Nokia's Lumia 920 Propels Windows to 3rd Place in Smartphone Wars

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Kantar Worldpanel released their latest mobile market share report for the three month period ending February 2013. Digging into the data reveals a few notable trends; Windows is winning the battle for third place in the smartphone industry, Android is cutting into iOS's market share domestically, and Apple (NASDAQ: AAPL) is making big gains in China.

Microsoft is winning the battle for third place

Microsoft's (NASDAQ: MSFT) Windows market share cracked 4% in February on strong results from Nokia's (NYSE: NOK) Lumia 920 handset. Kantar reported sales have been driven by customer appeal rather than promotions which is a big support for margins. 

Notably, the Windows 8 platform has gained a foothold in other markets during the past year. In Britain Microsoft's market share more than doubled to 6.7%; in Australia Windows' market share increased 1.7 points to 3.4%; and most incredibly in Italy the company's market share has gained 7.7 points to 13.1%. 

The fastest growing space in the smartphone market is occurring a the mid-price point where Nokia is well-positioned. The company has aggressively priced its offerings with the Nokia Lumia 520 and Lumia 620 selling for an unsubsidized price of $180 and $249 respectively. The company's smartphone offerings are also finding success in emerging markets. Nokia Windows devices are out-shipping the iPhone in several important countries including India and Russia. 

No apparent signs of a turnaround at Blackberry (NASDAQ: BBRY). The company launched its new Z10 device in the U.K. in January. However, Blackberry's British market share declined 0.7 points last month to 5.1%. There doesn't appear to be any pent-up demand for new smart phone devices after the recent release of Apple's iPhone 5 and the Samsung Galaxy.

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So based on the above graphic, I guess we can declare Microsoft has taken third place in the smartphone wars.

Er...not so fast. The race for the bronze medal is still too early to call. 

First, this report only includes one month of BlackBerry's latest Z10 handset launch in the U.K. and misses most of the product launch in the U.S. Second, BlackBerry consumers may be holding off their purchase until the Q10 device comes out in April or May. We won't be able to call a winner until September.

Android continues to dominate domestically

Google's (NASDAQ: GOOG) Android operating system continues to strengthen its position in the marketplace and now accounts for over half of all sales in the United States. Android U.S. market share increased 1.8 points in February and 5.8 points year-over-year. 

Apple's iOS accounted for 43.5% of sales in February, down 2.4 points for the month. Apple's market share has declined 3.5 points over the previous year.

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Apple appears to be getting squeezed from Android at two price points. At the high-end, customers are flocking to the Samsung Galaxy. At the low-end, Android's budget offerings, such as those offered by Huawei, are making gains

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Apple and Google gaining overseas

But both companies are making gains internationally. Over the past year Android posted a 10 point improvement in Britain and now accounts for 58.3% of sales. In Germany, Android posted a 12 point gain boasting 71% market share. 

Apple has posted strong growth in China. Sales of the iPhone 5 pushed Apple's market share up 6.6 points over the past four months to 25.8% of sales. This has come mostly at the expense of Symbian and Windows.

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Of course, this data doesn't include the fallout from Apple's recent problems in the country. China Central Television has alleged that Apple's warranty policies differed in China in relation to other countries. Citigroup analyst Glen Yeung estimates this public relations issue could cost Apple $13 billion in sales. No doubt investors will be watching next month's sales data closely. 

Who's best positioned going forward? 

Over half U.S. mobile subscribers own a smartphone. New customers will be less tech savvy and more price sensitive compared to early adopters.

This means smartphone growth is going to occur at the mid-tier price point and emerging markets where platforms like Android and Nokia have a big advantage. Google can sell hardware at or below cost because the company expects to profit from mobile searches and advertising. Nokia is also well positioned in emerging markets where they have well established distribution channels.

In contrast both Apple and Blackberry are chasing the high-end of the market at a time when this segment is showing signs of saturation. Apple could rectify this by introducing a low-cost iPhone. Such a move would result in higher unit sales but hurt margins and likely result in flat revenues. 

Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. 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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