As
if it was yesterday when we were cheering and looking towards a year
full of promising devices and events to cover. Yet, 12 months passed
like nothing, and 2016 is already knocking on our door! But before we
say goodbye to 2015 and move on to the bigger, better things that
hopefully await us, we're keen on taking one final look back at things,
and seeing how the smartphone status quo has changed over 12 months.
We'll examine phone manufacturers and wireless carriers' market share
and unit sales, operating system market share, and compare leading app
stores by number of downloads and revenue. This shall give us a splendid
bird's eye view over the mobile industry, a perfect occasion to start
waving 2015 goodbye and transition into the next year!
Let's
clear up something first – what is market share? Well, it is calculated
by taking the sales of a manufacturer for a given time period and
dividing that over the total industry sales for the same period.
According to the latest report published by the International Data
Corporation (IDC), Samsung has successfully reasserted its global
domination in 2015, thanks in part to attractive devices and a strive
towards more affordable price tags. Apple follows the Android kingpin in
the second spot, while Huawei, Xiaomi, and Lenovo (which accounts for
Motorola) fill in the next three positions. The “other” category of
device makers wields a combined 44.8% worldwide market share.
That
aside, the worldwide smartphone market has grown 6.8% year over year in
the third quarter of 2015, racking up approximately 355.2 million unit
shipments. This result has been influenced by an unprecedented trend of
consumers becoming increasingly aware of the alternative buying options
while shopping for smartphones. With a surge in early trade-in options
and more unlocked/off-contract offerings in mature markets, these
factors have turned the $400 to $500 base price into the preferred price
range for customers.
In this context, here's a breakdown of the current Top 5 device manufacturers' market share.
Top 5 vendors
| Vendor | 3Q14 Market Share | 3Q15 Market Share | YoY Change |
| Samsung | 23.9% | 23.8% | -0.1% |
| Apple | 11.8% | 13.5% | 1.7% |
| Huawei | 5.0% | 7.5% | 2.5% |
| Lenovo + Moto | 5.1% | 5.3% | 0.2% |
| Xiaomi | 5.2% | 5.2% | 0.00% |
| Others | 49.0% | 44.8% | -4.2% |
Samsung
After
seven straight quarters of revenue decline, Samsung finally managed to
post a revenue increase in the third quarter of 2015. Its Galaxy S6 and
S6 edge flagship smartphones marked a return to form for its stagnating
product line with their impressive design and hardware characteristics,
and success did come, even if modest. The price adjustments and timely
release of the Galaxy Note 5 and S6 Edge+ that followed, along with the
introduction of the price-conscious Galaxy A series, made a significant
contribution towards Samsung's solid 2015 performance. The company is
still the single most profitable Android device maker, with most of its
competitors barely exercising their bank accounts in comparison.
Apple
Apple
had an awesome year, too! In addition to selling millions of iPhones
and turning the Apple Watch into a billion dollar business, and this
year Apple became the one that grabs a whopping 95% of smartphone
industry profits for itself, while selling less than 20% of all
smartphones. The Samsung-Apple duopoly is stronger than it's ever been,
although both companies are yet to dominate the thriving Chinese market.
Over there, the power is spread between Huawei, Lenovo (with Motorola),
and Xiaomi. However, all three have a global presence, even if their
mobile devices aren't sold all over the globe. Let's see how their
global market share looks by Q3 2015.
Huawei
Huawei
enjoyed a crazy 81% third quarter shipment growth, acquiring a 7.5%
global market share and whisking away the first spot from Xiaomi (5.2%
global share) as China's top smartphone maker by shipments. While
smartphones are still its defining product, the ambitious Xiaomi is
spreading itself far and wide in the consumer electronics field, its
latest forays being a 60-inch TV and an electric scooter. So it seems
natural that the company may have lost focus on its smartphone business
for a moment, letting Huawei take advantage.
