The Mobile Industry in Numbers

Presenting our latest infographic – The Mobile Industry in Numbers – the H1 2012 edition of the 100 Million Club, the watchlist of the top mobile platforms and handset manufacturers. This infographic will give you some insights into the mobile market and help put things into perspective.

Here are some of the insights from the infographic:
– Smartphone sales penetration continues to accelerate, growing from nearly 30% in Q3 2011 to nearly 40% in Q2 2012
– Nearly 2 out of every 3 smartphones shipped in H1 2012 were Android devices
– Despite low device sales, the Windows platform already has over 100K available apps in Windows Marketplace
– Although Symbian is obsolete, it still has a sizable installed base – larger than bada and Windows Phone combined
– In the handset market, Apple and Samsung account for 63% of revenues and over 98% of the profits, depriving other vendors of oxygen and therefore the ability to invest in handset differentiation and marketing
– In the smartphone market, Apple and Samsung claim more than half of total shipments. Nokia is shipping more Symbian handsets than WP handsets and their smartphone share has fallen to 7%, down from 16% in H2 2011

100 Million Club – Top smartphone facts and figures in 2011

The mobile market is evolving, as increasing smartphone penetration is quickly shifting the balance of power between the major players. Marketing Manager, Matos, examines the latest smartphone facts and figures and announces the winners and losers of the platform and handset race for 2011. Also presenting our latest 100 Million Club report – in infographic format!

Quick facts on the rise of Android

100 Million Club - Facts and figures of the smartphone market in 2011Android is the undisputed king of smartphone platforms, at least in terms of shipments. While this was true even at the end of 2010, Android grew even further in 2011, grabbing a highly impressive 49% share in the smartphone market – this can easily be translated as follows: 1 in 2 smartphones sold in 2011 was an Android device.

Moreover, Android’s share keeps growing, rising from 42% share in the first half of 2011 to a crushing 54% share in H2 2011. This level of pervasiveness has not been seen since Symbian’s heyday, but let’s not forget that Symbian didn’t have to face such stifling competition back then.

In terms of ecosystems, while Android’s 350K apps are still lagging behind Apple’s 540+K available apps, there’s been an upset in the volume of downloads, bringing Android to the pole position. Due to a much larger installed base, Android’s downloads are growing exponentially and the Market will catch up to Apple’s number of cumulative downloads within a couple of years. Granted, a lot of these apps are Viber, Shazam and Angry Birds, but in any case Google’s business model is all about ads and an addressable audience, not device sales and downloads.

Furthermore, the Android brand name is being bolstered by large marketing budgets that provide numerous ads, news items and mentions across all printed and digital media. Android has now become a household name, mainly thanks to the support and promotion of telcos and handset OEMs, who have managed to position the platform as the new and exciting operating system for users.

Rivals to the smartphone throne

Android’s number one rival right now, iOS, also enjoyed a very good year. In 2011, Apple climbed to the second position as a smartphone vendor behind Samsung with 19% share, although it’s a very close call between the two companies. In the fourth quarter, Apple exceeded all expectations and sold 37 million iPhones, claiming nearly 24% share in that quarter. It’s quite telling that in Q4, Apple sold 80% more handsets than its previous record of 20 million, in the second quarter of 2011.

Although they’re still behind Samsung as a smartphone vendor, Apple is the clear winner in terms of both revenues and profits. Aided by the high sales of all iOS devices, including iPods and iPads, Apple raked in a 32 billion USD profit during 2011 – a figure comparable to the GDP of a small country. The question remains whether Apple will be able to repeat such a feat and continue this trend, taking market share away from platforms leaking market share, like Symbian and BlackBerry.

The third mobile platform in terms of shipments for 2011 was Symbian. There’s not much to discuss on Symbian – its expiration date is coming soon and Nokia has to convert as many Symbian sales as possible to Windows Phone sales, as quickly as possible. However, Nokia had announced four new Symbian models in 2012, but they’re only releasing one.

BlackBerry also finds itself in a quagmire, with declining market share, a decrease in share value from around $60 in Jan 2011 to as low as $16 in early 2012 underwhelming revenues and an underused ecosystem. Although RIM’s co-CEOs have stepped down and the company is under new leadership, this is a difficult boat to turn around and RIM is going to have to follow the simplest rule of all in mobile: innovate or die.

Bada snatched the 5th position of the smartphone platform market away from Windows Phone, outselling Microsoft’s platform by nearly two to one. Samsung’s platform for low-end smartphone continues to turn heads and the company seems to have even bigger plans for bada. However, both bada and Tizen (Samsung’s new open source project) are unable to compete in terms of developer mindshare. But that’s fine, as the primary use for bada or Tizen to Samsung is as a negotiating leverage against Google’s Android.

Last, but not least, we have Windows Phone as the sixth smartphone platform, with approximately 2% market share. Despite the fact that Windows Phone has been out for over a year now, Microsoft’s new mobile OS has so far met with lukewarm results – a fact commented upon by Microsoft’s Stephen Ballmer himself. Nokia’s new Lumia line has the potential to install Windows Phone in the upper echelons of the platform market, tapping the vibrant developer community that has sprung up around the platform, but there are still many risks and difficulties ahead. The fact of the matter is that WP’s chief rivals, Android and iOS, have the high ground in this battle of ecosystems and it’s never easy fighting uphill.

The Android court

The top 5 smartphone vendors in 2011, accounting for 42% of the total shipments [UPDATE: accounting for 75% of total smartphone shipments,] were Samsung, Apple, Nokia, RIM and HTC – out of these, two are (mostly) Android vendors.

100MC - Top Smartphone Vendors in 2011

Although many Android vendors enjoyed a good year in 2011, it was Samsung that took the lion’s share. Samsung doubled their smartphone shipments in just six months, going from 32 million in H1 2011 to over 60 million in H2. Nearly 80% of those were Android shipments leaving Samsung as the single most important Android vendor in 2011. Samsung seems to have sold approximately one in three Android devices in 2011.

