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Smartphone Market Remains Dynamic

Gartner published a report on February 9 that revealed some interesting movements in worldwide mobile device sales and mobile operating system market share. Keep in mind that these numbers pertain to the worldwide market (not just the U.S.) and include all mobile devices (not just smartphones). The report only includes sales to end users, not sales to corporations. Also, these numbers refer to sales in 2010, not to the installed base. Mobile device sales numbers differ from OS numbers, except in the cases of Apple and RIM, who manufacture both the devices and the OS.

Key trends from the Gartner report:

  1. The smartphone market has enormous upside. Smartphone sales grew 72%, but smartphones still account for only 19% of total mobile device sales. While it may seem that everyone already has a smartphone, that pertains only to about half of the population in the U.S. and Western Europe. The smartphone market still has huge growth potential for new users. Furthermore, most U.S. mobile operators provide equipment credits every two years, so the smartphone replacement market remains large, too.
  2. RIM Blackberry continues significant sales growth. Despite the frequent accusations that RIM has not kept up with newer smartphones, RIM device sales grew 38% in 2010. However, its OS market share dropped from 19.9% to 16.0%, landing RIM in third place behind Symbian and Android, but only slightly ahead of Apple iOS. RIM will enter the tablet market in 2011 with the RIM Playbook, based on QNX.
  3. Apple nearly doubles sales, but holds steady market share. Apple device sales grew a very healthy 87%, but its OS market share increased only slightly, from 14.4% to 15.7%. Expansion worldwide, reduction of exclusive carriers, wider availability of iPhone 4, and the introduction of the iPad drove the huge sales increase.
  4. Android makes massive gains, and could dominate. Sales of devices based on the Android OS grew 888%. Android took the OS market share by storm, rising from 3.9% to 22.7%. Android ranks second in OS market share, still far behind Symbian but well ahead of RIM and Apple iOS. If Android can overcome its OS fragmentation problems, it could become the dominant mobile OS in 2011 and beyond.
  5. Microsoft falls further behind, but has a new lifeline. Sales of devices based on Microsoft Windows Mobile OS dropped 18% and its OS market share dropped from 8.7% to 4.2%. Windows Mobile OS was the only OS to drop in total device sales in 2010. However, Microsoft introduced the new Windows Phone 7 OS in late 2010. While its sales have done well, it has not had enough market exposure yet. WP7 has received very positive reviews. With the right marketing, WP7 could see significant gains in 2011. In addition, some have suggested that Nokia and Microsoft will form a partnership that could catapult Microsoft dramatically in 2011.

Totally absent from the report: Hewlett-Packard’s webOS, which HP aquired with Palm.

The smartphone market remains strong and dynamic. Everyone except Microsoft experienced strong growth in 2010, but the OS market share shifted dramatically toward Android. With the right marketing and partnerships, Microsoft WP7 could do in 2011 what Android did in 2010. If it does not, then 2011 will likely see Android take over the OS market, with Apple iOS gaining share and RIM and Symbian holding steady. One thing seems certain: 2011 will see more dynamic shifts.

Copyright 2011 Jim Ward, Jr.