Smartphone Market: More Competitive Than Ever
Tony is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It's the season for us to be inundated with ads touting how great product EZ is or how B is better than G. No, it's not Christmas yet and the silly season in political ads for the Presidential election in November have yet to fully kick in. But it is the season for the launch of new smartphones from all the major competitors.
The latest smartphone to be unveiled is the iPhone5 from Apple (NASDAQ: AAPL). This followed recent launches from HTC, the Lumia line of phones from struggling Nokia ADR (NYSE: NOK) and its partner Microsoft (NASDAQ: MSFT), and the new Droid Razrs from Motorola, now a unit of internet search giant Google (NASDAQ: GOOG).
All of the new smartphones have something going for them. The Droid Razr Max HD offers an extra-large screen and a claimed 32-hour battery life while the Lumia phones offer consumers and telecom companies something that is not an Apple or Android product. Many telecoms are desperate for a competitor to arise and challenge the dominance of Apple and Google. Who would have ever thought of Microsoft as a feisty underdog? And Apple's iPhone5 is faster and, well, another quality Apple product.
The difference this time is that the global smartphone market has become more competitive than ever. This is especially true in the United States where, according to figures from ComScore, smartphone penetration has surpassed the 50 percent mark. Smartphone users have surpassed the 115 million level, rising sharply from 39 million at the end of 2009.
Much of that uptake is likely due to heavy ad spending by Apple. The company spent $251 million in 2011 on iPhone ads, almost twice the level of spending by Nokia, Samsung and Google combined on mobile device ads. Despite this, it is not beyond the realm of possibility to see the smartphone adoption rate in the U.S. slow from previous levels. This may crank up the ad spending and make the battle for every customer even more intense.
Do Nokia and Microsoft have a chance in this market? The answer is yes, as telecom firms will be pushing their products hard as an alternative to the Apple/Google smartphone duopoly. According to IHS Screen Digest, growth of Windows-based phones will be in the 140 percent range in 2013. Of course, this is coming off a very small base and will still leave them a distant third behind Apple and Android (Samsung, etc.) phones. Apple alone is forecast to sell between 40 and 50 million of the new iPhone 5 in the fourth quarter of 2012.
It is expected that Google will retain its big lead over Apple in the overall global smartphone market in 2012, despite Apple's victory over Samsung in a U.S. courtroom recently. Samsung has reported that it sold 20 million of its Galazy S3 smartphones in the first 100 days days after launch. By year-end, IHS forecasts there will be 550 million active smartphone users globally using an Android-powered phone versus about 250 million active iPhone users globally.
So look for Apple to continue its legal assault on Samsung and other sellers of Android phones around the world. But is doubtful it will ever catch up to Android in sheer number of users globally. As for Nokia and Microsoft, they have a punchers chance with the launch of the new Windows 8 which will be on roughly 400 million devices within a year globally.
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tdalmoe has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Nokia. 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.If you have questions about this post or the Fool’s blog network, click here for information.
