The Smartphone Market Is Too Big for Apple and Samsung

Mohammed is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

I have been hearing a lot lately about how the Smartphone market is a two horse race between Apple (NASDAQ: AAPL) and Samsung. The two aforementioned companies account for about 50% market share and the platforms they run on, iOS and Google's (NASDAQ: GOOG) Android, account for 90% of the smartphone market. There is an even more impressive aspect; These two giants make up 106% of the profits in the smartphone industry; That's because every one else is losing money.

However, those who talk about the dominance of iOS and Android or the dominance of Apple and Samsung do so with a sense of perpetuity, as their dominance is set in stone and that the makeup of the smartphone market cannot ever change . They say things such as this is already a crowded market place with no room for anyone else or how the BB10 is too little too late. 

Well, I believe that they are very wrong. Take a look at these numbers from IDC about how many smartphones are forecast to be sold in the years from 2010 - 2016

<img src="/media/images/user_13227/smartphone-shipments_1_large.png" />

Yes that is right, The smartphone market this year is expected to grow to 900 million units, and forecasted to double the 2012 number by 2016. Remember the good old days when the mighty Research In Motion (NASDAQ: BBRY) used to sell 20-30 million units a year; well Samsung now sells more than 50 million units a quarter.

Speaking of the devil himself, take a look at this table showing how Samsung has got to where it is now.

<table> <tbody> <tr> <td>Year</td> <td>Samsung's Smartphone Shipments</td> </tr> <tr> <td>2008</td> <td>4.7 million</td> </tr> <tr> <td>2009</td> <td>5.9 million</td> </tr> <tr> <td>2010</td> <td>24.7 million</td> </tr> <tr> <td>2011</td> <td>97 million</td> </tr> <tr> <td>2012</td> <td>200+ million</td> </tr> </tbody> </table>


<img src="/media/images/user_13227/smartphone-market-share_large.png" />

Yep, the reigning heavy weight champion of smartphones was once behind Nokia (NYSE: NOK), RIM and HTC.

The Smartphone market is huge compared to what it was a few years ago; so large that Samsung is projected this year to ship more smartphones (200 million) than Blackberries were shipped in their first decade from 1999-2009 (150 million). The market is also very fluid; industry leaders and laggards can be rearranged from head to toe in a matter of a few years, but a company doesn't necessarily need to completely dominate the market in order for it to be significant. For example, if RIM's new BB10 captures just a meager 10% of the market a couple of years from now, that would be equal to more than 100 million units. To put that into perspective, RIM's number one year in terms of the number of smartphones shipped was FY 2011 (calender 2010); in which RIMM shipped a record of 52 million units.

In Fact, in 2011 Samsung and Apple who made billions in profits from smartphones both shipped slightly under 100 million units. Imagine that in a couple of years if either RIM or Nokia are able to capture just 10% of the global smartphone market they will be shipping a bigger number of phones than Apple or Samsung in 2011 .

I do see what is mentioned above happening in the future, as the only reason I believe that Android has a 70% market share is because previously it was the only platform that could do what an iPhone could, but at a much lower price. The new Windows 8 Lumia Phones and the BB10 phones are about to change that, so I believe that a less concentrated market is in order.

Pirlo0o has a long position in Research in Motion. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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