Xiaomi
Xiaomi
is poised for a strong comeback with its Mi 5 flagship phone that's
been in the works for a while, shaping up to be among the first devices
with the Snapdragon 820 chip. Meanwhile, Huawei is at work on a Mate 8
phablet, which might feature a 6-inch 1440p resolution display and be
powered by the Kirin 950, a chipset that's supposed to perform in the
ballpark of Samsung and Qualcomm's current top-shelf silicon. If true,
that would make for quite the breakthrough, considering Kirin chips so
far have reasonably power-efficient, but not really up to speed with 3D
graphics.
Lenovo/Motorola
As
for Lenovo, which supercedes Xiaomi with just 0.1% of market share, the
Motorola owner enjoyed a 16% year over year growth in the last quarter
and made an impressive swing at the US market by foregoing carrier plans
and selling its new smartphone models direct to customers, at
affordable prices. However, a year and over since the acquisition,
Lenovo's mobile business hasn't seen a turnaround and the results so far
hit millions of units short of the company's shipment targets.
Now,
let's have a quick look at how the so-called 'underdogs' - HTC, LG,
Sony, Microsoft, and BlackBerry — are doing by the third quarter of
2015. Mind you, these figures are quite approximate, because due to
their market share being in the low single digits, the aforementioned
companies aren't really on analysts' radars, often being swept under the
collective rug of "others".
"Underdog" vendors
| Vendor | 3Q15 Market Share |
| LG | 4.60% |
| Sony | 3.10% |
| Microsoft | 2.20% |
| HTC | 2.00% |
| BlackBerry | 0.30% |
LG
LG
had a “good times, bad times” mixed bag of a year. Although the third
quarter saw the company report a 6% global sales increase and a 12%
sales increase in North America, revenue fell a depressing 21% from last
year. The realities of the Android marketplace and the weakened demand
for high-end devices in its South Korean homeland have put LG in a tough
position.
Sony
Sony
Mobile's market presence is as confused as its latest flagship
smartphones, the Xperia Z5 and Z5 Compact, are generally great.
Unfortunately, mobile is the only Sony business to sustain operating
losses and Xperia handsets remain money sinkers for the company. Sales
have fallen 15.2% from the third quarter last year. Still, Sony isn't
giving up on smartphones anytime soon, opting to build a new phone
factory in Taiwan and to spin off its very successful image sensor
division into a separate business.
Microsoft
Despite
introducing a duo of interesting, powerfully spec'd out Lumia
smartphones that run the latest Windows OS, Microsoft's smartphone year
isn't one to remember. In July, Redmond wrote off $7.6 billion off its
acquisition of Nokia's business. By the third quarter, sales revenue had
declined 54% on a yearly basis, with just 5.8 million unit sales.
Hopefully, the Lumia 950 and 950 XL will change things around for
Microsoft and the Windows platform.
HTC
HTC
began 2015 on a sour note, introducing a flagship smartphone (the One
M9) that was too much like its predecessor. As the One M9 failed to meet
sales expectations, the company picked up in a different direction and
released the HTC One A9 in late October, giving the masses what they
seemingly want - an Android iPhone. Before that, HTC posted a 7% revenue
decline and losses of $157 million, following a series of barely
profitable quarters.
BlackBerry
And
finally, BlackBerry — the BlackSheep of the smartphone market still
hasn't regained it's one-time aura of cool, but boy, is it trying hard!
The Passport and the Priv are distinct and impressive smartphones in
their own right, but the company also seems to have another ambitious
device in its pipeline. Alas, BB's situation is that Samsung's Tizen OS,
which is barely making the rounds in emerging markets, has gained more
market share than BB OS 10. And with just 0.2% of global market share,
BlackBerry is still a “boutique” brand for the security and keyboard
buffs out there.
Global unit shipments
Even
if we don't have fourth quarter data to consider, data from the past
three quarters is telling enough of the “who's who” in the smartphone
business. Samsung is still the world's largest smartphone maker by
shipments, with Apple and Huawei being the company's closest
competitors. Notably, Huawei has gained strong momentum on the Chinese
market. In the third quarter of 2015, Huawei's Chinese shipments rose
81%, eclipsing rival Xiaomi and setting itself to become the biggest
Chinese smartphone maker, being the first to surpass 100 million unit
shipments. However, it is not just strong sales in China, but also
intense investing in no less than 29 markets outside the Middle Kingdom
that helped Huawei's immense growth.
