Wednesday, 07 August 2013 12:23

Looking Through Windows To See The Big Data On Fruit - Or Android Gets 'em Again Featured

As I said in 2010, 2011, 2012 and this year, the less than free Android business model is killin 'em - Apple in particular. On Friday, 02 September 2011 I posted Google's Android Now Leads In Market Share, Growth Rate and Potential Buyer Preference. I made it clear that Apple's slowing of Google's growth was paramount to their continued success. I take it they didn't get that memo. Earlier this year I posted "Is Tim Cook Cooked? Market Share vs Profit Margin, part 2 - Follow What I Do, Not What I Say!" and it went something like this:

Tim Cook was in the media yesterday weighing in on market share. It's as if he is in a delirium, that is if you believe his words, which I don't. He states that for Apple, quality is more important than quantity (or something of that sort). As per Endgadget:

Apple's head honcho Tim Cook is chatting up Android's growth explosion, and it turns out he's not flustered. "Do I look at that? Of course, I don't have my head stuck in the sand," said Cook." But for us, winning has never been about having the most." Instead, he stands by the old Apple line of quality versus quantity. "Arguably, we make the best PC, but we don't make the most," he added. "We made the best music player, and we wound up making the most -- but we didn't initially."

Mr. Cook is ignoring his own ex-boss's words. For those who didn't read my piece yesterday, "Blackberries, Apples & Fruit Borne Successitis - The Problem With Excess Profits Is Hubristic Management Tends To Take Eyes Off The Prize!!!", I quote:

What ruined Apple was not growth … They got very greedy … Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible … they went for profits. They made outlandish profits for about four years. What this cost them was their future. What they should have been doing is making rational profits and going for market share.

You see, my post yesterday clearly showed that the financial metrics, over time and in handset companies, heavily favor market share over initial profit margin. As a matter of fact, I demonstrated that as market share decreases margins drop commensurately, or in other words "Quantity is quality in a fast moving, technologically dynamic market!"

In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant... . I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? Was I right?

Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysis

The has been the case with IBM, Nokia, Dell, HTC, Apple, Blackberry, etc. Mr. Cook, take the advice of Mr. Jobs if you don't wish to follow Mr. Middleton. I actually do believe that Cook understands these dynamics and is just putting on a dog and pony show for the media but his corporate actions don't bear this out. I strongly suggest they start spending that $174B cash horde on something other than massaging hedge funds.

Fastforward to today and reference this IDC press release:

FRAMINGHAM, Mass. August 7, 2013 – Despite beating Wall Street expectations in terms of shipment volumes, Apple's share in the worldwide smartphone operating system market posted a year-over-year decline during the second quarter of 2013 (2Q13). Meanwhile, Android and Windows Phone both managed slight increases during the same period. According to the International Data Corporation (IDCWorldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 236.4 million smartphones in 2Q13, up 51.3% from the 156.2 million units shipped in 2Q12. Second quarter shipments grew 9.3% when compared to the 216.3 million units shipped in 1Q13.

"The iOS decline in the second quarter aligns with the cyclicality of iPhone," says Ramon Llamas, Research Manager with IDC's Mobile Phone team. "Without a new product launch since the debut of the iPhone 5 nearly a year ago, Apple’s market share was vulnerable to product launches from the competition. But with a new iPhone and revamped iOS coming out later this year, Apple is well-positioned to re-capture market share."

"Last quarter we witnessed Windows Phone shipments surpassing BlackBerry and the trend has continued into the second quarter," said Ryan Reith, Program Manager with IDC's Mobility Tracker Programs. "Nokia has clearly been the driving force behind the Windows Phone platform and we expect that to continue. However, as more and more vendors enter the smartphone market using the Android platform, we expect Windows Phone to become a more attractive differentiator in this very competitive market segment."

Smartphone Operating System Highlights

Android maintained its leadership position, with strong contributions from Samsung and its Galaxy S4. Not to be overlooked were LG and Chinese vendors Huawei, Lenovo, and ZTE, which each recorded double-digit shipment volumes in the millions. Combined, these vendors accounted for 62.5% of all Android-powered smartphone shipments during the quarter. Still, the remaining vendors within the Android ecosystem should not be overlooked, as many have developed a strong local presence within key developing markets.

...and this was exactly as predicted in Samsung Will Be Ready To Do That Fruit Thing ... and Smartphone Hardware Manufacturers Are Dead ...

iOS finished the quarter as the clear number 2 operating system, showing that, even without new product launches, demand remains strong. Moreover, Apple added new mobile operators to its camp, boosting short-term volumes and cementing long-term end-user relationships. What remains to be seen is how the new iOS 7 will be received once it reaches the market later this year, as much of the look and feel of the user interface has been revamped.

