Drilling Down on Smartphone Numbers

Posted by: Andy Reinhardt on February 01, 2010

[Updated Feb. 4]

The roaring success of the Apple iPhone has focused attention as never before on smartphones, or jacked-up mobile handsets-cum-pocket-computers that offer e-mail, wireless Internet access, and the ability to download and run third-party applications. Yet for all that Apple has grabbed the public imagination, it’s still relative small worldwide in smartphones, with unit sales just one-quarter the combined total of the top two sellers, Nokia and BlackBerry-maker Research in Motion.

That point was illustrated by a research report released on Feb. 1 analyzing fourth-quarter 2009 results for the mobile phone industry. After Nokia turned in unexpectedly strong quarterly numbers on Jan. 28 that included a market share gain in smartphones, researchers at Strategy Analytics confirmed on Feb. 1 that the trend lines are improving for the world’s No. 1 seller of handsets.

According to the Strategy Analytics report, Nokia shipped a record 20.8 million “converged devices”—primarily its N series and E series multimedia and corporate handsets, but also its 5800 model, Booklet 3G netbook, and new Linux-based N900 tablet—in the fourth quarter, up 38% from the same period a year earlier. That gave it a 39.2% share in smartphones, essentially on par with its 39.1% share of the overall mobile phone market. This represents a big comeback for Nokia, whose smartphone share had dipped as low as 35% in its painful third quarter—though it’s still well below the 50% share the company once enjoyed in the days before RIM caught fire and Apple showed up to the party.

Overall, Strategy Analytics figures, smartphone sales worldwide grew 30% in the quarter compared with the last three months of 2008, to a record 53 million units. (For the year, they amounted to 173.8 units, or about 15.3% of all mobile phones, up from 12.8% in 2008.) “Smartphones are leading the handset industry out of recession,” said senior analyst Tom Kang in a statement. RIM shipped 10.7 million units in the fourth quarter, for 20.2% share, and Apple grabbed 16.4% share with sales of 8.7 million units.

Update: Figures released Feb. 4 by rival research house IDC largely reconfirm Strategy Analytics’ calculations. IDC pegs fourth-quarter smartphone sales at 54.5 million units, up 39% from the same period a year earlier. For the year, smartphones hit 174.2 million units, up 15.1% from 2008, and accounted for 15.4% of all mobile phones shipped in 2009. The main contrasts between the calculations from IDC and Strategy Analytics relate to market share: IDC shows 38.2% fourth-quarter market share for Nokia, 19.6% for RIM, and 16% for Apple. The difference owes to IDC’s larger estimated sales by the companies (including Motorola and HTC) that Strategy Analytics classifies as “other,” amounting to 14.3 million units, or 26.2% of the smartphone market.

A further glance at the numbers shows that all three of the top players outgrew the smartphone sector as a whole, according to Strategy Analytics. Nokia's 38% sales gain was exceeded by 41% growth for RIM and a near-doubling for Apple, up 98%. Strategy Analytics figures the gains posted by the top three came at the expense of the rest of the market, which saw its unit sales fall by about 1 million units from a year earlier, to 12.8 million, and share slip from more than one-third of the market to less than a quarter. (Update: IDC, by comparison, says Nokia's gains slightly lagged the smartphone market as a whole, and calculates that sales among the rest of the vendors rose by 2.2 million units. IDC agrees with Strategy Analytics that the "other" group lost share as a whole, from 30.9% to 26.2% of the market.)

It's not quite a three-man race yet—Samsung, a laggard in smartphones, is on the rise, and the impact of Google's Android operating system and Nexus One phone hasn't even begun to register in the numbers. But for now, the top three are the ones to beat.

Meanwhile, an earlier report from Strategy Analytics on Jan. 29 paints a similar picture of consolidation in the broader mobile phone industry. Nokia fought back in the fourth quarter to end the year with 38.1% share and sales of 431.8 million phones. (That said, sales for the year were still down by a thudding 36.6 million handsets.) Samsung cemented its firm hold on the No. 2 slot, with 20.1% share for the year and sales of 227.3 million units, up 30.7 million. (Update: Newsletter Rethink Wireless notes that Samsung's fourth-quarter sales grew at three times the rate of the market as a whole.) Korean rival LG Electronics also continued its rapid climb, with sales of 117.9 million phones, up 17.1 million. LG's 10.4% share for the year marked the first time it has crossed the 10% barrier on an annual basis.

The rising fortunes of the top three highlight the continued decline of Sony Ericsson and Motorola, which finished 2009 in fourth and fifth place, respectively. Unit sales for the Japanese-Swedish joint venture fell 41%, to 57 million units, and it ended the year with just 5% share, down from 8.2% in 2008. Motorola's sales fell 45%, to 55.1 million units. Despite some signs of turnaround for the troubled mobile phone pioneer, it finished the year with just 4.9% share, a new low. RIM sold 34.5 million devices in 2009 and Apple 25 million, putting them within striking distance of displacing Motorola from the top five.