Top 5 vendors
| Vendor | Q1 | Q2 | Q3 | Total |
| Samsung | 82.4m | 73.2m | 84.5m | 240.1m |
| Apple | 61.2m | 47.5m | 48m | 156.7m |
| Huawei | 17m | 29.9m | 26.5m | 73.4m |
| Lenovo + Moto | 18.8m | 16.2m | 18.8m | 53.8m |
| Xiaomi | 15.3m | 17.9m | 19.3m | 52.5m |
Out
of the second-tier smartphone manufacturers, LG is the one performing
most adequately. Thanks to smart pricing and sensible sales targets, LG
manages to make the most of its innovative smartphones' market presence.
However, the company does struggle to achieve growth in its key
markets, and it's merely breaking even with its smartphones. Meanwhile,
its competitors are unable to turn a profit at all, hence they are busy
exploring new areas of growth in addition to keeping their smartphone
business afloat. Microsoft is positioning its new Lumia phones as part
of a complete Windows device and services ecosystem. Sony relies on its
successful image sensor and PlayStation businesses to offset losses from
its mobile division. HTC is looking into wearables and virtual reality
headsets, and BlackBerry has its enterprise security solutions to rely
on. It is unclear how long Sony, HTC, and BB will manage to hold on to
smartphone making before it stops making business sense to compete in
the field.
"Underdog" vendors
| Vendor | Q1 | Q2 | Q3 | Total |
| LG | 15.4m | 14.1m | 15m | 44.5m |
| MS | 9.3m | 10.5m | 8.6m | 28.4m |
| Sony | 7.9m | 7.2m | 11.9m | 27m |
| HTC | 5m | 4.5m | ? | 9.5m |
| BB | 1.1m | 800k | ? | 1.9m |
U.S. Carriers
Market share breakdown
| Carrier | Market share |
| Verizon | 34% |
| AT&T | 33% |
| T-Mobile | 16% |
| Sprint | 16% |
In
2015, the Verizon and AT&T wireless duopoly is going strong, with
the two carriers wielding 34% and 33% market share, respectively.
T-Mobile and Sprint are behind with 16% each, and 1% goes to the noble
US Cellular. In July this year, T-Mobile overtook the third spot from
competitor Sprint, adding new subscribers every month with its its
pro-consumer approach and aggressive pricing schemes. A report by
Strategy Analytics, however, claims that no major shifts in market share
among the top four carriers are expected between now and 2020.
In
the meantime, T-Mo and Sprint will remain focused on reaching LTE
network parity with Verizon and AT&T, aiming to grow share and
address higher churn levels and margins. Citing a major study, Strategy
Analytics added that at least 100 million new wireless connections will
be made in the next 5 years, propelling the United States to a 128%
mobile penetration rate. Despite that, the subscriber growth rate is
slowing, which makes market share and retention rate competition between
carriers more intense than ever. With these movements on the horizon,
mobile service revenue is about to hit $197 billion annually by 2020.
Carrier subscribers
| Carrier | Subscribers |
| Verizon | 137.6m |
| AT&T | 126.4m |
| T-Mobile | 61m |
| Sprint | 58m |
Verizon
and AT&T's firm grip on the American wireless market is evident
from the number of subscribers reached by the carriers during the third
quarter of 2015. Verizon and AT&T serve around double the number of
subscribers T-Mobile and Sprint have for themselves, and as we
established early in the article, things are destined to remain much the
same for the foreseeable future.
Perhaps more interesting are
the analysis and forecasts carried out by agencies Strategy Analytics
and Jackdaw Research. After many quarters of fairly strong year-on-year
growth, the number of smartphones sold in Q3 2015 in the U.S. turned out
to be very similar to the number sold a year ago during the same
period. In other words, we have a stagnant market, and 2016 could very
well turn out to bear the first year-on-year decline in global
smartphone sales.
