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Nokia’s pain is Apple’s gain

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Facing strong competition from Apple, Samsung Electronics and No. 5 brand HTC, Nokia posted the worst performance among the leading smartphone brands, with its shipments falling to 16.7 million units, down from 24.2 million in the first quarter. Nokia’s shipments also were down 30.4% from 24 million one year earlier, in the second quarter of 2010.With the overall smartphone market expanding by 7.5% sequentially, Nokia’s share of shipments declined to 15.1% in the second quarter, down from 23.6% in the first quarter. Nokia’s smartphone shipments have regressed to their level of two years ago. This caused Nokia to fall to third place, losing the No. 1 ranking for the first time in the history of the smartphone business.The sharks circleNokia’s decline in the second quarter allowed Apple to climb one place to take the No. 1 position, although the company only slightly outperformed the overall smartphone market, with its shipments rising by 9.1% sequentially. Samsung ascended to No. 2, up from fourth place in the first quarter, as its shipments surged by 55.6%—the strongest sequential growth among the leading smartphone brands. HTC posted the second best performance among the top brands, with its shipments rising by 24.6% compared to the first quarter.Nokia’s woesAlthough Nokia had been holding onto the lead in the smartphone market during the last year, the company has been suffering from declining market share in its home European market. The company also has seen overall slowing sales in China. However, the second quarter marked a dramatic plunge in Nokia’s China business, with shipments dropping by 52.7%.Beyond Nokia’s problems with Symbian, the company also is encountering challenges in its transition to Windows 7 as its principal operating system for smartphones. With the announcement of the transition in early 2011, Nokia eliminated any incentive for consumers and developers to buy into its existing smartphone products, which are based on its Symbian and MeeGo operating systems. Because the Microsoft deal is unlikely to yield any products until late 2011, it is having a further negative impact on the Nokia’s already eroding position in smart phones.© IHS iSuppliSamsung dunks on RIMJust as Apple capitalized on Nokia’s decline to take the No. 1 spot, Samsung seized on a shipment decline at Research In Motion Ltd. (RIM) to vault to second place in the smartphone market for the second quarter. RIM’s shipments declined by 10.8% during the period, making it the only other major brand besides Nokia to suffer a sequential decline in shipments. As a result, RIM fell to the fourth ranking, down from third place in the first quarter.Like Nokia, RIM is losing share to the Android platform as it struggles to develop a complete ecosystem for its operating system and develop a device capturing consumer trends. Most of RIM’s market share loses are taking place in Europe and North America.Meanwhile, Samsung’s shipments have surged because of its broad focus on all parts of the smartphone business with its shotgun approach to address all segments and leverage the Android platform. In addition to premium smartphones, Samsung has been offering low-end models that appeal to consumers in China and Latin America, driving up the company’s shipments.Smartphone shipments set to soarSmartphones represent the fastest-growing and most lucrative segment of the global cellphone business. Because of this, the smartphone has become the central focus for mobile handset makers.IHS expects smartphone shipments to reach 478 million units by the end of 2011, up 62.4% from 2010. In comparison, the overall cellphone business will expand by 13.5% for the year.The average selling price for smartphones ranges from two to five times the average for all mobile phones in 2011.

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