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Smartphone Market Share Update 2Q, 2010: Strategy Analytics

Posted in Mobile Devices and Company Updates by Manas Ganguly on July 23, 2010

A market share update from Strategy Analytics

2Q 2010 saw 60 million smartphones being shipped globally, a 43% jump versus 2Q 2009. Overall, smartphones accounted for 19 percent of all handsets shipped during 2Q,2010. Strategy Analytics reasons that the 43% Growth was driven by robust subsidies from carriers, strong competition between high-end vendors, and a rising selection of lower-cost phones running systems like Android and Symbian

On the flip side, the dizzying array of smartphones and the increasingly competitive market could pose a challenge to manufacturers trying to ramp up profits. The global smartphone industry is growing volume, but the industry’s value is beginning to feel the effects of intensifying competition. Dozens of vendors from the telecoms, PC and consumer electronics industries are piling into the market and driving down prices. Even established brands such as Nokia, RIM, and Apple are finding it increasingly hard to raise prices and profits in the face of such fierce competition.

Among the three major smartphone players, Nokia’s market share dipped slightly to 40.3 percent compared with 40.7 percent in 2009’s second quarter. Second-place Research in Motion saw its slice of the market fall to 18.8 percent from 19.3 percent a year-ago. And third-place Apple watched its share grow to 14.1 percent from 12.5 percent in last year’s quarter.

Even while Nokia reported a 40% drop in profits in the 2nd Quarter 2010, it was able to grow its smartphone shares from 38.8% (Exit 2009) to 40.3%. Going forward a lot of Nokia’s smartphone fortunes would depend upon the N8 and Symbian 3 Operating systems. While there have rumours of CEO Olli Pekka’s exit after a sub-optimal performance, the biggest concern for Nokia is its ASP.The average selling price for Nokia smartphones declined to €143 from €181 a year ago. Currently the 43% increase in volume has offset the 21% decrease in ASP. However going forward competition from low end Androids may result in further ASP drops unless Symbian 3 is able to reverse the perception of inability of Symbian to support Smart features.

RIM may be the top gun in the North American smartphone markets, but it is also under pressure from the Android armies of HTC, Motorola and Samsung. RIM’s inability to produce a great touch experience can also be a handicap going forward. A lot depends on Blackberry OS 6.0 due launch soon. Analysts and Tech Geeks are also awaiting the rumored Blackberry Tablet. There would be lot of learnings on the Tablet front that could be taken to Blackberry’s touch portfolio.

While Apple continues to beat the smartphone growth, there are some signs of the Apple sales slowing down and this is chiefly attributed to the following factors: Users were more likely to put off purchases of the iPhone in 2Q 2010 because of the anticipation of iPhone 4G. Secondly, Apple may be reaching the upper limits of the number of customers it can grab through its current carriers, especially in major iPhone markets such as the U.S., China, and Japan. To expand market share much further, Apple will need to reach out beyond its current lineup of carriers. Higher growth for Apple is expected to happen from Multiple carrier tie-ups across large markets such as US, China and Japan. The backlash of the Foxconn worker suicides and the Antennagate issue is expected to have blunted Apple’s mind share amongst it followers.

The Global Virtual Currency courtesy Facebook

Posted in Social context, media and advertising by Manas Ganguly on July 23, 2010

Profiling Facebook’s attempt at Virtual Global Currency: Unveiling Facebook Credits

Even while Facebook has crossed 500 million mark, it has lacked a consistent mechanism for turning the user/follower legions to dollars. Banner advertising in most cases doesn’t provide a worthwhile return on investment internationally.

With an eye on its revenue engines, Facebook has also declared that it will now roll its Credits programme beyond its Beta confines. The network-wide rollout of the virtual currency application would streamline transactions online and, in effect, pave the path to the world’s first global currency. It’s also going to help Facebook scale one of its last major economic hurdles – monetizing its millions of international users. Now translated into more than 100 languages, Facebook will do more than $1 billion in revenue this year

The potential implications of a virtual global currency are staggering, if not difficult to pin down precisely. Facebook users have already shown a willingness to shell out for virtual goods in online games like FarmVille and Mafia Wars. The software company behind these, Zynga, is expected to make more than $450 million this year, the bulk from virtual purchases. With a Facebook credits program, users both domestic and abroad may soon be purchasing real goods through companies that utilize Facebook Connect. The benefits of One-click purchasing for targeted Facebook ads could be enormous: Advertisers and social marketers might have unprecedented access to real-time data on spending patterns and international purchases. Mobile carriers stand to benefit, too, as international consumers are increasingly more adept at using smartphones for financial transactions. A virtual currency could also be a boon to entrepreneurs in developing nations. Consumers could use credits to purchase directly from artisans in Brazil or Thailand. That may require Facebook to ultimately abandon the dollar as its exchange root, but it certainly presents a unique opportunity for micropayments to blossom.

There’s increasing chatter about Facebook giving Google a run for its money. But in some ways it may also carry the torch once wielded by PayPal, which held a similar vision of a truly global currency.

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