The Q3 results are mostly in now and there are two big stories. The iPhone 6 of course, which started shipping just before the end of the quarter. The other story is China, now the #1 mobile market in the world. These have led to very different stories for different companies.
Samsung is basically flat with Q2, but that was a big drop. Smartphones are such a large part of Samsung’s business it has affected overall corporate earnings. They are down a full 50% on revenues that are down around 20%. “its smartphone business lost ground in an intensely competitive global market”. They are still #1 with almost 25% market share (but they were over 30% recently) shipping around 78M smartphones.
Apple is still #2 of course, and they have said that they are shipping everything they can build. They sold 10M phones in just the first week of the iPhone 6 launch. Since they launched on 19th September that was all in this quarter. In total they shipped nearly 50M phones and very slightly gained market share. Q4 will probably be up since it will be the first full quarter with iPhone 6 and then, assuming Apple stick to making only one new phone per year, will creep down until this time next year.
The most amazing result is that #3 is Xiaomi, shipping 18M phones for close to 6% market share. Considering how recently they were created, this is amazing. All those phones sold in Asia, mostly China. They are eating Samsung’s lunch.
Chinese manufacturers also hold #4 #5 #7 #8 positions. Lenovo is #4 (and this is still without the Motorola Mobility acquisition from Google, which hasn’t closed yet). If it closes in Q4 and the numbers are all merged I assume they will be #3 in Q4, but Xiaomi is growing fast. Lenovo shipped 17M phones.
Huawei is #5 shipping nearly 17M phones. In fact some analysts have them ahead of Lenovo since the numbers are so close. And almost exactly the same number is LG (the second Korean entry into the table). Then Coolpad and ZTE.
Bringing up the rear are Sony, Microsoft and Motorola Mobility all with around 9M phones shipped, more or less.
What I think is happening is that at the high end of the market in the US, Samsung and Apple are doing very well. You certainly see a lot of Galaxy and iPhones around, although it is always wise not to assume that what you see in silicon valley generalizes to middle America. In US Samsung has 36% market share and Apple 26%. And as late as this time last year, Apple and Samsung’s profits together were 109% of the entire mobile industry, everyone else in aggregate losing money.
But Samsung used to be #1 in China and now Xiaomi is, at a much lower price point. The iPhone 6 didn’t launch in China until October so it has no impact on the Q3 numbers but Apple is an aspirational brand that everyone wants if they can afford it. Apple is wildly profitable, with Samsung struggling. Some estimates of Apple’s profits are as high as 85% of all the profit for the whole industry, but its challenge is going to be to keep growing as fast as the market so that its share stays relevant to 3rd parties (it is currently 12%). Android has close to 85% market share (across all the manufacturers) so Apple need to keep iOS desirable. Today, people seem to develop first for iOS and then port to Android, and Apple would like to keep it that way.
It doesn’t look as if Samsung’s position is likely to change very fast either. Kim Hyun-joon, senior executive at its mobile division, said:
the outlook for the fourth quarter in smartphones “wasn’t looking good” as competition will get fiercer. “That will probably hurt our profitability.”
Another small story is Microsoft (the old Nokia handset division) which had dropped out of the top 10 to fall behind Motorola but snuck past them again this quarter. But I still find it hard to believe that Microsoft, and thus WindowsPhone operating system, can get out of the basement at around 3%. As well as Microsoft, Samsung and ZTE do ship some phones with the WindowsPhone OS but less than a million units together. Blackberry (what used to be called RIM) is even lower at under 1% and also has to be doomed, although with their strong position in government and some corporations they presumably are an acquisition target at some point.
Oh, and Amazon? They took a $170M writeoff on their smartphone inventory. The Fire just didn’t seem to light. Amazon don’t publish numbers but some analysts reckon they only sold 35,000 in the first 25 days. Not quite up there with Apple selling 10M in a week. I reckon that means Apple sold as much as Amazon in the first 40 minutes.
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