HTC did reach many milestones during 2011, such as becoming the no1 smartphone vendor in the US during Q3, but its shipments declined in Q4 and are expected to decline even further in the first quarter of 2012.

Other vendors who mainly ship Android smartphones, like Sony Ericsson, LG, Huawei and ZTE are indeed reporting an increased number of handset shipments, but they still have a lot of catching up to do. The big question for 2012 is how Google will play the Motorola card, with the deal having been green-lighted by authorities on both sides of the Atlantic. While some analysts have put forward the theory that Motorola will become a benchmark for Android handsets and will be used to keep in check other Android vendors, it’s quite likely that Google will choose a different path. Motorola’s acquisition is more closely linked to its patents, with the company’s 17 thousand patents more likely to be used as an insurance policy against Apple’s relentless legal onslaught.

 

Android’s expansion continues

Smartphone penetration continues to grow at an impressive pace; the smartphone market grew by 43% in 2011, from nearly 300 million shipments in 2010 to over 480 million in 2011. Penetration is expected to continue to increase and reach well into the 40% range during 2012.

It’s highly likely that, at least for the time being, Android is going to continue expanding and maintaining its current high market share. What’s more important to Google, though, is getting Android on as many screens as possible. Android is already making an impact on the tablet market, rising from 29% market share at the end of 2010 to 39% at the end of 2011. While Android has a lot of ground to cover in this particular market, it’s slowly stealing market share away from the dominant iPad, while keeping other competing platforms, like QNX and Windows, at bay. Another big bet for Google is TV; Google goal is to get as many users as possible hooked on Android, across as many screens as possible.

Feedback welcome, as always.
– Matos (@visionmobile)

The elusive long-tail of mobile shipments

[The era of smartphones is upon us, as penetration increases from 11% in 2008 to over 25% in 2011. But what of the remaining three quarters of the market? Marketing Manager Matos Kapetanakis talks smartphone numbers and takes a look at the elusive long-tail of feature phone shipments]

100 Million Club - H1 2011 - Handset OEMs vs. Platforms

Dawn of the smartphone era

Smartphone penetration continues to accelerate, growing from a paltry 11% in 2008 to 20% in 2010 and climbing to 27% in H1 2011. Feature phones continue to make up the bulk of mobile shipments globally, but the revenue potential of each segment is a different matter altogether. As an example, the average selling price for Nokia’s feature phones was 39 Euros versus 144.5 Euros for their converged devices.

Another parameter, namely profitability is much in favour of smartphone vendors. HTC has comparable revenues to Nokia’s successful feature phone segment, with two times the profits and profit margin, despite having six times fewer shipments. The gap is even larger in the case of Apple, whose profits are nearly 20 times those of Nokia’s feature phone segment, despite having less than a third of Nokia’s shipments.

Smartphone platforms: Google vs. Apple

First, let’s take a look at the two leading players, Android and iOS. The vacuum left behind by Symbian’s timely demise has been filled primarily by Android and, to a lesser extend, Apple’s iOS. In H1 2011, Android gobbled up nearly 45% of the smartphone pie, leaving approximately 20% for Apple’s iOS and 12% for RIM’s BlackBerry OS.

Apple has enjoyed a healthy increase of iPhone shipments in 2011, already reaching past the 50M full-year figure for 2010 in the first three quarters of 2011. Despite the initial disappointment of not being a brand-new iPhone, the iPhone 4S managed to get 4 million sales in just one weekend – that’s more than Windows Phone manages in an entire quarter. However, in an increasingly price sensitive smartphone market, there is a limit to how many iPhones can be sold.

Despite being the number one smartphone platform, Android is not guaranteed a smooth sailing. Apple’s lawsuit barrage on Samsung, the biggest Android vendor in terms of sales, has exposed the platform’s Achilles’ heel, namely patents. The large arena of this high-stake drama will not be set in Germany or Australia, but the large smartphone markets, like the U.S. Google’s acquisition of Motorola (don’t miss our full analysis) has indeed armed Google with fresh patent ammunition, but might alienate the big Android vendors.

Smartphone platforms: The best of the rest

But what of the other platforms? Windows Phone continues to fail to impress users, with sales being disappointing, as Ballmer himself recently admitted. Nearly eight months after the much-vaunted Microsoft-Nokia deal, Windows Phone is faced with lukewarm results, being outsold even by Samsung’s bada platform. In H1 2011, Windows Phone barely reached 4M shipments, while bada shipments climbed to nearly 8M. WP7’s growth, after it replaces the zombified Symbian as Nokia’s main smartphone platform, is still uncertain, but the longer it takes for Nokia WP devices to hit the shelves, the more market share will Nokia lose. In H1, even if Nokia were to magically replace all Symbian handsets with Windows Phone handsets, Microsoft’s platform would still be far behind Android, with just half of Android’s shipments.

Windows Phone, however, should not be summarily disregarded, as Microsoft has managed to create a substantial ecosystem around the platform, which is the main ingredient to the success of Apple and Google. Windows Marketplace reached the 30 thousand apps milestone in just 10 months, while the platform has received positive reviews by developers. The platform is widely acknowledged as having the best developer tools in terms of features, based on our Developer Economics 2011 report (www.DeveloperEconomics.com).

Even though Stephen Elop described the smartphone market as a three-horse race, there is another important player to be considered, namely RIM. During the past year, RIM has suffered a number of blows, from declining market share and repeated drops in their share price to a total service blackout that lasted four days. RIM is starting to lag behind its competitors and their leaking market share is up for grabs. Despite a vibrant developer community, problems such as fragmentation issues and an aging platform have cost RIM the creation of a healthy ecosystem. A telling sign is how BlackBerry App World is lagging behind not only Apple and Google’s app stores in terms of available apps and downloads, but also Nokia’s Ovi Store. Now, the BlackBerry blackout fiasco has cost RIM the confidence of 70M subscribers. RIM is on the verge of relinquishing their last remaining competitive advantage, namely reliability. Even though RIM is trying to turn the situation around, with the introduction of the BBX platform, plus the carrot of Android apps compatibility in the second version of Playbook, it’s the RIM brand that has taken a beating, more than the BlackBerry brand. It remains to be seen whether users will flock to the notoriously unsafe Android platform or will opt to follow the safer, iPhone route. The iPhone route seems more suitable to RIM’s enterprise segment, as the segment’s disposable income is enough to carry the weight of expensive iPhones.

