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|
|Lenovo + Moto||5.1%||5.3%||0.2%|
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 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 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 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.
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".
|Vendor||3Q15 Market Share|
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 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.
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 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.
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
|Lenovo + Moto||18.8m||16.2m||18.8m||53.8m|
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.
Market share breakdown
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.
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)
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.
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!