In our latest mythbusters blog, we take on the claims that AT&T’s acquisition of T-Mobile will somehow kill the explosive innovation that is currently reshaping the global wireless marketplace of devices, apps and network technologies. With appropriate credit to Mark Twain, I must proclaim that the reports of innovation’s death have been greatly exaggerated.
The opposition never really explains precisely why or how this will happen, but they are quite certain that it will. They have gone as far as to pull out a decades-old brick phone and threaten a return to that age (watch Public Knowledge testify at the May 11 hearing).
To explode this ridiculous myth, let’s again turn to some facts about what’s really going on in the device market. In the interest of space (this is a blog after all), I’ll get to the apps and network innovation facts in subsequent posts.
CTIA has reported that consumers in the U.S. can choose from among more than 630 devices, and a recent Gartner report predicts that smartphone sales in the U.S. will reach 95M in 2011. Impressive. But the device market is global and the worldwide stats are staggering. According to another recently released Gartner report, worldwide mobile device sales for the first quarter of 2011 totaled 428M units. Nokia is still king, selling over 107M devices for a 25% 1Q11 market share. But other manufacturers are busy climbing the castle walls. Nokia’s share is down from 30.6% in 1Q10 to its lowest since 1997.
By contrast, Samsung experienced its strongest first quarter ever, with the sale of 68M devices, and announced additional new devices in the first quarter, including the Galaxy S II and new Galaxy tablets. Apple sold 16.9M units in 90 countries, boosting it into 4th place and HTC moved up sharply into 7th place on the strength of its smartphones.
Research in Motion is now in 5th place. It recently announced that it will transition to the QNX platform in 2012, which many believe will improve the performance parameters of its devices.
LG, ZTE, Motorola, Sony Ericsson and Huawei round out the top ten, and 154M units were sold by all “others,” with that catch-all category rising from a 29% marketshare to a 36% marketshare in just one year. With rising share like that, expect to see individual manufacturers breaking out of the “other” pack to challenge the top 10 out in quarters to come.
Now, this story is not complete without a peek at the battle of the smartphone operating systems. Android continues to perform well, grabbing an estimated 36% marketshare of worldwide smartphone sales in the first quarter, up from a 9.6% market in 1Q10. This quick rise is remarkable. By contrast, the Symbian smartphone marketshare has fallen from 44% a year ago to a 27% share in the first quarter. Gartner predicts that Nokia’s announcement that it will retire Symbian will set off “a competitor’s rush” to capture share.
Of course, the occasional iconic device comes along that shocks the OEM world and changes everything. It bursts onto the scene and quickly becomes the “must have” wireless accessory. No, I’m not talking about the iPhone. I’m talking about the Motorola Razr. It first sold in 2004 and by 2006 it was the most popular clamshell phone of all times, boosting Motorola into second place in the handheld device market. Just two years later, consumer tastes had changed and Motorola began slipping in the ranks. Motorola, of course, eventually announced a decision to sell off its handset business, which at that point was losing money. The moral of that lesson? Innovate or die.
So, waving an old brick phone around at a Congressional hearing may make for good theatrics, but it demonstrates just how out-of-touch our opposition is with the hard facts of the competitive wireless marketplace. On an annualized basis, the first quarter numbers suggest that over 1.7B wireless devices will be sold in 2011. Every manufacturer out there will be fighting for an ever bigger piece of that rapidly expanding pie and innovation will be their primary weapon in the battle.
The T-Mobile deal allows us to commit to deploy LTE to 97% of all Americans. By significantly expanding the addressable base of customers with access to LTE technologies, this transaction will spur and accelerate innovation around wireless devices, applications and services, as manufacturers and developers seek to leverage the enhanced capabilities of LTE.
In short, I am happy to report that innovation is alive and well, and this deal will be the catalyst for new innovation for many years to come.