Smartphone vendor arena

In H1 2011, Apple and Samsung toppled Nokia as the undisputed king of smartphones. The top-5 smartphone vendor rankings also include RIM and HTC. It’s no surprise that 3 out of the top 5 players are purely smartphone vendors; but the old guard is catching up.

VisionMobile - 100 MC - H1 2011 - Mobile market share by OEM

Although lagging behind, LG is finally on board the smartphone express, while Sony Ericsson has disowned their feature phone heritage and plan to become a smartphone-only vendor in 2012. As smartphone prices are dropping, ZTE and Huawei are also firmly in the game, extending well past their native home market.

It’s interesting to note that in a market of 208 million smartphones in H1 2011, there are very few dark horses. The top 10 players accounted for nearly all smartphone shipments in the first half of 2011, leaving just 3% of shipments in the ‘other’ category.

 

The elusive long-tail of mobile shipments

While Nokia has lost the pole position in the smartphone market, it continues to firmly hold the feature phone market in its grasp. Nokia accounted for over 27% of total feature phone shipments in H1 2011, followed by Samsung with 20% and LG with 7%.

However, the feature phone market is extremely fragmented, with the top 7 players accounting for just 64% of shipments. The remaining x% belongs to the generic ‘other’ category. But what is this dark, elusive gap in the market? The answer lies in the plethora of primarily Asian phone manufacturers out there (see a slightly out-of-date list here), taking off-the-shelf MediaTek hardware designs to create Shanzai handsets for the Chinese market or brand name handsets for India.

VisionMobile - 100 Million Club - Feature phone market share H1 2011

The long tail of feature phone manufacturers largely caters to local markets, in partnerships with local telcos. India and China are the obvious examples of low-volume feature phone manufacturers, with each country playing host to over 15 such companies. With tens of companies shipping low-end devices to local markets, it’s small wonder that the biggest bulk of feature phone shipments comes from the long-tail of handset OEMs.

The end of feature phones

While smartphone penetration continues to increase, just over 1 in 4 mobile phones are smartphones. The tipping point will come when handset OEMs manage to release low-cost smartphones into the market, in high volumes. Google is already attempting to sell cheap smartphones in the range of $100 unsubsidized, pre-tax. The rate of acceleration will increase even further if there is any truth to the rumors of cheaper iPhones, as consumers are still hesitant of the prices that Apple demands for its products.

Furthermore, most major handset OEMs are keen to lower the volume of feature phone offers in favor of smartphones, as the latter have a much higher profit margin and the market is slowly getting accustomed to the use of touch screens.

Questions or comments? Drop us a line on Twitter.

Download the full 100 Million Club watchlist.

– Matos

100 Million Club: Winners and losers in the OS Arena

[2010 was a year of upsets in the mobile industry, as the league of top 5 handset manufacturers saw the inclusion of pure smartphone vendors (Apple and RIM) for the first time. As the rate of smartphone penetration accelerates, Marketing Manager Matos Kapetanakis takes a closer look at the winners and losers of 2010 as part of the latest 100 Million Club].

VisionMobile - 100 Million Club H2 2010 - Winners and Losers in the OS Arena

Welcome to the H2 2010 edition of the 100 Million Club, our semi-annual watchlist tracking mobile software embedded on more than 100 million devices. Click here to download the full watchlist.

Key Highlights
WebKit continues to grow, fueled by the accelerated rate of smartphone penetration. Up to the end of 2010, WebKit-based browsers had been shipped in more than half a billion handsets

– While smartphone penetration has increased to more than 20% in 2010 globally, featurephones continue to dominate the industry. Indicatively, S40 shipments were almost equal to total smartphone shipments.

–  In 2010, Android raced past iPhone’s iOS and BlackBerry, almost reaching Symbian’s shipments despite Nokia’s smartphone woes. While Nokia will undoubtedly push up Microsoft’s mobile market share in the future, we’ll continue seeing Symbian in the smartphone OS top-5 for another year.

– Total handset shipments for the second half of 2010 were 780 million, a 25% increase over the first half. A handful of software products, like vRapid Mobile by Red Bend and CAPS by Scalado, managed to tap a sizable portion of this figure, having more than 500 million shipments in H2 2010 alone.

– Myriad Group is now the only company to have 3 products with more than 100 million shipments, after Nuance merged two products into one, with T9/XT9/T9Trace. With the products combined, cumulative shipments have reached a staggering 10.5B shipments.

VisionMobile - 100 Million Club - H2 2010

Winners and losers: changes in the OEM landscape
Who were the winners and losers in 2010? In terms of handset OEMs, we have two clear losers – Sony Ericsson and Motorola have been seeing declining market share for some time now, but 2010 marks the first time that these two traditionally dominant players were toppled from the top 5 leaderboard by pure-smartphone players RIM and Apple (see our latest infographic for more details). At the same time, LG just managed to stave off competition, but without achieving a growth in shipments. Samsung, on the other hand, has effortlessly held its position as the number two handset OEM, having been the most aggressive incumbent OEM in ramping up smartphone shipments.

ZTE is the one piece of the OEM puzzle that doesn’t fit. Some estimates place the Chinese company near the bottom of the barrel, while others feature ZTE in a prominent position in the top 5 OEM leaderboard.

These upsets in the OEM landscape form the foundation for the OS race in 2011 in both feature phones and smartphones.

Feature phones made up nearly 80% of all mobile shipments during 2010. While it’s true that smartphone penetration has accelerated this past year, the days where every phone will be a smartphone are still far.

The next chart clearly shows that feature phones are still the driving force for the mobile industry in terms of shipments. However, revenues and profits are an altogether different matter (see slides 8-9 in our Mobile Megatrends 2011 report).

