updated 11:25 am EST, Tue December 2, 2008
Needham on iPhone Share
The iPhone is now not only the second most popular smartphone in the world but has saved the smartphone industry from a decline this past summer, according to a research note by Needham analyst Charlie Wolf. Apple's handset has represented about 16.6 percent of the entire smartphone market worldwide for the quarter ended in September and is now second only to Nokia. The latter has already acknowledged struggling smartphone share but is now known to have plummeted from 63.3 percent of the market a year ago to 43.6 percent owing largely to the spike in iPhone sales triggered by its 3G version.
The figure was also partly buoyed by RIM's BlackBerries and the overall range of Windows Mobile phones, though each of these declined slightly between the spring and summer.
Apple's relaunch has been strong enough that it ultimately masked a potential stall in the overall smartphone market. While the rate of growth was flat between spring and summer at 28.6 percent, Apple's presence has been the "only reason" the market didn't slow down significantly, Wolf says.
In the US, Apple is now also second only to RIM, earning about 30 percent of the country's smartphone sales through the iPhone versus the BlackBerry lineup's 40 percent. Windows Mobile and Palm OS are continuing to decline with Microsoft's platform holding 17 percent and Palm less than 10 percent.
The analyst explains the sudden shift towards iPhones as a reflection of a wider preference for the business models used by Apple and RIM, both of whom make the operating systems for their own devices and so have greater control over the hardware itself. While licensing operating systems for multiple hardware devices has worked well on PCs until recently, most smartphone makers have been reluctant to allow a second Microsoft monopoly with Windows Mobile and so reportedly chose Symbian more for its anti-Microsoft status than its merits.
"The Symbian operating system is generally considered to be less robust than
Windows Mobile or the Palm OS," Wolf claims. "But Symbian was able to retain a huge lead over competing operating systems chiefly through Nokia's endorsement and marketing muscle, especially in Europe, along with Microsoft's difficulties in attracting major handset manufacturers."
Symbian's share may decline further as some developers opt for Google's free Android platform instead, the researcher says, also noting that Microsoft has essentially had the advantages of Office and its Exchange servers taken away by the BlackBerry and the nature of the smartphone market. The desire from companies such as HTC and Sony Ericsson to develop front-ends like TouchFLO or the XPERIA panels for Windows Mobile simply shows that many of them have felt a need to mask a difficult stock interface, Wolf adds.
He is cautious to provide guidance and notes that Android's impact is liable to change as more phones and carriers come onboard beyond the existing range, which is limited to HTC's G1 for T-Mobile in the US and Europe. He nonetheless notes that the just-launched BlackBerry Storm is unlikely to gain traction given a series of high-profile mixed or negative reviews that attack the phone for neither outpacing the iPhone in the touchscreen market nor catering to RIM's core business audience.
"The Storm will probably ignite an upgrade cycle among some BlackBerry users," he writes. "But it's unlikely to lure a significant number of mobile phone users into the BlackBerry fold."