Analyzing the world's 10 biggest handset makers in Q2

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abi michael morganThe numbers are in, and it's time to make sense of the data. ABI Research's Michael Morgan checks out the world's 10 largest branded cell phone makers in the second quarter of 2011, providing sales data as well as insight into their strategy and competitive position in the market.

Though most research firms only list the market's top five handset makers, ABI lists the full top 10 (and the firm is providing shipment numbers for all of the vendors listed).

A few notes: ABI's numbers represent "sell in," or phone shipments into the retail channel, rather than "sell out," or sales to consumers. Further, ABI's ranking only counts phones that carry the manufacturer's brand. Therefore, phones that bandy a carrier's logo without a hint of which company actually built the device are not counted.

And see ABI's first quarter 2009 rankings, second quarter 2009 rankings , third quarter 2009 rankings, fourth quarter 2009 rankings, second quarter 2010 rankings, third quarter 2010 rankings, fourth quarter 1010 rankings and first quarter 2011 rankings.

(And click here for a look at the second quarter earnings season and click here for a look at the top 10 U.S. wireless carriers in the second quarter.)

Second quarter 2011 market share by OEM
Second quarter 2011 market share by OEM

OEM shipments from first quarter 2010 to second quarter 2011
OEM shipments from first quarter 2010 to second quarter 2011

Smartphone share of handset shipments
Smartphone share of handset shipments

Analysis from ABI's Michael Morgan

Nokia Nokia's sales dropped by 20 million units from Q1, with sequential drop of 12 million devices from China alone. Unfortunately, Nokia cannot blame the decline in smartphones as the sole reason for shipment declines as its lower end devices declined by 12 million in Q2. At the current rate of decline, Nokia could end up with only 8 percent smartphone market share and lose its No. 1 handset position to Samsung by then end of 2011. Despite decreasing smartphone prices by 15 percent in Q2, smartphones shipments declined in all but one region and profits were only acheived through a large IP settlement.
Samsung As companies get larger, it becomes increasingly difficult to deliver organic growth that meets or exceeds the industry average. Samsung has managed to exceed the industry average growth by delivering competitively priced handsets with the design features of more expensive handsets. In the smartphone realm, Samsung has shown great success with its Android based Galaxy series and its homegrown bada OS. Q2 numbers showed muted growth as feature phone shipment declines offset absolutely stellar smartphone growth. Selling over 5 million Galaxy S II devices in 85 days, Q2 smartphone shipments were up over 500 percent YoY.
LG LG's shipments were essentially flat in Q2 as increased smartphone shipments were offset by decreases in feature phone shipments. LG is looking to differentiate itself in the Android space with LTE and 3D smartphones. However, this approach will pit LG directly against the nimble HTC and powerhouse Samsung.
Apple iPhone With and additional 2.3 million handsets moving through Verizon Wireless and triple-digit growth in APAC, Apple had another record quarter. Apple unseated Nokia and squeezed by Samsung to earn the number one position for smartphone shipments in Q2; which is no small feat considering Apple has only been in the game for four years. Despite Apple's excellent historic growth, it is still possible that Apple can improve upon its track record as the iPhone 5 is released in Q4 across a huge installed based that is eager for the next big thing.
Blackberry Q2 was a very tough quarter for RIM as its smartphone shipments declined 11 percent from Q1. Although RIM's international shipments did increase, it was not enough to offset RIM's decline in the North American market. Facing pressure from Android devices and Apple's expanded distribution, RIMs year old smartphone line up is not capturing consumer mindshare. Before RIM releases its QNX line of 'super phones' in 2012, RIM is hoping a refreshed line of handsets running on OS7 and 1.2 GHz processors will break the trend of declining interest and sales.
ZTE ZTE has made a name for itself with low cost handsets in emerging/developing markets such as India, China, LATAM and Africa. ZTE's focus on emerging markets has served it well as Nokia continues to  bleed share in these segments which  are predicted to deliver the greatest number of new wireless customers in the coming years. As China rises, ZTE is positioned to benefit from Nokia's failings and the growth of China's homegrown 3G networks. On the smartphone of the market, ZTE has set a goal to ship 12 million smartphones in 2011 (up from 3 million in 2010). Given the expected growth of $150 smartphones in 2011, ABI Research believes ZTE is well positioned to capture its fair share of this market segment in emerging markets such as China and Africa.
HTC Driven by strong growth in Asia and continued growth in North America and Europe, HTC achieved another record quarter. While HTC is historically known for high end and high tech smartphones, the models released in Q2 show that HTC can also address the mid-tier smartphone segment. As HTC continues to focus on brand development in China it will be important that HTC has a well developed mid to low cost smartphone line up if it wants to succeed. Looking forward, HTC is likely to continue showing strong growth on the back of 4G smartphones, Android and its emerging mid-tier line up.
Huawei Historically considered a low-cost Chinese handset OEM, Huawei shares the international  stage with ZTE and TCL/Alcatel, as a rising star in China. Huawei has leveraged its prolific set of carrier infrastructure relationships to deploy its low cost handsets in nearly every region. Huawei continues to grow from low cost handsets to low cost Android smartphones and like its Chinese brethren is one of the few OEM's that can deliver a sub-$150 smartphone today. With China's appetite for data and smartphone's increasing everyday, Huawei is well positioned to serve all elements of China's handset needs and is one of a select few to acheive international success.
Motorola Motorola's sales in North America suffered as a result of delayed product launches and the Verizon iPhone. However smartphone sales did increase QoQ with help from growing demand in the APAC region. Motorola was also able to increase its sale of feature phones when many of its competitors suffered declines in this segment. Motorola did not earn a profit this quarter but, the current trend shows that it is acheivable in the near term so long as Motorola continues to execute.
TCL /Alcatel Mobile Phones TCL is a well-known electronics brand in China that had formed a joint venture with Alcatel of France to leverage new markets and carrier relationships. For TCL, the strong growth  sales of entry- to mid-level devices in EMEA and LATAM. The Alcatel / TCL device portfolio is a mix of low- end candy bar devices and colorful clamshell devices with basic media capabilities.  Most TCL handsets are designed to meet the universal needs of all regions served by Alcatel and TCL, allowing for greater production volume per device model. TCL's effecient prodcution has allowed it to offer low cost 3G handsets that are sought after by consumers moving from 2G. TCL is continuing to leverage its low cost production capabilities to offer sub-$150 Android smartphones, and remains one of the few OEMs that can do that today.