If combined, media-favorites iOS and Android barely account for 10% of the total shipments for 2010, which are roughly half the shipments of the lowly S40 OS. Samsung’s strong sales through 2010 have helped the company maintain a sizable piece of both the handset and OS pie.

VisionMobile_OS_Market_Share_H2_2010

The OS Arena – Smartphones
But what about smartphones? Which were the dominant OEMs and OSs in 2010? As always, Nokia has the lion’s share. As a smartphone vendor Nokia claimed more than 34% of shipments for 2010, while RIM and Apple, managed to get around 16% each.

VisionMobile_Smartphone_market_share_by_OEM_2010

The above diagram also shows how Samsung has maintained its lead over immediate competitors, with their smartphone shipments equaling those of Motorola, Sony Ericsson and LG combined. Samsung’s lead in this race of the ‘old OEM generation’ is thanks to reacting very fast to ramping market demand and delivering a highly sought after product; Samsung sold more than 10 million Galaxy S smartphones in 2010 in just 7 months, a figure that exceeds the total smartphone shipments of some of Samsung’s competitors.

So, what does it all mean for our favourite smartphone OSs?

Symbian. Dead, you say? That might be the case in terms of developer interest and Nokia’s R&D expenditure, but the current smartphone leader has yet a lot of shipments left in it. Perhaps not 150M shipments, as stated by Nokia CEO Stephen Elop, but a committed handset roadmap can’t change overnight which means that Nokia will continue shipping Symbian smartphones well into 2012, well after their much-discussed WP7 devices start coming out.

While the Verizon deal has not boosted iPhone sales as much as expected, the operator has the potential to tip the balance of the smartphone scales in the US. The question remains whether the Verizon handsets will cannibalise iPhone sales from AT&T, rather than generating new ones, but that should be little cause for concern. Apple has enjoyed a steady growth in shipments over the past couple of years and that, coupled with an accelerated smartphone penetration rate, should ensure that iPhone sales continue to enjoy a healthy increase. Furthermore, there are indications that the iPhone is starting to replace BlackBerry phones as the ‘executive handset’ and could start growing in that segment as well. This is Apple’s ‘blitzkrieg’ tactics at work, advancing on a market segment not just with a platform, but a thriving ecosystem of app developers and content publishers. The realization of this might be one of the driving factors behind RIM’s sudden adoption of Java and Android apps for its admittedly hurried Playbook release.

The biggest smartphone OS surprise has of course been Android. Growing by 100% QoQ for the first three quarters of 2010, the Google operating system shows no signs of slowing down. The biggest contributors to Android’s success have been HTC and Samsung, with Sony Ericsson, Motorola and, to a lesser extent, completing the top 5 contributors. HTC has enjoyed steady growth in smartphone shipments, mainly concentrating on their Android vs. the Windows line. With 60M smartphone shipments forecasted in 2011, HTC seems poised to drive Android sales once again. Samsung will also continue to grow in terms of smartphone shipments, capitalizing on their Galaxy series success. But what of Sony Ericsson, Motorola and LG? These vendors are losing market share, with the latter two having already lost their prestigious position in the top 5 leaderboard. With more OEMs adopting Android (ZTE announced 3 new Android phones at MWC), the Android map still has a lot of surprises in store.

 

The battle of ecosystems and BOMs
The demand for smartphones continues to rise, driven by mobile operators and handset manufacturers both of which need to remain competitive and differentiate. In 2011 the share of smartphones and the OEM competitive landscape will be determined by 3 fundamental factors: ecosystems, services and price points.

Price points. Firstly, hardware BOM (bill of material, including screen, chipsets and memory) is the key factor limiting how low smartphones can go in terms of price points and therefore how quickly they will be replacing feature phone projects within OEM roadmaps. Qualcomm has confirmed fears of a price war that is going to be taking place amongst chipsets in 2011 which will should allow Samsung or LG to deliver unsubsidized $100 retail price smartphones this year.

Ecosystems. Secondly, as Stephen Elop eloquently said in his burning platform memo, “our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem”. The three horse race of iOS, Android and Windows Phone is a race of developer adoption. Any new horses (including Qt, MeeGo, BREW and SmarterPhone) will have to show sizeable ecosystem support in terms of 10,000s of applications and 10s of millions of downloads in order to join the race as worthy contenders.

Services. Thirdly, smartphone growth is driven by western markets where mobile operators are dominant. With subsidies and marketing boost for smartphones coming from operators, a key determinant of device sales will be how well OEMs can drive operator services revenues; both in terms of supporting ‘hero’ operator services across regions on day 1 of launch and in terms of offering out-of-the-box white label services with a revenue contribution going towards the operator. This third services battlefront is heating up, too, with HTC buying up service companies, Samsung growing its global services deployments (more about OEM services landscape in a next article).

How do you see the future of smartphones in 2011?

-Matos

Smart < feature phones = the unbalanced equation (100 Million Club series)

[Smartphones get all the media attention, but it’s feature phones that are still driving the mobile industry. Marketing Manager Matos Kapetanakis examines this unbalanced equation and makes sense of the numbers published in the latest 100 Million Club]

100 Million Club - Smart < feature phones: the unbalanced equation

Welcome back to the 100 Million Club. This 6th edition of our watchlist tracking successful mobile software companies debunks the smartphone myth and paints a detailed picture behind the 34 software products – from BREW to Webkit  – which have shipped in more than 100 million handsets as of the end of H1 2010. Click here to download the watchlist.

Key insights
– Despite the hype, smartphone platforms account for less than 20 percent of the 620+ million handsets shipped globally in Q1 and Q2 of 2010. More than 80 percent of total shipments are driven by feature phones, the majority of which use proprietary software platforms.

– BlackBerry is now the second smartphone platform, after Symbian, to break the 100M handset barrier. As of the end of June 2010, RIM has sold more than 100 million BlackBerry devices.

