Cameras

Interesting that both Apple and Nokia are running campaigns around the camera. For Nokia this is a real point of differentiation: the Pureview camera tech is very good. For Apple it's part of the broader lifestyle positioning: don't worry about widgets, just enjoy your phone. 

The poignant thing, of course, is that Nokia doesn't have Instagram, or many of the other photo-sharing services: it had to launch the new 925 with Hipstamatic (remember that?)

Both, incidentally, are doing good advertising at the moment, unlike some others in the space. Although I'm not sure about the wisdom of a close-up on the ISO settings in the Nokia spot...

Polarisation, continued

Playing with a new chart format. This shows quarterly handset unit revenue at the 8 'branded' handset OEMs, over the past three years. It includes all phones, not just smart.

The polarisation of the industry is pretty clear. Not shown: the 'other category - Chinese OEMs making up increasingly large volumes for which this sort of data simply isn't available.

Focus

This is how Nokia saw the world in Q1 2008, a year after the iPhone launched. I could comment, but I think the image speaks for itself.

The end of black and white

The Nokia 105 rightly got a lot of attention last week: a €15 phone with a 35 day stand-by battery life. This will improve tens of millions of peoples' lives.

Almost unnoticed in the press release, though was another milestone: Nokia says it has made its last phone with a black & white screen.

One of these plus a small 3G tablet or phablet might be a good combination for some people. After all, 12.5 hours talk time is longer than the standby time for some smartphones.

Market share

This chart shows both the revenue share and the unit share of global handset market in Q4 2012. (This was an iPhone launch quarter, which means Apple's share is a little larger than normal). 

This is, of course, a combination of public data (eg Apple revenue and sales,, Samsung revenue) and estimates from various sources (the 'Other' is pretty speculative, and could be argued at various different levels), but there's nothing terribly controversial here. A couple of observations: 

  • The dominance of Apple, Samsung and (in volumes) Nokia is clear
  • Apple had around a third of the revenue in the industry despite selling only about 10% of the units: that's what selling phones for an average of $619 gets you
  • Conversely, most of the volume in Android is at significantly lower prices than Apple (a blended average in the $200-250 range), especially in the 'other' category, which really reflects low-priced Chinese manufacturers targeting the $150 sweet spot. 
  • Smartphones in total had about 50% of the volume of the market, but around 80% of the revenue

This gives a pretty good illustration of some of the key questions facing the industry in general and Apple in particular. How much more growth is left in the market? How many more people will convert from non-smart to smart phones, and at what prices? And with Apple already taking a third of the revenue in the market, how much more can it grow?

Below: the same data in a more compact form. 

Device prices, self-selection and a Catch 22

One of the many challenges faced by BB10 is that the launch hardware is priced to compete head-on with the iPhone 5 and high-end Android phones, yet the platform lacks the range and depth of apps that those devices can offer. Nokia's Lumia launch faced exactly the same problem 18m ago.

The obvious argument is that these new platforms would do rather better at a lower price point, competing against mid-range Android and the residual featurephone base, where the target customer cares less about apps and the user experience is more differentiated (i.e. the mid-range Android experience is less good than the high-end one).

However, if you only target users that don't care about apps, then your install base will never be an attractive market for developers, and you never will get apps.

This seems to be what is happening with low-end Android tablets. Google (arguably) tried to short-circuit the 'no users therefore no apps therefore no users' issue by selling the Nexus 7 at cost, carrying an effective subsidy in its working capital and making the device cheap enough that people would overlook the lack of apps. It remains to be seen just how many actually sold as a result: the launch quarter sales were a little over 2m, though with limited distribution, and we don't yet know how many were sold over Christmas (though some people have had a guess). Meanwhile the Nexus 7 is not even the cheapest Android tablet on the market - devices at $100 or even lower are to be had, though with very poor performance. (The Kindle Fire is available as well, but that's a rather different proposition, with more going for it than price.)

The challenge with all of these tablets, though, lies in the choice presented to consumers. In effect, they are asked: "would you rather buy this Apple tablet with lots of apps, or save $100 or so and get this black plastic thing with far fewer apps?"

That's a perfectly legitimate question to ask, and Christmas was one big A-B test as to what tablet proposition people actually want. However, what does it tell you if someone says 'I want to save $100 and get the cheap-looking one with no apps'? Are they a good target for any publisher or developer? This is at the root of the staggeringly low engagement on Android tablets that all publishers report - under 5% of what they see on the iPad: self-selection by the users. People who buy cheap tablets are effectively declaring that they value the saving over the apps.

In other words, you can sell to a high-end user and hope that they'll forgive the lack of apps. That's hard, and you won't sell many. Or, you can make a cheap device (setting aside the technical challenges RIM and Nokia faced in actually doing that), which is rather easier to sell with no apps - but then the user base you do get is even less likely to buy apps. Catch 22.

Colour

Nokia doubling down on colour in a sea of black plastic rectangles (this is the new Lumia 620, which will sell for $250 before subsidy). Adds a layer of difficulty in stock-management, but Apple manages fine with iPods 

I do think it's ironic that Apple brought colour to PCs, but monochrome to phones.

Mobile uncertainty

Smartphones are moving from a high-end luxury to a billion-unit-a-year business. Yet one of the fascinating things about the industry right now is just how many companies are in serious trouble, and how many things are totally uncertain. We could easily see a major handset brand get bought or just disappear in the next 12 months, but every single handset company faces fundamental and often existential questions: 

  1. Will Apple make a cheaper phone, moving below $600 new? How would it do it? (How) would it maintain segmentation? Would that be a $300 phone? A $100 phone?
  2. Will Microsoft make its own phone? Will Windows Phone finally get any traction?
  3. What happens to Nokia if Windows Phone gets no traction? What if it does? Does Microsoft buy it?
  4. What is the future of Nokia's featurephone business? How big will Asha be?
  5. How much longer will RIM survive? Who will buy the wreckage?
  6. What happens to the struggling Android OEMs, HTC, LG and Sony? Is there an M&A roll-up here?
  7. What is Google going to do with Motorola? Shut it down? Break it up? Let it carry on running into the ground? Or give up on the firewall?
  8. Is Google's whole approach to Android sustainable? Will it move more towards Nexus handsets, or does that remain just a low-volume showcase?
  9. Is Samsung's leading position sustainable?
  10. Will the Chinese move up-market and become major consumer players in the West?
  11. Will the Chinese try to buy a non-Chinese OEM? RIM? HTC? Would they be allowed to?
  12. What is the future of the subsidy model? Will operators (and consumers) move decisively away from them? What would have to change to do that?
  13. (late addition) Will Samsung remain committed to Android, refocus on Windows Phone, fork Android or all of the above?
  14. (late addition) Will Amazon make a 'Fire Phone'?
  15. (late addition) Will Apple's monopoly of the high-end ($600+) phone market continue, or will Android/Windows Phone improve to the point they can take it on head-to-head?
  16. (late addition) Will Intel become relevant in mobile? Would it do a big acquisition? Panic and buy an Android OEM?

I have pretty considered opinions about most of these - but there are no clear answers to any of them. Massive amounts could change, quite easily, in the next year to two.