The raw data

Market share in 2011 Q2
Nokia 24.6%
Samsung 20.6%
LG 6.9%
Apple iPhone 5.6%
Blackberry 3.7%
ZTE 5.4%
HTC 3.4%
Huawei 3.3%
Motorola 3.1%
TCL /Alcatel Mobile Phones 3.0%
Sony Ericsson 2.1%
Other 18.3%

Shipments (in millions)
vendor 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Nokia 107.8 111.1 110.4 123.7 108.5 88.5
Samsung 64.3 63.8 71.4 80.7 70.0 74.0
LG 27.1 30.6 28.4 30.6 24.5 24.8
Apple 8.8 8.4 14.1 16.2 18.7 20.3
RIM 10.5 11.2 12.1 14.2 14.9 13.2
TCL (Alcatel) 2.9 7.6 9.0 12.5 8.7 10.8
Motorola 8.5 8.3 9.1 11.3 9.0 11.0
Huawei 6.1 6.7 6.9 7.7 9.4 11.9
ZTE 8.0 9.9 8.6 9.6 12.1 19.6
HTC 3.3 5.4 6.8 9.1 9.7 12.1
SonyEricsson 10.5 11.0 10.4 11.2 8.1 7.6

Smartphone Share of Handset Shipments
  1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Handset Shipments 255.8 269.1 292.8 333.4 303.0 321.2 346.2 390.0 357.8 359.7
Smartphone Shipments 38 41.3 42.9 54.9 55.7 63.4 81.7 100.1 100.7 103.9
Smartphone Penetration 14.9% 15.3% 14.7% 16.5% 18.4% 19.7% 23.6% 25.7% 28.1% 28.9%