Daniel Eran Dilger in San Francisco
Random header image... Refresh for more!

Canalys Q3 2009: iPhone, RIM taking over smartphone market

Canalys market share Q3 2009

Prince McLean, AppleInsider

The latest Q3 2009 smartphone market figures from Canalys show RIM and Apple gobbling up the smartphone market as overall growth in the segment begins to slow.

Canalys Q3 2009: iPhone, RIM taking over smartphone market
.

The global smartphone market grew just 4% over the previous year ago quarter, a major slowdown from last year’s 27.9% expansion over Q3 2007.

“While growth has undoubtedly slowed, it is still outperforming the overall mobile phone market by some margin, as well as driving data revenue for operators,” Canalys analyst Pete Cunningham said in a statement which also noted that sales mobile phones as a whole actually shrank by 4 to 6%.

Canalys’ press release only cited market share percentages for hardware vendors and software platforms, so AppleInsider did the math to chart the changes in smartphones over the last two years. The results were stunning, and contradict conventional pundit wisdom on where the industry is heading.

Canalys market share Q3 2009
A reversal on expectations

Nearly all market forecasters have insisted that integrated hardware and software platforms like RIM’s BlackBerry and Apple’s iPhone can only possibly be temporary successes that will have to make way for licensed software platforms, where one company or open source group develops software and reference designs that a variety of hardware makers can purchase or use for free.

For example, Gartner recently predicted in a widely publicized report that three years from now it expected to see Symbian slipping only a few percentage points to maintain its lead as the most widely used smartphone operating system. This prediction comes despite the fact that Nokia, by far the largest user of Symbian, has already started seeing its share of smartphones drop rapidly, and that the company is earnestly working to invest in alternatives to Symbian, including its Maemo Linux platform.

On the the other end of the scale, Gartner predicted massive 400% growth for Android and 70-80% market share growth for Windows Mobile, while assuming that the iPhone wouldn’t grow its market share at all and that RIM would lose half of its share by 2012.

Most other pundits have predicted a similar shift from integrated platforms (Apple’s Mac model) to licensed platforms (the Microsoft Windows model), nearly always citing the shift from the fledgling computer market dominated by Apple and similar integrated companies in the 70s to the DOS and Windows PC monoculture that began to flourish in the 80s and 90s.

What the last three years’ smartphone numbers actually show is a shrinking on the top and the bottom of licensed platforms, with growth coming from integrated platforms in the middle.

The Symbian monoculture is rapidly shrinking, shown in the blue segments. Apple and RIM, depicted in yellow and green in the pie charts, are both expanding dramatically. Meanwhile, the “other” manufacturers and licensed platforms outside of the top three are all shrinking away as well.

Canalys market share Q3 2009

A short list of winners

This type of consolidation in the smartphone industry is the opposite of what everyone has been predicting, but is inline with the historical timeline of other consumer product categories. Examples include music players (a market first dominated by Sony’s Walkman and then by Apple’s iPod, where efforts to introduce PlaysForSure as a licensed platform simply failed) and video games (long dominated by Nintendo and usually only one or two other significant rivals at a time.)

Many attempts to introduce a new integrated platform into a mature market have fallen flat, both in PCs outside of the Macintosh (something discovered by Amiga, Atari, NeXT, BeOS, and others) and in MP3 players (like the Zune) and even smartphones (there does not seem to be much global market potential for the Palm Pre).

Similarly, attempts to duplicate the business model of Windows PCs haven’t worked out well in many places, even for Microsoft. Symbian, which has long been the “Windows of smartphones” outside of the US simply because there weren’t many viable global competitors, is now abdicating the throne. But of all the alternative licensed platforms hoping to take its place, from the commercial Windows Mobile to free options including Google’s Android and various other platforms built on top of Linux, none are making much progress. Outside of the top three platforms (Symbian, RIM, Apple), “everything else” has shrunk from 20% of the market a year ago to just 15% now.

