GARTNER: MOBILE PHONE UNIT SALES UP 5.6% IN Q3 2011, SALES UP 42%, ANDROID OS DOMINATES IOS BY A MARGIN OF MORE THAN 3-TO-1

Worldwide sales of mobile devices totaled 440.5 million units in the third quarter of 2011, up 5.6 percent from the same period last year, according to Gartner, Inc. Non-smartphone devices performed well, driven by demand in emerging markets for low-cost devices from white-box manufacturers, and for dual-subscriber identity module (SIM) devices.

Sales into the channel reached 460 million units. Gartner analysts said this increase was because of inventory build-up in the channel partly because of the shipping of new devices late in the quarter but mostly to prepare the channel for the holiday season. Gartner expects most of the build-up to be sold by the first quarter of 2012.

Annette Zimmermann, principal analyst at Gartner based in Munich said.

"Our forecast for the end of the year remains broadly in line at a worldwide level as regions such as Asia/Pacific and the Middle East and Africa make up for weaker performance in the Western European market." 

Here are a few of the Q3 smartphone sales highlights:

• Smartphone sales to end users reached 115 million units in the third quarter of 2011, up 42 percent from the third quarter of 2010.  
• Sequentially, smartphone sales slowed to 7 percent growth from the second quarter of 2011 to the third quarter of 2011. 
• Smartphone sales accounted for 26 percent of all mobile phone sales, growing only marginally from 25 percent in the previous quarter.

Roberta Cozza, principal research analyst at Gartner said. 

"Strong smartphone growth in China and Russia helped increase overall volumes in the quarter, but demand for smartphones stalled in advanced markets such as Western Europe and the U.S. as many users waited for new flagship devices featuring new versions of the key operating systems. Slowdowns also occurred in Latin America and the Middle East and Africa."

Ms Cozza said.

"Some consumers held off upgrading in the third quarter because they were waiting for promotions on other new high-end models that were launched in the run-up to the fourth quarter holiday season.  Other consumers were waiting for a rumored new iPhone and associated price cuts on older iPhone models; this affected U.S. sales particularly."

Despite a drop in market share, Nokia continued to be the worldwide leader in mobile device sales as it accounted for 23.9 percent of global sales (see Table 1). The second quarter of 2011 was the low point for Nokia, and the third quarter brought signs of improvement.  Dual-SIM phones in particular, and feature phones generally, maintained Nokia's momentum in emerging markets. Heavy marketing from both Nokia and Microsoft to push the new Lumia devices should bring more improvement in the fourth quarter of 2011. However, a true turnaround won't take place until the second half of 2012.

Table 1
Worldwide Mobile Device Sales to End Users by Vendor in 3Q11 (Thousands of Units)

Vendor	3Q11  Units	3Q11 Market Share (%)	3Q10  Units	3Q10 Market Share (%)
Nokia	105,353.5	23.9	117,461.0	28.2
Samsung	78,612.2	17.8	71,671.8	17.2
LG Electronics	21,014.6	4.8	27,478.7	6.6
Apple	17,295.3	3.9	13,484.4	3.2
ZTE	14,107.8	3.2	7,817.2	1.9
Research In Motion	12,701.1	2.9	12,508.3	3.0
HTC	12,099.9	2.7	6,494.3	1.6
Motorola	11,182.7	2.5	8,961.4	2.1
Huawei Device	10,668.2	2.4	5,478.1	1.3
Sony Ericsson	8,475.9	1.9	10,346.5	2.5
Others	148,990.9	33.8	135,384.1	32.5
Total	440,502.2	100	417,085.7	100

Source: Gartner (November 2011)

Samsung 

Samsung became the No. 1 smartphone manufacturer worldwide as sales to end users tripled year over year to reach 24 million; sell in was high as the channel built inventory. Samsung was the No. 1 smartphone manufacturer for the first time, ahead of Nokia in Western Europe and Asia. Gartner attributes this to the strong performance of Samsung's Galaxy smartphones, which now cover a broad range of prices, and a weaker competitive market. Analysts expect more competition in the fourth quarter of 2011, not least because sales of the iPhone 4S, 4 and 3GS will capture share from Android manufacturers.

