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What Samsung's rise and Nokia's fall means for Apple and the iPhone

What Samsung's rise and Nokia's fall means for Apple and the iPhone

Industry research firm Gartner just released its latest data on mobile phone sales for the first quarter of 2012. There are some interesting points to be pulled out of this report that I wanted to address.

Samsung dominates Android. Gartner’s data says that Korea-based Samsung shipped over 40% of all Android handsets last quarter. So that still leaves 60% of the market to other vendors, right? Yes, but according to Gartner none of these other vendors make up more than 10% of Android volume. None.

In terms of handset brands, Samsung is also now the #1 phone maker in the world, ahead of Nokia.

Nokia may have the #2 position in the market, but we need to remember that most of Nokia’s volume is based on the dying Symbian OS. Very little is based on its Windows-powered future at this point. So, considering that we’re looking at the death of the dumphone over the next few years, let’s look at smartphone vendors and volumes.

Samsung is the #1 player, having shipped 38 million smartphones. Most of these are Android powered, with a smaller number of Bada OS phones.

Here’s how smartphone market share looks, by vendor, based on the Gartner data:

  1. Samsung with 26% market share
  2. Apple with 23%
  3. RIM with 7%

These are essentially the top 3 smartphone players right now. I realize that ZTE, LG and Huawei have a larger portion of the mobile market than RIM, but RIM is a pure play on smartphones whereas these three are not. Remember that other Android vendors have less than one quarter of Samsung’s volume.

What does this data mean to Apple?

Android is clearly taking a huge chunk of the market here, and that’s fine. The movement from the PC market to the mobile computing market has been a beautiful thing for Apple. They’ve gone from being a 6% market share player to something very significantly higher, depending on how you measure it. They don’t need to completely dominate the mobile phone market. Android will succeed, and so will Apple.

First and foremost, Apple just needs to keep delivering a beautiful user experience that makes people love their products. At the high end, it’s Samsung and Apple fighting it out, with Nokia and RIM trying to re-enter the race.

I’m more interested in what happens towards the middle and low end of the markets, in the fullness of time. This is not necessarily a 2012 or even 2013 strategy, but I’d like to see how Apple can profit from the continuing demise of Nokia.

Nokia still has almost 20% share of the mobile market. Granted, a LOT of that is at the uber-low end, and Apple isn’t going there anytime soon. But Nokia still has a very meaningful chunk of the mid and high end feature phone market. This is a dying market, and Symbian is a dying OS. Apple should be able to swoop in here and soak up a lot of the customers who move away form Nokia. After all, a Nokia customer may love the Nokia brand (maybe) but doesn’t necessarily feel the same way about Microsoft and Windows Phone.

With respect to pricing, if Apple can do something closer to what it did in the iPod space versus what it’s done in the Mac space, it can own a larger chunk of the lower end market. But I expect this to take a while. Tim Cook has made it abundantly clear that he won’t go to a lower price point if the product stinks as a result.

Either way, I love Apple’s positioning. They own a real platfrom, they’re already the #3 manufacturer of mobile phones in the world, and the #2 player is bleeding out.

Source: Gartner

Chris Umiastowski

Chris was a sell side financial analyst covering the tech sector for over 10 years. He left the industry to enjoy a change in lifestyle as an entrepreneur, consultant, and technology writer.

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There are 10 comments. Add yours.

Akki says:

First article I have seen on imore that doesn't blindly worship Apple and accepts that Android will succeed. Also acknowledging Samsung (most hated by blind followers). That's what I expect from professional fan site. Be happy about your product but give respect to what others are achieving.

flyingember says:

Don't forget that succeeding is all relative anyways. In business the goal is profit and stock price.
Samsung saw a 6% drop in stock price in one day with a mere rumor Apple would change one component in their phone away from Samsung factories. No one selling their stock cared they sold more phones than Apple, they saw Samsung's success only in Apple's order.
Google makes the majority of their profit from cell phones from Apple devices. The implication is Google could make more profit by stopping Android in it's tracks and focus on the iPhone.
That's the success of Android even if it has market-share. The profit just isn't there.

akki says:

I don't understand why almost every one on iMore has to criticize Samsung/Google? So what if they are not making as much profit as Apple. Is making profit only thing in the world? How does it matter to you if Apple makes billions of profit unless you are share holder? It just means that they can afford to sell iphone/ipad cheap but they won't only because blind worship by fanboys. Android has helped many people/student in poor country like India to get into smartphone/tablet world. I wonder if it is inferiority complex that makes people to always criticize others?

Roshizzle731 says:

Android has helped people? Now that is funny. By doing what? Pricing their products 10 bucks cheaper? I seriously hope you don't believe what you posted here.

taz says:

in many countries android has allowed the price of smartphones drop significanlty...you can android phones for £500 or £100...not everyone can afford to spend £500+ on a single device.thats where android has done something,it has allowed people to own smartphones where maybe before they couldnt afford it before.

frog says:

Going to apologise about the child abuse comments yet Chris?
Why is this loser still posting articles on here Rene

Roshizzle731 says:

I don't understand why people come on an Apple site and expect everyone on here to kiss Android's assets. Wake up and get a clue. And I really don't get why if you like Android so much you would come in here at all. With a new android phone dropping every 2 weeks and 50 more on the horizon at all times, there should be plenty for you to read elsewhere. Lag!

Ritesh says:

Nokia fans will still love nokia.. if they deliver the same with WP.
And mind you, the UI of WP is refreshing. who knows what WP8 has to deliver?

anonymous says:

its funny that the iphone users tend to point out how android fans come here and bash the iphone but are contiuously mocking the windows phone whilst they do it. Lets face it if you bash another companies product because it doesnt suit you your as much a fanboy as the person your calling fanboy. This brand loyalty is killing progression because everyone is so attached to one company. We fail to see new opprotunities and the stock market doesnt help because it influences devs to go here or not to go there or people to invest or make nonsensical predictions about a product....man corporate greed and human pride has got people fighting over what phones they use, just dig what you dig and stop hating so much for the love of all things tech....

Spaz888 says:

I think for the most part it's the hackers and people that pay almost nothing for a smartphone that prefer android. I just dont see how an OS such as android can succeed considering how fragmented the updates are, how counter intuitive the layout and interface is. The fact that android malware has increases 4x over the last 12 months and how the antivirus sw only scans for malware after you downloaded and installed the app. In Addition, android allow apps to populate in the background robbing you device of CPU, memory, and battery life. If it wasn't for Apples mindset that bigger is not better I wouldnt be using a 4.5 inch Samsung galaxy 2. Even if apple does give ppl a 4 inch screen that's way too small in today's market especially since this form factor will likely be with apple for another 5 years