Rather than eating into RIM and Apple’s integrated platform sales, Android appears largely to have cannibalized the use of other free Linux minority platforms and taken the lunch away from Microsoft’s Windows Mobile.

The largest backers of Android are HTC (which actually lost market share as its former sales growth plateaued over the last year) and Motorola, which is in such bad shape that it has fallen from Canalys’s top five and joined the “other” pool without so much as even creating a ripple.

Again, from a manufacturer perspective, outside of the top three makers (Nokia, RIM, Apple), “everything else” has fallen from 28% to 21% in just a year. This makes it essential for rival phone makers to distract from the smartphone market and talk about the vast numbers of low margin simple phones being sold. However, as that larger market continues to shrink, this will become increasingly difficult to do.

21 comments

1 nat { 11.03.09 at 3:49 pm }

Take that, Gartner! Great analysis, Dan.

On a side note, the steady flow of new articles lately has been refreshing. I spent the better part of this past weekend reading through a window crammed with 15-20 tabs of your writings that had accumulated over the last week or two.

That’s a problem I like to have.

2 bartfat { 11.03.09 at 6:00 pm }

@nat
haha. if only it were so simple to accuse Gartner of being beholden to corporate payoffs (which in this case it is), but Dan does seem to have a tendency to point out topics that go completely against what the “industry” wants to believe, simply because that means there’s little chance of them surviving. But he’s absolutely right that the cell phone market is starting to look like the iPod market. Well, this is capitalism at work.. sifting out the manufacturers that want to pretend that they’re adding features (but really making crappy products and selling them at a higher margin than otherwise) and those like Apple and RIM that actually try to design an interface that works with their product well.

3 HCE { 11.03.09 at 7:40 pm }

Given how fast the smartphone landscape is changing I think it is a lot better to compare this report with last quarter’s report rather than the year-ago quarter. If we compare the past couple of quarters, we get a somewhat different picture.

1. RIM and Microsoft are essentially flat. Does not look too good for RIM. It seems as if their growth in market share is leveling off. Remains to be seen if the Storm 2 will help them any. As regards Microsoft, this quarter predates the launch of Windows Mobile 6.5 so we should probably see a bit of a bump for them next quarter – not much of a bump though, since reviews of WinMo 6.5 have been terrible.

2. Apple’s 18 percent market share is misleading. They launched the iPhone 3GS this quarter – so a big increase in share is to be expected. Here’s where the Q3 2008 comparison is useful – their market share in that quarter was just around 17 percent (pretty close to what it is now) but then it dropped to 13 by Q2 2009. Given Apple’s release schedule, Q3 is always going to be a disproportionately big quarter for them.

3. Regarding Android … can’t really say much. They did have around 25 percent growth but it isn’t really that impressive given their small market share. I’d say the jury is still out on them. I think for them, the first half of 2010 is going to be key. If they can get ahead of Microsoft by then, I think they’ll be a player.

4. Nokia may be in a little trouble. They did have a big launch in June – the N97. They also launched their “music phones” – the X3 and the X6 during the quarter and their market share went down. The Symbian platform as a whole seems to be in decline. Other then the above-mentioned underwhelming phones, I did not notice any significant Symbian devices launched.

Overall, nice showing by Apple but I wouldn’t read too much into it. What would really be interesting is the whole-year market share figures.

– HCE

4 cy_starkman { 11.03.09 at 9:50 pm }

To add the story, if Daniel doesn’t mind.

Here is an article from today that tells some of the story in Australia

http://www.itwire.com/content/view/29044/53/

iPhone is really punching above its weight.

@HCE, I think the 5 year data will be most interesting. The game is still playing out. We can expect plenty more upheaval yet to come and I don’t think its clear who will win or if anyone has to.