Despite
their established presence and consistent market share, trends aren't
consistent across carriers. Sprint and T-Mobile have grown their
postpaid smartphone sales year-on-year, while Verizon's sales have
stagnated, and AT&T's have actually fallen year-on-year.
These
companies added just $1.2 billion in revenue year-on-year in Q3, down
from almost twice that in the previous two quarters. This is due to a
combination of factors, including the slowdown in phone growth,
aggressive price competition, and the core part of the mobile market in
the U.S. approaching saturation.
OS market share (U.S., Europe, Asia)
| OS | Market share |
| Android | 52.61% |
| iOS | 40.28% |
| Windows Phone | 2.47% |
| BlackBerry | 1.06% |
Throughout
2015, Android continued dominating the global smartphone market with a
52.61% share. Although Samsung, which is Android's primary growth
engine, hasn't performed exactly as strong as it hoped with its flagship
smartphones (S6 & S6 edge), the strong growth achieved by Chinese
vendors Huawei, Xiaomi, and ZTE has managed to make up for that.
iOS's
market share is a respectable 40.28%, with Apple enjoying strong sales
and influence, thanks to consistent interest in the iPhone 6, 6 Plus,
and their immediate successors.
The other two operating systems
in wide circulation, Windows Phone and BlackBerry OS, stand at 2.47% and
1.06%, respectively. Microsoft is currently in the process of revamping
Windows for the era of device convergence and expects its new Lumia
flagship smartphone to do a portion of the heavy lifting necessary to
gain market share after a year of decline. As for BlackBerry, the small
increase it enjoyed in regions such as Indonesia did little to offset
its overall decline across the globe.
App store revenue
The
state of app sales revenue mirrors that of the smartphone industry
itself. Android phones sell the most, but iPhones make the most money!
Similarly, Google Play (still leads over the App Store in terms of sheer
downloads, but App Store revenues eclipse it. Talking in numbers, the
Android marketplace's worldwide downloads have been 90% higher than the
App Store's, while Apple's shop racks up 80% higher revenues.
According
to App Annie's analytics, China has become Apple's most important
market following the move to larger-screened iPhones. China has led all
countries in terms of absolute growth in the third quarter of 2015, in
terms of both iOS app downloads and revenue. Meanwhile, India and
Southeast Asia provide download growth for Google Play.
Indeed,
the Asian app economy impacts both Google Play and the App Store, but it
pushes them in different directions - that is, more downloads for
Android apps, and more revenue for iOS apps. While affluent Chinese
customers seek iPhones for their perceived status, sub-$50 Android
phones bring the people of India, Indonesia, and Vietnam online.
Where the number of apps available is concerned, the iOS App Store (
2,023,688 apps) eclipses Google Play (
1,828,463 apps).
Both stores enjoy similar levels of developer activity, with the number
of monthly app submissions in both being in the ballpark of 45,000 to
50,000 new apps.
Conclusion
There
are a few key points to take away from this review. First, Apple and
Samsung's dominance on the smartphone market is poised to continue for
the foreseeable future, as it's nigh on impossible to fathom what could
shake things up as far as to bring a seismic market shift that will rock
these two out of the top. Much the same goes for the U.S. wireless
carrier market, where Verizon and AT&T's current stronghold will
remain in place for the next 5 years, at least. Despite being the
world's most popular operating system, Android is still not the
moneymaker everyone in the industry would like it to be — Apple takes
the lion's share of smartphone and app sales' profits.
Difficult
as it's been for smartphone makers and carriers, 2015 has been
especially friendly to consumers. Quality hardware has become more
affordable, with high-end smartphones now available at sub-$500 prices.
Meanwhile, owning a smartphone has gotten cheaper too, as carriers have
moved from subsidizing phones to selling them in monthly installment
plans, together with more reasonably priced service plans.
Save
for some underwhelming flagship smartphone announcements and the overall
feeling that mobile innovation has peaked (instilled by the incremental
hardware and operating system updates witnessed), we think 2015 has
been a fine year for smartphone enthusiasts. We're now looking forward
to what may turn out to be an even more exciting 2016 with its fair
share of triumphs and disappointments!
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