– A total of 350M handsets have shipped with a WebKit-powered mobile browser up to the end of 2Q10. The biggest contributors to shipments of the open source browser engine are the Series 40 and Symbian OSs, while the steep rise of Android will play a bigger role in WebKit going forward.

– Only a handful of mobile software products were shipped in more than 100 million devices during the first half of 2010. Among them are the T9/XT9 text input engines by Nuance, the vRapid Mobile software update engine by Red Bend and the Nucleus real-time OS by Mentor Graphics.

– Symbian alone has more shipments in H1 2010 than iOS and Android combined. Moreover, when combined, the Google and Apple mobile operating systems make up less than 20% of Series 40 shipments in Q1 and Q2 2010.

What’s new in the Club?
In this 6th edition of the 100 Million Club we ‘ve introduced a dedicated watchlist tracking mobile platform shipments.

The watchlist comprises of 10 application environment software products, OSs and RTOSs with more than 100 million installations. Our latest members in these categories are the BlackBerry OS by Research in Motion and ThreadX by Express Logic. We have also added media favourites Android, iOS and Windows Phone 7, for comparative purposes, since they are well below the 100 million mark.

The Embedded Software Shipments watchlist features 24 products that have been pre-installed in more than 100 million handsets. This latestedition of the club sees the addition of the Media EXP, an audio/video codec and frameworks suite by Aricent and MSIP, a mobile analytics software agent, by Carrier IQ.

100 Million Club - 1H10 - Mobile Platform Shipments
Click on the image to download the full pdf

The smart vs. ‘dumb’ phone equation
The impact of smartphones to the industry is way overrated. It’s a little-told secret that smartphones account for only 20% of worldwide handset shipments, a fact we tend to forget in the face of the one-sided media storm that surrounds smartphones. A key observation from the 100 Million Club is that the ‘proprietary’ Nokia’s Series 40 and Qualcomm BREW are shipped in many times more handsets than Android, iOS, BlackBerry even the older Windows Mobile and Symbian OSs. In fact, with 638 million cumulative shipments by the end of Q2 2010, BREW is the most widely deployed licensable mobile operating system. If one considers real-time OSes for application and baseband processors, then the shipments scale to the billions of phones.

OS, RTOS shipments H1 2010
Click on the image to download the full watchlist

So, is Nokia’s Series 40 the most successful OS ever? Not exactly; the handset market is very much dependent on internal OEM platforms, which power more than 45% of total handset shipments for H1 2010. Samsung and LG, ranking 2nd and 3rd in the top-five handset OEM leaderboard, are largely responsible for proprietary platform shipments. Samsung has heavily ramped up smartphone shipments starting in Q2 2010 (which should become visible in H2 results) and is investing in its home-grown Bada platform, a C++ layer on top of its proprietary SHP operating system. LG also hopes to get a larger piece of the smartphone pie, by releasing 20 new smartphone models in 2H10.

The 20% share of smartphone shipments is set to grow rapidly driven by two phenomena; firstly the growth of Internet-borne platforms, namely iOS and Android. Secondly, the carrier drive to commission and subsidise smartphone handsets as a differentiating strategy, which is driving the carrier-happy tier-1 OEMs (Motorola, Sony Ericsson, Samsung and LG) to bend over backwards and ramp-up smartphone production. This is unprecedented growth in share of smartphone sales, which was neighbouring at 10 percent back in 2007.

The shift of attention of traditional handset OEMs towards smartphones, coupled with the rise of smartphone-only vendors, seems to indicate a balance shift in the smartphone vs. feature phone balance. It might seem a foregone conclusion that that pretty soon we’ll have a majority of smartphones flooding the global market. However, that is not going to happen overnight, i.e. not in the next 3-4 years. Smartphone shipments of traditional OEMs are but a fraction of their overall shipments, while Apple, RIM, HTC and ZTE cannot yet hope to meet the demand of huge, feature phone-dependant, price-sensitive markets, like India and China.

Clash of the platform titans
In the clash between the more familiar platforms, Symbian and BlackBerry rule over newcomers Android and iPhone’s iOS, in terms of cumulative shipments. But the picture is quite different in terms of growth, where Android has been the clear winner, growing by leaps and bounds (from 100K activations a day in May 2010, to 160K a month later and 200K in August – activations are not the same as sales, but the growth is still impressive). RIM and Apple have seen a healthy increase in their handset sales, while Symbian has suffered a small (~3-4%) decrease in market share between H2 2009 and H1 2010, despite Nokia’s growth in the handset market. However, Symbian’s market share is bound to drop even more, considering the recent decision by Samsung and Sony Ericsson to drop Symbian altogether, as well as Nokia’s choice of MeeGo over Symbian^3 for their latest N-series. Symbian is fast becoming a Nokia-only OS so we should expect the end of the line for the Symbian Foundation within the next few months as well.

Where are MeeGo, Chrome OS and webOS in this picture? The short answer is that they are nowhere to be found in mobile devices in the first half of 2010. MeeGo is rumoured to be appearing in Q2 2010 in the market, with Nokia targeting to make first impressions last while facing delays in Qt integration and the departure of key personnel. Chrome OS will most likely be shipped solely in tablets and netbooks, while HP aims at delivering new webOS devices in early 2011.

Last but certainly not least, we should not ignore Microsoft’s latest bid for dominance in the mobile industry: Windows Phone 7. The newly released OS has been completely redesigned to offer iPhone-style margins with an Android-style business model, while targeting untapped pockets of Xbox and PC developers instead of making up with Windows Mobile developers who were left with a bitter aftertaste (see our Developer Economics research). Windows Phone 7 already seems to be building momentum, with 9 new models coming to the market in Q4, $500 million in marketing budgets and a tightly integrated hardware and software platform (see our earlier article on Windows Phone for a detailed strategic analysis).

Not museum material…yet
In summary, smartphones captivate our minds, but it’s still ‘dumb’ phones that we carry around with us. Someday in the foreseeable future, non-touch screen phones will take their place in a telecoms museum (right next to the old, ‘brick’ mobile phones), but that day is not as close as mainstream media have us think.