If we use Dan’s console metaphor, well in the current generation all 3 players are viable platforms, there is no winner regardless if one or the other ends up with a few more unit sales and given the recent sales drop for Nintendo (and their existing large lead) it is fair to assume that as the generation continues on it will end up all quite balanced. Only thing that will disrupt that is Nintendo releasing a new console in 2010 which would be out of character for the industry where product cycles are longer, it’s also quite possible since they have raked in profit for every unit sold since day one. Anyway I am getting off topic sort of.

Apple is a bit like Nintendo in this respect, a game changer, will the 2010 iPhone be another “point upgrade”? I think not. from 2G – 3GS it reads more like Apple running hard to bring it all together in terms of platform. With 3GS I suppose that internally Apple sees it as the first fully fledged iPhone. This leads me to suspect that 2010 will bring an actual new iPhone as opposed to simply adding in the missing bits.

As with Nintendo, such a move by Apple would radically alter the landscape. Others could do it too, but its been 3 years and they haven’t; WebOS isn’t exactly storming at this point and Android hasn’t yet but maybe the new crop will.

5 gus2000 { 11.03.09 at 10:53 pm }

“The iPhone will not substantially alter the fundamental structure and challenges of the mobile industry.” – Charles Golvin, an analyst at Forrester Research Inc., 2007

Standing in line today I overheard a man trying to explain the nuances of Android and opensource to his teenage daughter. “Well it failed because you had a software bug and needed to install this other software before making a call” etc. He went on to suggest that it would never get a virus “because it’s not Microsoft” but she should install the antivirus app anyway. But hey “unlike Apple, it’s open and free!”

She seemed most proud of her app that killed all the background apps “to save the battery”. What’s point of multitasking, then? Isn’t that what the removable battery is for?

I refrained from attempting to correct any of their misconceptions, lest I cement myself into the “rabid fanboy” stereotype by accosting strangers in a restaurant. Maybe I should just carry a stack of RDM business cards?

6 The Mad Hatter { 11.04.09 at 7:59 am }

I agree with Dan, and I disagree with Dan. Here’s where I agree with him:

Yes, Apple and Rim are strong, and will remain strong. They deliver a valuable solutions to their customers.
Symbian is going to continue to loose market share, since it’s main user has abandoned it.
WinMobile is going to loose market share. Why pay when you can get Symbian and Android for free?

OK, now for where I disagree.

Palm and WebOS are going to grow. Palm is the first smartphone maker to pay attention to what Apple and Rim have been doing. Once they understood it, they dumped Windows Mobile, designed the Pre, which delivers an integrated solution, and provides value to their customers. There are some problems with the Pre (the biggest of which is the boot time), but using it is a satisfying experience, like using a Blackberry or IPhone. It runs on Linux, and it makes all of the Windows Mobile devices look like junk. It also makes all the Android and Symbian devices I’ve seen look like junk. It’s quite possible the baby Pre (the Pixi), which I haven’t seen yet, could take the lower end of the smartphone market that Palm and Rim mostly ignore. I can’t see Palm’s market share failing to grow. The Pre is just too good.

As to Android, well it’s market share can only grow at this point. But that’s only because it is going to eat into WinMobile’s market share (the revelations about Pink were just what the smartphone OEMS needed to make them confident in Microsoft). How well it’s market share grows is out of Google’s hands, it all comes down to the OEMS. And the OEMS still don’t seem even now to understand what the Blackberry and IPhone platforms have done to them. If one of them manages to figure this out, it will still take them 2-3 years to build an equivalent platform, but they could be competitive.

End result, everyone looses market share except Palm, Rim, and Apple. By Q3 2010, I expect Apple to be about 30%, Rim to be about 30%, Palm to be about 15%, Nokia to be about 22%, and the rest of the OEMS about 3%.

Oh, and WinMobile as an OS to be about 0.5%.

