Friday, February 8, 2008

Apple Takes Third of Global Mobile Market

In less than half a year, Apple, Inc. has become the world's number-three seller of smart mobile devices, as Apple's iPhone took off. But Apple's exclusive carrier arrangements for the iPhone show signs of strain with users unlocking Apple's iPhone. Analysts say Apple needs to work on its smartphone to catch up to the Blackberry and Nokia.
Apple bested Motorola to grab third place in global fourth-quarter sales of smart mobile devices, according to market researcher Canalys.
With 2.3 million iPhones sold in the quarter, Apple has a 6.5 percent global market share of smart devices, still substantially behind BlackBerry maker Research in Motion, with 4 million units sold and a 11.5 percent market share, and global leader Nokia with 18.8 million unit sales and a 53 percent market share. In the U.S., the iPhone accounted for 28 percent of the market, advancing on RIM with 41 percent and blowing past Palm with only 9 percent.
"When you consider that it launched part way through the year, with limited operator and country coverage, and essentially just one product, Apple has shown very clearly that it can make a difference and has sent a wake-up call to the market leaders," said Pete Cunningham, Canalys senior analyst.

iPhone vs Nokia

Meanwhile, Apple on Tuesday doubled the storage capacity of the iPhone to 16GB and the iPod Touch to 32GB. Apple originally offered 4GB and 8GB versions of the iPhone. The beefed-up devices come with software previewed at Macworld last month, which among other things allows them to identity the user's location.
Can Apple build on its success to seriously compete with Nokia for dominance of the smartphone space? To do so, it will have to expand its coverage and build out its product portfolio, Cunningham said. "A broad, continually refreshed portfolio is needed to retain and grow share in this dynamic market," he said.
Apple will be a strong contender for the crown over the next several years, said Tim Bajarin, principal analyst with Creative Strategies, in an e-mail. "While Nokia is a key player, Apple is clearly going down a path to challenge them and all the other players in the area of smartphones," he said.
In addition, the iPod Touch is "one of Apple's major strategic advantages over their competitors in the smartphone and MP3 music-player markets," Bajarin said. "I expect Apple to extend this multi-touch user interface to even more Apple-created products in the future."

Gray Market in Asia

Of concern is Apple's strategy of exclusive relationships with wirless carriers. "It will also need to ensure that the exclusive relationships that got it so far so quickly do not prove to be a limit on what it can achieve," Cunningham said.
Reports of a huge gap between iPhone sales and service subscriptions with AT&T, Apple's exclusive carrier in the U.S., have raised concerns that consumers are revolting against Apple's restraints. Apple reported selling 3.7 million iPhones, but AT&T said it had only received 2 million sign-ups. If a third of all iPhones were sold to consumers who unlocked them for use on other carriers, that would indicate a fundamental flaw in Apple's business model.
But Gene Munster of Piper Jaffray told The New York Times last week that his contacts had discovered that 40 percent of people buying iPhones at Apple Stores were buying more than one at a time. "The majority of the people who were buying more than one phone were Asian, and they were bringing small buses of people who all buy more than one phone," Munster said. He speculated that the phones are being sold in Asia, where it is much harder to purchase an iPhone, since Apple has yet to launch a carrier deal there.
"I don't know how many iPhones are really missing, but I do know many of them were bought with the intention of breaking them so they can be used on other carriers' networks, especially in Asia and Europe," Bajarin agreed. "But don't expect Apple to change their carrier-based revenue-sharing model any time soon. They will just make it harder to break the iPhone over time."

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