– Matos

Breaking the 500 million barrier of mobile software

[Which are the most ubiquitous mobile software products out there? Marketing Manager Matos Kapetanakis opens up our 5th edition of the 100 Million Club, the watchlist of embedded software products and talks about the really big numbers of mobile software.]

Welcome to the H2 2009 edition of the 100 Million Club, the semi-annual watchlist of mobile software products that have been embedded in more than 100 million mobile devices since their release. Despite the apparent opportunity in the one-billion-a-year handset market, very few software companies have managed to overcome the commercial and technical challenges inherent in the mobile industry.

Key highlights in this H2 2009 edition:

– “The cumulative number of shipments of all the 100 Million Club software products up to the end of 2009 is 24.6 billion – an 11% increase since the previous half”

– “The estimated 250 million cumulative shipments for Apple’s WebKit show that it is fast becoming a de facto browser platform.”

– “BlackBerry is the next smartphone platform, after Symbian, that will break through the 100 million shipments barrier.”

What’s new in H2 2009?
So, what major changes have we seen since our previous update?

First off we’re happy to welcome three new entrants to the Club: ARM, Mimer and Numonyx have joined, adding three new middleware products to our watchlist. Mimer has just broken the 100 million barrier with its SQL database engine, while ARM brings us Mali-JSR184, a 3D graphics engine for wireless devices. The Flash Data Integrator by Numonyx is already ahead of the game, having been shipped in more than 900 million devices.

We have also had to remove three software products that have long been part of the Club. For different reasons, Mobile BAE by Beatnik and Picsel’s File Viewer are no longer part of the 100 Million Club, while Nokia’s Series 60 OS has been incorporated in the Symbian OS.

(click to download)

Growth in the 100 Million Club
The H2 2009 edition of the 100 Million Club is comprised of 30 software products by 26 companies. The total number of shipments of all 30 products, up to the end of 2009, comes to 24.6 billion – an 11% increase since the previous half.

In the previous edition, the Club featured 15 software products that exceeded 500 million shipments, 6 of which had also broken through the 1 billion barrier. The H2 2009 edition features 17 products with more than 500 million sales, 7 of which have surpassed 1 billion shipments. In other words, for the first time the majority of the products featured in the 100 Million Club have over 500 million shipments.

In the second half of 2009, CAPS by Scalado and OKL4 by Open Kernel Labs managed to break through the 500 million barrier, while Myriad Group’s messaging client and Nokia’s Series 40 OS now have more than 1 billion shipments each.

Category leaders: apps, browsers, middleware and operating systems
Quickoffice wins by default in the embedded applications category, since it’s the only embedded application featured in the 100 Million Club.

Adobe is still number one in the application environments category, with Flash/Flash Lite having been embedded in more than 1.3 billion devices up to the end of 2009. The growth of Flash Lite has decelerated significantly from 43% (1H09) to 15% (2H09) as share of devices sold with the software embedded; however the pace should be picking up pace again with Flash shipments later in 2010.

Myriad Group, whose browser has almost twice as many shipments as the other category products combined, dominates the browser market.

In the middleware category things are not that clear, due to the diversity of products. In absolute numbers, the messaging client by Myriad Group has the most shipments (1.2B) and vRapid Mobile by Red Bend shows the highest of growth over the second half of 2009. UI software is also highly penetrated within mobile devices, led by graphics engines by Ikivo, Scalado and The Astonishing Tribe which are at or around the 500 million mark.

The operating system market features 6 products that have been embedded in more than 1 billion devices. It’s worth noting that mass-appeal operating systems like OSE, Nucleus and recently Series 40 have cumulative shipments numbering in the billions, while BREW has just broken past the 500 million mark. In contrast, most major smartphone platforms – Android, OSX, Windows Mobile, BlackBerry – apart from Symbian have yet to reach 100 million shipments.

Finally, the input engines category features two products, both by Nuance inherited from the past acquisitions of Tegic and Zi Corp. As is evident in the chart, T9/XT9 is by far the most prominent, having been embedded in a staggering 4.8 billion mobile devices up to the end of the second half of 2009.

100 Million Club facts and trends

Two companies account for 38% of shipments: Only two companies have multiple software products included in the 100 Million Club, each company featuring three products. The cumulative number of shipments of these two companies is 9.5 billion, representing 38% of all 100 Million Club products’ shipments up to the end of H2 2009. The software products are Myriad Group’s Browser, messaging client and Jbed and Nuance’s T9/XT9, eZiText and VSuite.

WebKit on the rise: We estimate that up to the end of 2009 WebKit, the open source browser engine, has been embedded in more than 250 million devices. WebKit owes most of its market penetration to Nokia (Symbian shipments with the Series 40 contribution picking up), while its recent adoption by RIM can only accelerate its market penetration.

Top revenue models: In this edition, we asked the 100 Million Club members to provide us with the top two revenue models for their products. The responses revealed that the most common revenue models for embedded software are per-unit royalties,followed by NRE (non-recurring engineering fees) for product integration or customisation. Despite the tight profit margins, handset OEMs and network operators are still paying for software on a per-unit basis, with the ‘paradigm shift’ to per-active user revenue models taking longer than most would have expected.

What’s in stock for the 100 Million Club
Our watchlist continues to grow, as more products make it past 100 million shipments. Blackberry should be entering the Club in the next edition (H1 2010), with OSX, Windows Mobile and the much younger Android lagging a further 6-18 months behind.

The bigger picture of mobile software is very different than the industry hype would have us think.

– Matos

100 million insights on mobile software

[Marketing Manager Matos Kapetanakis, discusses the latest update to VisionMobile’s 100 million club, and the complex world of mobile software]

100 million club logoVisionMobile is proud to present our latest update to the 100 million club, the watchlist of mobile software products which have been embedded on more than 100M handsets. This H1 2009 update is the latest in our semi-annual publication series that started in 2007, offering a watchlist of the most widely deployed software in the mobile industry.

