or annual) feature on Asymco. My guess is that Apple will continue on its trajectory but the others will
continue to shift around quite a bit.

Reply
1 reply · active 4 weeks ago

· 4 weeks ago

Is is just me or Android caring companies are not very profitable. Seams the only thing that makes money
for them is the paid licensing of the "Droid" word from Lucasilm by Verizon wireless.

Reply

ks ago

Outstanding!

Reply
 0

er Brown· 4 weeks ago

Love this article and its graphs. I just wish it was required reading alongside the dung-pile of "Android
rules the mobile space" articles that are churned out ad nauseum.

Reply

weeks ago

very interesting ...apple=low market share but apple = high profilts...

Reply

weeks ago

A picture speaks a thousand words.

Absolutely fantastic visual synthesis of the data previously presented by Asymco!

Reply

Winners and Losers of the Smartphone Industry: Flow Chart - Phone-stuff

[...] [asymco via DF] [...]

Winners and Losers of the Smartphone Industry - Phone-stuff

[...] [asymco via DF] [...]

weeks ago

no mention of motorola at all. Did all those flat flip phones die?

Reply
1 reply · active 4 weeks ago

0
uck· 4 weeks ago

Excellent analysis. I'd like to see a comparison of profit share for developers in the app
stores/marketplaces though I guess a lot of that data isn't published.

Reply

-4

eeks ago

"there is compelling symmetry"

See also: ley lines.

Reply

Winners and Losers of the Smartphone Industry | iPhone World Blog

[...] [asymco via DF] [...]

eks ago

It seems that financially the only companies to survive in this market are those who produce their own
software and hardware - Apple, RIM, Nokia, HP/Palm. I'm not sure what that means for Android and
Win7. It will be interesting to see how this graph changes in the next year with the maturity of Android and
the introduction of Win7. We'll also see Nokia's new OS and HP/Palm will finally release a new phone.

My personal take is that manufacturers will have to either choose Android or Win7 if they want to survive.
Apple, RIM, and Nokia will become the dominant players although I really hope that HP makes some
headway. Conclusion - Android and Win7 are going to be the bain of most companies here in a couple
years.

Oh, and the manufacturers are really screwed because the winners of this industry are not going to be
competing on hardware specs to win customers (that is now taken for granted by consumers), the real
money is in the services offered to differentiate the products. That is the real reason the Apple and RIM
are doing well - the services behind the phones.

Reply

0
eks ago

Very, very nice indeed. Keep up the good work!

One small niggle, for the final chart you say (emphasis mine) "Finally, moving all vectors to the same
origin leads to this view of share gain/loss over TWO years in two dimensions:" but the chart axes are
labelled for "3yr."

Reply

123Next »

Post a new comment

Top of Form

Bottom of Form

Comment as a Guest, or login:

Login to IntenseDebate
Login to WordPress.com
Login to Twitter
Login to OpenID
Top of Form

Name
Email
Website (optional)

Displayed next to your comments.

Not displayed publicly.

If you have a website, link to it here.

Bottom of Form
Submit Comment
 Subscribe to

Comments byIntenseDebate

• Share167

• 4,501 comments

by 1,399 readers

IntenseDebate

• EMAIL SUBSCRIPTION
Top of Form

Your email:
Enter email address...

Subscribe Unsubscribe

Bottom of Form

• MORE INFO

○ RSS Feed for Entries

○ RSS Feed for Comments

○ Powered by WordPress

• RECENT COMMENTS

○ Brad Larson on 14 Percent of App Store apps target the iPad

○ jon jordan on Samsung’s smartphones make up 10% of total sold. Nokia is at 30% and Motorola is over 40%.

○ Study suggests Android handset makers will suffer the fate of PC makers | UmeedainTimes.com on How much

profit did vendors capture from Android-powered phones?

○ Ziad Fazel on 14 Percent of App Store apps target the iPad

○ Ted Cranmore on Competing with non-consumption: Can Apple sell 100M iPhones next year?

○ Dave on How much profit did vendors capture from Android-powered phones?

○ Alexkhan2000 on How much profit did vendors capture from Android-powered phones?

○ Kalle on Absolute value: the handset market stacked

○ Fijai Cairo on How much profit did vendors capture from Android-powered phones?

○ Alexkhan2000 on How much profit did vendors capture from Android-powered phones?

• MOST COMMENTED POSTS

○ Android's Pursuit of the Biggest Losers(206)

○ iTunes app total downloads to overtake songs this year(104)

○ Where are the iPod touch knockoffs?(98)

○ Unix's Revenge(95)

○ It takes nearly $1 billion/yr to run iTunes(92)

○ Why Apple is on top today: the top 10 technology decisions(89)

○ iPod touch made up 37.7 percent of all iOS devices sold so far(86)

○ How much profit did vendors capture from Android-powered phones?(75)

○ The symmetry of share shifts in mobile phones(73)

○ Back to the PC(68)

• SUPPORT ASYMCO WHILE SHOPPING FOR APPS

• SPRINGAHEAD

•
•

• MOST VISITED

○ 60 percent of Apple's sales are from products that did not exist three years ago(42356)

○ The symmetry of share shifts in mobile phones(31834)

○ Android's Pursuit of the Biggest Losers(27861)

○ Unix's Revenge(26857)

○ Back to the PC(26449)

○ Can Android change the distribution of profit among phone vendors?(22239)

○ Canalys: Android global share rises to 16% of smartphones in Q1 [Updated](21887)

○ Android vs. Windows Phone: Extending the urination metaphor(20042)

○ Gartner: as a Media Tablet, iPad deserves to be ignored in PC rankings(18056)

○ Open always wins, unless it's Symbian or LiMo or Openmoko or Qt(15506)

• VIEWS SINCE JUNE 1 2010

○ 31834

» wp.com stats helper

©2010 Horace Dediu. All rights reserved. RSS feed. This site uses the Basic Maths theme for WordPress, designed

by Khoi Vinh & Allan Cole.

620