Apple

Apple shipped 17 million iPhones, an annual increase of 21 percent, but down nearly 3 million units from the second quarter of 2011 because of Apple's iPhone 4S announcement in October.  Gartner believes Apple will bounce back in the fourth quarter because of its strongest ever preorders for the iPhone 4S in the first weekend after its announcement. Markets such as Brazil, Mexico, Russia and China are becoming more important to Apple, representing 16 percent of overall sales and showing that the iPhone has a place in emerging markets, especially now that the 3GS and 4 have received price cuts.

Android Phones

The Android OS accounted for 52.5 percent of smartphone sales to end users in the third quarter of 2011 (see Table 2), more than doubling its market share from the third quarter of 2010.

Ms Cozza said.

"Android benefited from more mass-market offerings, a weaker competitive environment and the lack of exciting new products on alternative operating systems such as Windows Phone 7 and RIM. Apple's iOS market share suffered from delayed purchases as consumers waited for the new iPhone. Continued pressure is impacting RIM's performance, and its smartphone share reached its lowest point so far in the U.S. market, where it dropped to 10 percent."

Table 2
Worldwide Smartphone Sales to End Users by Operating System in 3Q11 (Thousands of Units)

Operating System	3Q11  Units	3Q11 Market Share (%)	3Q10  Units	3Q10 Market Share (%)
Android	60,490.4	52.5	20,544.0	25.3
Symbian	19,500.1	16.9	29,480.1	36.3
iOS	17,295.3	15.0	13,484.4	16.6
Research In Motion	12,701.1	11.0	12,508.3	15.4
Bada	2,478.5	2.2	920.6	1.1
Microsoft	1,701.9	1.5	2,203.9	2.7
Others	1,018.1	0.9	1,991.3	2.5
Total	115,185.4	100	81,132.6	100

Source: Gartner (November 2011)

More information is available in the Gartner report "Market Share: Mobile Communication Devices by Region and Country, 3Q11," which is available on Gartner's website at http://www.gartner.com/resId=1847315.

COMMENTARY:   Wow, Android OS phones are kicking ass.  Bye, bye iPhone.   RIM BlackBerry is having a shitty quarter dropping from a market share of 15.4% in Q3 2010 to 11.0% in Q3 2011.

If there was ever any doubt that the Android OS has won the smartphone war, all you have to do is look at the numbers.  Even if Apple had launched the Apple 4S in Q3, I doubt it would've made tht much of a difference.

Apple thought that by controlling everything:  hardware, operating system, app ecosystem, digital music, and sales distribution channels that you can win.  Apple still has a slight lead in iPhone apps, but Android is closing that gap---FAST.  You can bet that the next round of smartphones will come equipped with a SIRI-knockoff, hopefully even better.   It was only a matter of time before Android caught and then passed the iPhone.

So what can Apple do about it?  

China represents a huge new market for the iPhone and the rest of the Apple mobile device lineup, so I do expect iPhone unit sales to jump, but so will Androids.  

Apple can remain a closed system of devices and do nothing, counting on its reputation for quality and innovation, brand loyalty and legions of Apple evangelists, in which case they will continue to grow methodically, but eventually dwindling into insignificance, by sharing the highend segment of the smartphone market, but abandoning the midrange and lowend of the market to other smartphone brands, of which many of them will be Android.  

Solution?

At some point, Apple may need to open up its closed ecosystem to Android developers.  I know that this sounds almost impossible to even imagine, but Steve Jobs is no longer running the company, Tim Cook is, and he may see Apple's share of the smartphone market dwindle or even remain static at some point in the not too distant future.  Besides, I have one hell of an imagination, and if somebody tells me "Go that way, because it's shorter," I sometimes ignore that advice and take the longer way because I love the view.   

FACT;  Smartphones are quickly becoming a commodity.  Apple was even forced to conduct a Black Friday Sale of all things, so that they could move their product.  With the exception of Apple, smartphones are not really a huge moneymaker for the majority of mobile phone manufacturers. It has become a price-driven market.  There is not that much product differentiation.  Most of the smartphone producers have matched or emulated the iPhone.  There really isn't much of a difference anymore, although the iPhone UI is friendlier, apps are no longer an issue, and you can view Adobe Flash websites, something the iPhone does not.   So, I do expect that Apple will open up the iPhone to outside developers and running either "on top" of iOS or with the innerds capable of running Android OS.   Wild prediction, but I have been right more than wrong.

Courtesy of a press release dated November 15, 2011 appearing in Gartner Research