The finalists: 30 products from 24 companies
The latest update to the 100 million club watchlist comprises of 30 software products that have been shipped on more that 100 million handsets up to the first half of 2009. These products range from text input engines and middleware all the way to Java platforms and application suites. It’s quite interesting to note that 80% of the companies that have made it into the 100 million club companies come from the US, the Nordics and Japan.

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The newcomers
One of latest additions to the club is the Mobile Office software by Quickoffice, which marks the first time that a mobile application has made it into the 100 million watchlist.

Another newcomer to our 1H09 update is WebKit, the Apple-led browser core, shipped on 170 million devices through S60, S40, iPhone and Android devices, which makes it perhaps the most widely penetrated open source software in mobile handsets.

Another up-n-coming company to note is Rococo’s Impronto TLK is a Java-to-bluetooth middleware bridge that has been shipped on more than 150M devices.

Most popular software products by category
The 100 million club spans several categories:
– Applications: the one entrant here is Mobile Office Suite from QuickOffice
Application environments, dominated by Flash Lite which has been embedded on over one billion devices (including Flash) 
– Browsers, where Myriad’s (ex Openwave) Browser is by far the most popular web browser, having shipped in a staggering 2+ billion devices.
Middleware is dominated by two products: Beatnik’s Mobile BAE audio codecs, with more than 1.2 billion shipments, followed by Myriad’s Messaging client (inherited through the Openwave and Magic4 mergers)
– The most popular
operating systems remain OSE by ENEA and Nucleus by Mentor Graphics with more than 1.5B shipments each, although S40 is not too far behind.
– Finally, the
input engines category contains two products, both developed by Nuance, with EziText being inherited from Zi Corp acquisition. Quite understandably, the T9 component is by far the most widely deployed in the 100 million club, having been shipped in more than 60% of mobile phones by the end of the first half of 2009. Moreover, T9 is one of the very few products in our 100 million club (and the wider arena of mobile software) with significant consumer brand recognition.

Market ups and downs
On the whole, the 100 million club members have seen a very small increase in software shipments, despite the worldwide decline of mobile sales.
The most notable increases in sales include Adobe’s Flash Lite (now including Flash shipments), ACCESS’ Netfront browser and Scalado’s CAPS imaging engine. Nuance’s T9 also shows a healthy increase in shipments. On the down side, SVG players in general seem to suffer a decline in shipments.

zoomin

Twenty two billion
You could be holding a phone powered by S60, using the Quick Office application for viewing text documents, navigating through the Flash Lite -based menus, surfing the net with Myriad’s Browser and texting with the aid of T9. In fact, there are phones with three (yes, three) separate instances of Flash Lite, used as engines for user interfaces, for applications and a third instance exposed to developers.

So what’s 22 Billion? This is the number you can arrive at if you sum the shipments of all 100 million club products. But more often than not, these software products will co-exist – with an average of 3+ instances in a single handset on average. Yet another testament of how complex the mobile software world is.

Drop us a line
Do you have any insights of your own to share? Send us a nice Christmas card with your thoughts or at the very least add a comment! And don’t forget to check out the full 100 million club report.

– Matos

The 100 million club: some surprising facts about mobile software

[Research Director Andreas Constantinou, discusses the latest update to VisionMobile’s 100 million club, and some surprising facts about the companies that dominate mobile software]

100 million club logoWe ‘ve just released the latest version of our 100 million club: the watchlist of software companies whose products have been embedded on more than 100 million mobile handsets.

In this H2 2008 update we ‘ve identified 26 software products from 21 companies which have shipped on more than 100 million handsets cumulatively as of the end of 2008. We ‘ve had a few important changes in the who’s who of the 100 million club; the introduction of HI Corp’s MascotCapsule 3D, a graphics acceleration software that has shipped in 490 million mobile devices as of the end of 2008, and embedded in Japanese, but also European handsets. Other noteworthy changes are due to the consolidation that is underway in the mobile industry; Nokia completed the acquisition of Symbian in November 2009. Esmertec merged with Purple Labs to form the Myriad Group (with 2 products in the 100 million club; Esmertec’s JBed and the ex-Openwave browser). Nuance acquired Zi Corp (as part of its string of 15+ acquisitions in the last 4 years), making Nuance the only company with 3 products in the 100 million club.

100-million-club-2h08-small

(click to go to the download page)

Traditionally we have looked at the cumulative shipments of mobile software products (the orange-red bars on the chart) – and the sea of challenges that keep them constrained to a small portion of the one-billion-a-year handset market. In this update we have also compared the 26 products in terms of penetration in the mobile market as part of the devices sold (the blue bars on the chart).

What are some of the most popular software products in mobile? Looking at the headlines one might suggest the Symbian operating system, or the Opera Mobile browser. In reality Opera and Symbian/S60 are in only 2% and 6% respectively of the devices sold in 2H08. There’s far more successful companies in terms of penetration of the sales base:

– ENEA’s OSE: Founded in 1968, ENEA is a Swedish software & services company which offers network management software, development tools and real time operator systems. The OSE RTOS forms the basis for both radio stacks and application stacks for many handset models from Sony Ericsson, Samsung, Nokia and others. All in all, we estimate that OSE has been embedded in 32% of all handsets shipped in 2H08.

– Mentor Graphics’ Nucleus: Founded in 1981, Mentor Graphics is a US-based  hardware and software design solutions. Its Nucleus real-time operating system has powered both radio stacks and applications in billions of mobile handsets – we estimate that Nucleus is embedded in 34% of handsets that shipped in 2H08. The secret behind Nucleus’ success is its revenue model which is based on per project or site fees, rather than per-unit royalties.

Adobe’ Flash Lite is another success story. Flash Lite has been embedded on over 950 million mobile devices as of the end 2008, hitting the 1 billion installed base in 2009. Unfortunately, a large percentage of Flash Lite installations is closed to third party developers, which Adobe is now trying to fix with the Open Screen Project. It’s interesting to note that under OSP, the Flash 10 runtime will be available for zero royalties for product implementations which meet 3 criteria: a) the Flash runtime has to be certified for compliance with Adobe’s test suite, b) the runtime is open to developers and third party content and c) the runtime is updateable over the air, so that the installed base can be continually brought up to the latest version.