7 ChuckO { 11.04.09 at 10:06 am }

The Mad Hatter,
I don’t know Palm looks catatonic, comatose, DOA you pick the adjective. Is the teen girl market really that big that it warrants it’s own phone (the Pixi)? I’m not being sarcastic maybe it is. Is there a name they could have come up with so that young guys might want one also? The Pre sure seems to have stalled out. Even those weird commercials are boring at this point.

8 Nathan { 11.04.09 at 11:11 am }

Although RIM’s platform is strong, I think their numbers are inflated. Weren’t they offering a ‘buy a smartphone get one free’ campaign for the better part of the first half of 2009? How many of these phones are just sitting in drawers waiting as replacements? However, if this data is coming from subscription services then the point is moot. Because of the in-store activation, I think it is safe to say that nearly every purchased iPhone is in service. It would be a stretch to say this about RIM, Nokia, and HTC phones.

9 David Dennis { 11.04.09 at 11:25 am }

Isn’t it interesting that the analysts we’re talking about are expecting the market shares of platforms that have attracted fanatical user loyalty (iPhone, RIM, even Palm) to decrease, while platforms that have not done (Android, Windows Mobile) will increase? That seems to fly in the face of simple common sense.

Why on earth do Symbian smartphones still have such a high market share? My impression is that they haven’t even been slightly competitive for a very long time. I guess they are cheaper in countries where phones aren’t bought as part of service contracts?

I think Dan may underestimate Palm because his last phone before his iPhone was a Treo, which was just horrible. The Pre and WebOS really are pretty nice, except for the awful physical keyboard. The card multitasking is just plain fabulous.

D

10 ChuckO { 11.04.09 at 12:10 pm }

Why do you get a Blackberry? Because that’s what they hand out at work. Why do you get an iPhone? because it made the smartphone market an actual thing by being the best. Why do you get a Palm? Because your on whatever network it is that sells that damn thing and that was as close as you could get to an iPhone.

That’s also why Dan underestimates Palm.

11 funkygrooves { 11.04.09 at 12:15 pm }

This article was written by someone named Prince, not Dan. Did no one read the byline? If you’re going to argue what the author is saying, at least get his name right.

12 ChuckO { 11.04.09 at 12:19 pm }

That’s Dan’s non de plume when he’s writing for AppleInsider.

13 HD Boy { 11.05.09 at 12:49 am }

Daniel:

Are the cell phone market share numbers based on units sold or new subscriptions with carriers? I believe RIMM is propping up declining numbers with BOGO sales (Buy One, Get One), a promotion the company has been running with Verizon for several consecutive quarters now (the start of which coincided with Apple’s explosion of iPhone sales in 2008).

I’ve also read that many Verizon subscribers get these free, second BlackBerry phones, resell them on E-Bay and then cancel their new service. Reportedly, this is the reason why Verizon plans to dramatically increase its cancellation penalty fee this month.

14 Berend Schotanus { 11.05.09 at 3:23 am }

“Nearly all market forecasters have insisted that integrated hardware and software platforms [...] can only possibly be temporary successes”

I think there is an underlying dilemma that is worth mentioning:
- On one side a 100% hardware monopoly has never happened and isn’t likely to happen. At some point the world decides this manufacturer is becoming too powerful and starts inducing counter forces.
- On the other side, when third party content like Apps is involved, both consumers and these third parties want to be able to use this content throughout different hardware. In the 1980′s the big frustration was that Apple II software didn’t work on IBM-PC. In the 2010′s – similarly – the big frustration is that iPhone Apps cannot be used on Blackberry.

In music and video this dilemma has been solved by setting industry standards, just remember the VHS – Betamax struggle over the video casette standard. But computer software is so complicated things appeared to be a little bit tougher. Instead of heading towards an industry standard for desktop PC’s in the 1990′s the surprise outcome has been the rise of a proprietary third party that acted as an intermediate between hardware and software: Microsoft. So the pundit prediction of a similar outcome in smartphones is at least understandable. But let’s face it, the “Microsoft” solution hasn’t proved sustainable either.

