“Sony Ericsson posted an atrocious 4Q11 handset performance, extending the losing streak of Android vendors. This wasn’t expected to be a stellar quarter for SE, but the numbers are way below expectations – handset volumes dropped by 20% YoY. Of course, earlier on HTC issued two back-to-back warnings and Motorola delivered a very disappointing 4Q volume performance. LG’s smartphone growth started sputtering already last summer,” Tero Kuittinen reports for Forbes.
“Samsung is still cruising on – but what is happening to all these second-tier vendors? After the Nielsen report on 4Q11 smartphone market in United States, it’s clear that Apple is slamming Motorola and HTC badly in North America with its cut-rate old iPhone models. But Sony Ericsson does not have much US exposure,” Kuittinen reports. “And Google is now reporting a heady 700’000 Android device activations per day. How is it possible the mid-tier Android vendors cannot eke out revenue growth with that kind of global Android unit explosion still going on?”
Kuittinen reports, “The most likely explanation is the rapid expansion of the low-cost Android phone vendors, particularly ZTE and Huawei. In 2010, Vodafone and Orange decided to give these Chinese companies a shot at becoming mainstream vendors in Europe. The experiment was a wild success – several of the models and particularly the ZTE Blade (which Orange named “San Francisco”) became bestsellers by pushing smartphone pricing to new lows… We are likely to witness a US sequel to this phenomenon this year. Globally, the industry could well witness smartphone ASP erosion that is substantially faster than projected.”
Read more in the full article here.
MacDailyNews Take: Race to the bottom. Guess which company will be able to maintain margins and end up owning the profit share pie?
Interesting how the most profitable company in the Android space is the one that most fervently steals Apple hardware designs and software interfaces.
Had Google not stolen Apple’s IP, can you imagine how many iPhones would have sold by now?
Something surely to be investigated by Apple’s lawyers for their suits.
They may win lawsuits, but there’s no way they could have built the volume of iPhones that are being consumed in the form of all smartphone handsets. If everyone who bought an Android phone last year wanted an iPhone, Apple could not have produced them.
That is total bullshit. Apple doesn’t assemble any phones for market. They just make prototypes.
Many different assembly companies make cell phones, not just Foxxcon. The people who want a cell phone in any given year get a cell phone. The independent cell phone assemblers have the capacity to make any number of phones a company like Apple could order.
If Android using companies stopped ordering phones, Apple could have filled that assembly void with iPhone orders. If special new equipment was needed Apple could prepay the cash to cover the expenses.
“How is it possible the mid-tier Android vendors cannot eke out revenue growth with that kind of global Android unit explosion still going on?”
Easy; and I am not an analyst. Cell Phones are just like the car market a century ago had something going toward 200 makes in the U.S.
A few of the biggies will survive the next year or two and only the “Big 3” will remain, but it will be global this time. Interestingly, Motorola, which had the first hand held cell phone will not be around.
700,000 Androids a day?!? Where are they??? iPhones / iPads are everywhere!! I see like five droids a month and tens or hundreds of iOS devices. It seems that flashing your device must count as a new activation.
I wonder if some obsessed Droid people bought extra phones just to leave them on the desk re-flashing and reactivating to drive-up numbers. 🙂
All those Android activations are on the cheap Chinese-made phones that are only available currently in Asia and Europe.
Exactly, I have seen maybe a too of 10 Andread smartphones, while I see hundreds of iPhones.
I think Google is lying.
Good point, Bill. The other explanation is that Google is, um, exaggerating the “activations” claim. After all, the number is clearly an estimate and is unsupported by auditable data…
Right! Exaggerating for sure IMO. That is 255 million a year. Now if a news company wants to put Google on the spot, just write an article saying that Google says their OS sells 255 million phones a year – and then wait for the fall out!
Sony Ericsson hasn’t made money in smartphones since the iPhone originally launched. We already knew that Motorola and LG were either unprofitable or making small profits depending upon the quarter. Nokia switched from Symbian to WP7, because ZTE and Huawei were eating the low-end S40 phones, while Apple and Android were eating the high-end.
Only HTC and Samsung were doing well, and then last month HTC pre-announced that they were going to disappoint on earnings. So, the only smartphone mfr that is doing well is Samsung, besides the ZTEs and Huaweis of the world.
Should Apple worry? Of course not, Samsung should be worried, as those are the customers most likely to buy a cheap ZTE or Huawei instead.
“China ate Android”,…
Now that’s what I’d call indigestion!
Plop, plop, fizz, fizz…
You mean some of those 700K daily activations aren’t legit Google-sanction Android? Just like the “60% of people signed up for Google+ use it daily”.
Google is the new king of misleading – and outright bullshit – statistics, having swiped the title from Microsoft.
ZTE and Huawey are already making strides in American mobile markets. Granted, they aren’t showing up on the usual, contract-based plans (where iPhones are $200), but they are among the most popular (and cheapest) Androids on the pre-paid plans (on T-Mobile), and especially on the prepaid-only, budget carriers (MetroPCS, Boost, Cricket, etc). These phones cost $100 and even less, WITHOUT subsidy. When an ordinary person looks at an Android device where he must pay north of $70 per month (and get shackled to a two-year contract), the $100 (or even $0) LG, Motorola or HTC doesn’t look all that attractive if you can get a $30 monthly plan plus just “as good” Android phone for less than $100.
Huawei and ZTE are seriously disrupting the non-iPhone market, and it is only the matter of time when Samsung will eventually begin to feel the pressure to lower prices, margins and profits.
In the Android market, very few people feel the difference in value between a $80 ZTE and a $600 Samsung. It is just the matter of time when the pinch becomes a vise grip for Samsung.
” How China ate Android”
Why, with chopsticks of course.
The only thing that Google contributes to the licensees of Android is to make them copycats and lazy plagiarists and to help them rush to the bottomless pit. While these licensees become “charitable” boutique of trash, Google will be milking their efforts to make tons of money in ads.
Most damning of all, it will make the US licensees the chief casualties. They will be clobbered by the likes of Samsung and HTC and the low-cost Chinese manufacturer, who do not necessarily compete according to the US’s rules of competition. Just like the Windows’ model, US licensees are becoming insignificant players in the tech arena. Just imagine former giants such as HP and Dell thinking of getting out the PC business, this is an object lesson of how US Android players will fare against the likes of Samsung and HTC. Google and Microsoft are complicit in the decline of the participation of US companies in the tech industry of America.
1 very true
Microsoft and Google are enablers of this type of business model in which Low wage nations namely China feast upon.
And, does anyone trust Samsung “sales” figures? Beginning last summer the company has chosen not to release *any* official sales or shipping numbers of mobile devices and instead is hiding behind estimates put out by private research firms having a hidden client list and non-transparent methodologies, Plus they use anonymous leaks to trusted journalists about how Samsung is “building on its supremacy” in smartphones (try googling the phrase to appreciate the craftiness of Samsung’s PR). Journalists are too lazy, incompetent, or corrupt to demand Samsung provide official numbers.
I know several people who have shopped for cell phones by “buying-activating-trying-returning” numerous android models over a few days. In this case, one ultimate user accounted for numerous “Activations”. Does Google count all these activations? How many times can the same phone be Activated/Reactivated? Is each Activation/Reactivation counted as a new cell phone? Is there any real correlation between “Activations” and units “Sold”?
Can anyone answer this?
Good take ET. I never pondered it that way. AssDroid ethics 101. Just Lie.