The mobile market seems to be all anybody ever talks about these days. Consumers have more smartphones and tablets to choose from every day. For the vendors, however, it’s not all fun and games.
For every Apple
, there is a Nokia
. And for every Google
Android, there’s a Symbian. There are, in other words, haves and have-nots. Nowhere is that more apparent than in the smartphone market.
Back in May, research firm Asymco released a study it conducted on smartphone market operating profits spanning the second quarter of 2007 to now. And what the company found was shocking: Out of the $14.4 billion in operating profits generated in the fourth quarter, Apple made 73% of them. Samsung, its chief competitor, nabbed 26%. The remaining 1% — a mere $144 million — went to HTC.
It was a much different story back in 2007, when Nokia owned well over half of the smartphone market’s operating profits. RIM
, LG, and Sony Ericsson
were also doing well. Now, they’ve lost it all.
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Nokia’s decline is especially troubling. In 2008, the handset vendor generated $4 billion in profits on $50.7 billion in revenue. Last year, it took a $1.2 billion loss on $38.7 billion in revenue. During the second quarter alone, the company lost another $1 billion. Apple, meanwhile, continues to climb. During its fiscal third quarter ended June 30, Apple sold 26 million iPhones. The iPhone and its related services generated $16.2 billion during the period, accounting for nearly half of Apple’s $35 billion of revenue.
But it’s not just smartphones.
Last year, Apple shipped over 40 million iPads, earning the company 58% market share in the tablet space, according to data from research firm IDC. All of the Android-based devices — dozens, in total — were only able to secure 38.7% of the market on about 27 million shipped units. To put that figure into perspective, Apple announced recently that it sold 17 million iPads during the three-month period ended June 30.
Late last year, when the Amazon
Kindle Fire was selling well, it was believed that it could be a credible iPad threat. But according to Cowen analyst Kevin Kopelman, Amazon will sell only 12 million Kindle Fire units this year. And let’s not forget about the countless other tablets, including Samsung’s own Galaxy Tab line, that have tried to take down Apple’s iPad to no avail.
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The great divide between the haves and have-nots in the mobile space can even extend to mobile advertising, where Google’s AdMob is slowly but surely starting to pull away. In December, research firm IDC reported that Google’s mobile ad market share rose from 19% in 2010 to 24% in 2011. Apple’s iAd, which was largely viewed as a possible contender to AdMob, watched its share fall from 19% in 2010 to 15% last year.
Apple’s platform isn’t down and out just yet. But any notable decline in the mobile space, at least in the last few years, has spelled trouble for the company on the wrong side of things.
The new normal in the mobile space also appears to be infiltrating the mobile-gaming market. Rovio, maker of the world’s most popular mobile game, Angry Birds, reported in May that it generated $106.3 million in revenue and a profit of $67.6 million on its franchise last year. Although games have proven extremely popular in the mobile market and other developers have made some cash with their creations, Rovio has emerged as the dominant force in mobile gaming. Whenever it launches an update to its games or a new title, consumers take notice. That’s unique and only a dream for most mobile developers.
There was a time when a few companies were competing in the mobile market, and many of them were reaping the rewards. Now, many more firms are in that space, and just a handful are succeeding. It might be enough to make some companies question why they should spend cash on products that have a higher likelihood than ever of failing. A good question indeed.