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