At the introduction of the iPhone Steve Jobs proposed the use of webapps as industry standard for third party developers and, even though he was boohed away by his audience, this would have been (maybe still is) an elegant solution for the dilemma. It was clearly orchestrated with Google and part of a broader movement promoting standards like HTML5. From this perspective iPhone can be seen as the first specimen of an “Android” phone;-) We will never know in how far Apple by that time already had secret plans for a proprietary App-Store but the huge success of the App-Store must have come as a surprise to anybody including Apple itself.

Due to the App-Store success the dilemma remains unsolved, which is not only a benefit but also a risk for Apple. A risk because the App-Store causes pain for consumers owning a different branded phone who cannot reach the App-Store content and for developers who cannot reach all of their audience. To protect the iPhone platform Apple faces the huge task to make a very precise distinction as to what aspects of its platform should remain proprietary and what aspects should be disclosed for industry standards. My expectation is that, for this purpose, the Android ideology will remain very much alive even when the actual sales figures are less impressive.

15 ChuckO { 11.05.09 at 8:29 am }

Didn’t Apple say Businesses would be able to run “custom” versions of iTunes so they could distribute apps developed by the business to employees with iPhones? I seem to recall hearing that when Apple rolled out the SDK and some enterprise specific functionality.

I gotta think that seeing Microsoft as a standard that is available from competing suppliers has to look a lot less attractive to smart IT managers after the Vista fiasco and now the ridiculous XP to Windows 7 upgrade path. I can’t imagine anybody with thousands of computers see’s any way to go other than waiting until computers get replaced to move to Windows 7. This situation should be an enormous wake up call for businesses relying on Microsoft.

16 The Mad Hatter { 11.05.09 at 5:25 pm }

ChuckO,

And that’s why the Mono crowd think that their third class development platform will take off on the IPhone. They are hoping to take over corporate development that occurred on Windows Mobile, as Windows Mobile dies.

Novell’s charges for the Mono IPhone platform are ridiculous. Only a corporation would pay those charges, for a development platform which could be used internally. No “profit” driven developer would ever spend that much money.

17 ChuckO { 11.06.09 at 9:59 am }

Wow that’s the first I’ve heard of “Mono”. I had to go Google it. I was thinking of something different. I think when they launched the iPhone SDK Apple talked about businesses being able to run iTunes in some mode (sort of like an intranet version) that would allow them to distribute apps built by the business for employees.

18 The Mad Hatter { 11.06.09 at 11:58 am }

ChuckO,

Yes, I had heard the same, but only the once, and no one seems to know when or if that will actually be delivered. In the meantime, who is going to pay $1000.00 per year for a development environment, when Apple provides a free one?

19 KenC { 11.07.09 at 10:17 am }

<> – HCE

Good comments, but I had to remark about the one above. To be completely fair, you have to remember that in Q3 2008, they not only launched the iPhone 3G, but also refilled the channel inventory, by 2M iPhones. That gave shipments a one-time bump. They did not have to refill channel inventory in 2009, so the comparison is not really apples to apples. So, if you look at units sold, there’s not this big drop afterward, and the growth between 2007 and 2009 looks better.

20 KenC { 11.07.09 at 10:19 am }

Weird, the quoted text disappeared. Anyhow, in Q3 2008, Apple shipped 6.9M iPhones, while they sold only 4.9M. In Q3 2009, Apple shipped 7.4M iPhones, while they sold around 6.9M, as about 400k to 500k went to increasing channel inventory as more points of sale were added. So, the increase in sales is significant about 40%, while the shipment increase of about 7% hides that fact.

21 Strand Consult: Denmark’s illegitimate iPhone-angry pundit-nutter — RoughlyDrafted Magazine { 12.16.09 at 1:27 am }

[...] Canalys Q3 2009: iPhone, RIM taking over smartphone market [...]

You must log in to post a comment.