“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?