There are many more notable software products with high penetration within devices sold which often shy the headlines: Myriad Group’s (ex-Openwave) browser (still at 24% of the sales base due to feature phone embeds), Beatnik’s MobileBAE audio codec (21%), BitFlash’s SVG engine (18%), NXP Software LifeVibes audio/video middleware (23% – which recently also broke into the ‘500 million club’), Red Bend’s vRapid Mobile firmware update technology (18%) and Nokia’s Series 40 operating system (19%). Last but certainly not least, Nuance’s (ex-Tegic) T9 predictive text engine is embedded within an impressive 56% of all devices sold.

We ‘ve analysed other noteworthy aspects and insights of the 100 million club in previous articles:

– Only 26 products have made the 100 million club, a tiny figure compared to the 250-300 companies that license embedded mobile software products – not to mention the circa 30,000 mobile software developers (see analysis in the earlier article mobile software is dead.. long live mobile software).

– The emergence of de facto software standards like Flash Lite and WebKit (see our analysis in the earlier article The 100 million club: the bigger picture of mobile software), compared to closed-door standards like the LiMo Foundation (see our critical analysis on Why the LiMo Foundation needs to go back to the drawing board)

– The challenges of pre-load mobile software vendors; long sales cycles, deteriorating per-unit royalties and costly product adaptation (as highlighted by Morten Grauballe’s original The inner secrets of the 100 million unit club which provided the inspiration for the launch of VisionMobile’s 100 million club)

Comments welcome as always.

– Andreas
twitter: @andreascon

The 100 million club: the bigger picture of mobile software

[Research Director Andreas Constantinou, discusses the latest update to VisionMobile’s 100 million club, and the bigger picture that emerges from our research, including de facto standards and software that’s truly mass-market]

100 million club logoWe ‘ve just released the updated version of our 100 million club: the watchlist of software companies whose products have been embedded on more than 100 million mobile handsets.

[update: the latest edition of the 100 million club is here]

In this H1 2008 update we ‘ve identified 25 software products from 23 companies which have shipped on more than 100 million handsets cumulatively as of June 2008. The watch list  provides the basis for three key observations (especially in comparison to our 2007 update):

– Firstly the 100 million club is a testament to the commercial and technological complexities inherent in the mobile industry; there are over 6 billion handsets having been shipped up to June 2008 and around 1.2 billion handsets estimated to be shipped in 2008. Yet our research shows that only 4 software products have reached the 1 billion deployment mark, 9 products have exceeded the 500 million mark and 25 products in total have shipped in more than 100 million handsets. Considering that there are 250-300 companies that license embedded software products – not to mention the circa 30,000 mobile software developers – this is clearly a tough market in which to achieve scale. Indeed, the revenues and developer mindshare are migrating from the pre-load to the post-sales phase of the handset lifecycle, as we ‘ve covered in an earlier article (mobile software is dead.. long live mobile software).

100 million club preview

(click for the download page)

– Secondly, the results of the research point to the de facto standards that are emerging with regards to software components. Adobe’s Flash Lite has been embedded on 723 million handsets as of June 2008. Adjusting for seasonal variations, Flash Lite is being deployed on over 500 million handsets per year in 2008 – phenomenal numbers and close to challenging the penetration of Java ME implementations which are generally estimated to around 80% of the global sales base. On the other hand, browser shipments are slowing down (see earlier article on Bye Bye Browser). The Openwave (now Purple Labs) browser was shipped on 180 million devices in H1 2008 and Opera Mobile shipped on just under 20M handsets in that same period. The de facto standards here are under the radar for the time being; WebKit (which should make it into the 100 million club in H2 2008 thanks to Nokia’s S60 and S40 pre-installs) and Opera Mini which saw over 95 million downloads in total as of August 2008. Nuance is also a company to watch, given that it tops our 100 million club with a clear margin to the second runner, and is expanding across multiple forms of text input technologies.

– Thirdly, the watch list points to some surprising observations on mass-market software. The industry talks too much about smartphone software – Symbian, S60, Windows Mobile and Android – yet these are overshadowed by the volume deployments of feature phone operating systems. Mentor Graphics’ Nucleus and ENEA’s OSE have been deployed on well over 1 billion handsets, in many cases as the single OS powering both the applications and the modem stack. Nokia’s S40 has been embedded on an estimated 730 million handsets, while Qualcomm’s BREW has been shipped on an estimated 469 million handsets in total. Both S40 and BREW expose a large part of the device capabilities to software developers and force into question the term ‘open OS’ which is typically associated with Symbian and Windows Mobile.

All in all, the 100 million club lists 25 products which have shipped on more that 100 million handsets as of June 2008, grouped into five product categories:
Application environments: Adobe Flash Lite, Aplix Jblend and Esmertec Jbed.
Browsers: ACCESS Netfront, Opera Mobile, Picsel File Viewer and the Purple Labs (ex Openwave) browser.
Middleware: Beatnik MobileBAE, BitFlash Mobile SVG, Ikivo SVG Player, Nuance VSuite, NXP Software’s LifeVibes MxMedia, PacketVideo CORE, Red Bend vCurrent, Scalado CAPS and TAT Kastor.
Operating systems: ENEA OSE, Mentor Graphics Nucleus, Nokia S60, Nokia S40, Open Kernel Labs OKL4, Qualcomm BREW and Symbian OS.
Input engines: Nuance T9 and Zi eZiText.

For a detailed discussion of the common traits of the companies listed in the 100 million club see our 2007 update of the watch list. Note that the 100 million club is based on an original article by Morten Grauballe.

We have excluded ARM, InnoPath and Sun from the watch list as they were unable to disclose exact shipment numbers for their products, and Teleca’s Obigo browser which has been discontinued since May 2007.

Warm congratulations to the vendors who have succeeded in crossing the 100 million handset mark!

– Andreas