Windows Phone posted the largest year-over-year increase among the top five smartphone platforms, and in the process reinforced its position as the number 3 smartphone operating system. Driving this result was Nokia, which released two new smartphones and grew its presence at multiple mobile operators. But beyond Nokia, Windows Phone remained a secondary option for other vendors, many of which have concentrated on Android. By comparison, Nokia accounted for 81.6% of all Windows Phone smartphone shipments during 2Q13.

BlackBerry saw its market share decline during the quarter, reaching levels not seen in the history of IDC's Mobile Phone Tracker. However, BlackBerry has shown steady progress since the launch of its BB 10 platform, which has grown to three models, additional mobile operators, and a greater presence within its total volumes. It is still early days for the platform, however, and BlackBerry will need time and resources to evangelize more end users.

My opinion on Blackberry hasn't changed for 3 years... See Blackberries, Apples & Fruit Borne Successitis and BoomBustBlog Research Performs a RIM Job!

 

Top Smartphone Operating Systems, Shipments, and Market Share, 2013 Q3 (Units in Millions) 

Operating System

2Q13 Unit Shipments

2Q13 Market Share

2Q12 Unit Shipments

2Q12 Market Share

Year-over-Year Change

Android

187.4

79.3%

108

69.1%

73.5%

iOS

31.2

13.2%

26

16.6%

20.0%

Windows Phone

8.7

3.7%

4.9

3.1%

77.6%

BlackBerry OS

6.8

2.9%

7.7

4.9%

-11.7%

Linux

1.8

0.8%

2.8

1.8%

-35.7%

Symbian

0.5

0.2%

6.5

4.2%

-92.3%

Others

N/A

0.0%

0.3

0.2%

-100.0%

Total

236.4

100.0%

156.2

100.0%

51.3%


Source: IDC Worldwide Mobile Phone Tracker, August 7, 2013

This chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic are available by clicking here.

Top Android Smartphone Vendors, Shipments, and Market Share, 2013 Q3 (Units in Millions) 

Vendor

2Q13 Unit Shipments

2Q13 Market Share

2Q12 Unit Shipments

2Q12 Market Share

Year-over-Year Change

Samsung

73.3

39.1%

48

44.4%

52.7%

LG

12.1

6.5%

5.8

5.4%

108.6%

Lenovo

11.4

6.1%

4.9

4.5%

132.7%

Huawei

10.2

5.4%

6.5

6.0%

56.9%

ZTE

10.2

5.4%

6.4

5.9%

59.4%

Others

70.2

37.5%

36.4

33.7%

92.9%

Total

187.4

100.0%

108.0

100.0%

73.5%

Source: IDC Worldwide Mobile Phone Tracker, August 7, 2013

Top Windows Phone Smartphone Vendors, Shipments, and Market Share, 2013 Q3 (Units in Millions) 

Vendor

2Q13 Unit Shipments

2Q13 Market Share

2Q12 Unit Shipments

2Q13 Market Share

Year-over-Year Change

Nokia

7.1

81.6%

4.1

83.7%

73.2%

Samsung

1.0

11.5%

0.3

6.1%

233.3%

HTC

0.4

4.6%

0.4

8.2%

0.0%

Huawei

0.2

2.3%

0.0

0.0%

N/A

Others

0.0

0.0%

0.1

2.0%

-100.0%

Total

8.7

100.0%

4.9

100.0%

77.6%

Source: IDC Worldwide Mobile Phone Tracker, August 7, 2013

Note: Data are preliminary and subject to change. Vendor shipments are branded shipments and exclude OEM sales for all vendors.

So, does Mr. Cook's lack of adherence to Steve Jobs wisdom portend a potentially uber-successful company misunderstood by the markets (meaning time to buy stock) or is this the beginning of the end of an iconic corporate era?

I refer my subscribers to the research documents below for the answers... 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

For Google...

Subscribers, click the following links for my updated price targets on Google (click here to subscribe) and read  Google Q2 2013 Update: Valuing Possibly The Most Powerful Co. In The World?:

The biggest risks to these price points are:

  1. A market that's being levitated by central bank magicians running short on magic spells...
  2. Regulatory pressure, which I feel is quite material and inevitable, but will not be a major factor in the near term.

Related links...

Was The Google Purchase of Motorola A Hardware Disaster With Overpriced Patents?

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

Last modified on Wednesday, 07 August 2013 12:55

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