Ovum comment: Nokia Lumia 1020 sets new smartphone benchmark but pricing will be key

Nokia’s latest Lumia 1020 finally marries Microsoft’s Windows Phone 8 software with the 41MP over-sampling camera technology the company previously marketed in the Symbian PureView 808.

Tony Cripps, Principal device analyst at Ovum believes “The combination sets a new benchmark for high-end smartphone engineering – and a timely reminder of Nokia’s R&D capabilities – but the company must still overcome incumbent rivals, slow adoption of Windows Phone and a modest marketing budget if it is to finally help the company turn a financial corner after its recent time in the doldrums.”

Cripps continues:

 “At a time when macro-level innovation has seemed to be lacking in smartphones – due to the homogeneity of smartphone operating systems and the drive to appeal to the mass market – Nokia’s Lumia 1020 demonstrates that there is still considerable scope to drive forward the user experience in core smartphone capabilities. This is evidenced not only in the Lumia 1020’s imaging prowess but also in its audio abilities, the company’s Rich Recording technology similarly transforms the Lumia 1020’s audio recording.

“Both imaging and audio are key areas of investment for Nokia and crucial to its long-term strategy of rebuilding market differentiation. This is true not only at the high end, where the Lumia 1020 will be something of a beacon, but also further down the range as the fruits of Nokia’s labours begin to trickle down through the midrange towards the value end of the smartphone spectrum.

The previous PureView 808 gave a tantalizing view of what was possible in terms of phone imaging but felt squandered in the context of its geriatric operating system and aesthetically compromised by a cumbersome – if impressive – camera module.

“The Lumia 1020 addresses both issues. While the new camera module contributes to a device that is noticeably thicker than the existing flagship, the Lumia 925, it is small enough to avoid the chunky and top-heavy design of its PureView 808 forebear. The PureView user experience is similarly upgraded through its integration with Microsoft’s elegant Windows Phone 8 platform, which itself benefits from a flagship device featuring category-leading imaging technology.

Supermodel must show its class not become a cheap date

“Nonetheless, while the Lumia 1020 looks to be the new belle at the smartphone ball, its debut will not necessarily attract a mass of suitors. Most obviously, the device will be expensive. Pricing has yet to be revealed but engineering of the kind on offer in the Lumia 1020 does not come cheap. Aggressive operator subsidies would no doubt help in that regard, but might detract from the device’s premium engineering and user experience.

“Furthermore, Nokia, and Windows Phone more generally, still suffers from a lack of consumer awareness and marketing dollars compared with their key rivals, Apple and Samsung-plus-Android. While this situation is undoubtedly improving, these factors continue to put off many prospective consumers due a greater chance of favorite applications being unavailable.

As such, when lined up against rival devices such as Apple’s iPhone 5 and Samsung’s Galaxy S4, which now effectively sell themselves, the case for selecting the Lumia 1020 is less clear cut.

Nokia may still have work to do to convince prospective buyers to sacrifice favourite apps for superior imaging. But for those who are less concerned about specific third-party apps or in need of something different, the Lumia 1020’s pictures provide a thousand reasons to look again to Espoo.”

Gartner Says Asia/Pacific Led Worldwide Mobile Phone Sales to Growth in First Quarter of 2013

Sales of Mobile Phones in All Regions Except Asia/Pacific Declined in the First Quarter of 2013
Slowdown in Feature Phone Upgrade Cycle Could Strain Mobile Phone Market in 2013

Kuala Lumpur, May 21, 2013 — Worldwide mobile phone sales to end users totaled nearly 426 million units in the first quarter of 2013, a slight increase of 0.7 percent from the same period last year, according to Gartner, Inc. Worldwide smartphone sales totaled 210 million units in the first quarter of 2013, up 42.9 percent from the first quarter of 2012. The Asia/Pacific region was the only region to show growth in mobile phone sales this quarter, with a 6.4 percent increase year-on-year.

“More than 226 million mobile phones were sold to end users in Asia/Pacific in the first quarter of 2013, which helped the region increase its share of global mobile phones to 53.1 percent year-on-year,” said Anshul Gupta, principal research analyst at Gartner. “In addition, China saw its mobile phone sales increase 7.5 percent in the first quarter of 2013, and its sales represented 25.7 percent of global mobile phone sales, up nearly 2 percentage points year-on-year.

“The Chinese and local manufacturers have been exemplary at addressing the demands of buyers by offering affordable devices with optimum features such as 2.5G (EDGE) instead of 3G in a smartphone. In the smartphone market, local and Chinese manufacturers are making faster inroads as they account for 29 percent share in the first quarter of 2013, up from 13.2 percent a year ago.”

In the first quarter of 2013, sales of mobile phones in the EMEA region declined 3.6 percent. The North America and Latin America’s mobile phone market fell 9.5 and 3.8 percent, respectively, while Japan saw its mobile phone sales drop 7.3 percent.

Mobile Phone Vendor Perspective
Samsung: Samsung remained in the No. 1 position, growing 13 percent in the first quarter of 2013 (see Table 1). Its share of smartphones reached 30.8 percent, up 3.2 percentage points from the first quarter of 2012 (see Table 2). “We expect the new Galaxy S4 to be very popular despite being more of an evolution than a truly revolutionary device compared to the S3,” said Mr. Gupta.

Nokia: Its mobile phone share dropped 4.9 percentage points in the first quarter of 2013 mainly due to a steep decline in feature phone sales. Although Nokia’s Windows Phone sales have sequentially improved reaching a volume of 5.1 million units, Nokia is yet to see high growth in the smartphone segment. Nokia’s position in the smartphone market dropped to No. 10 in the first quarter of 2013, from No. 8 in the fourth quarter of 2012.

Apple: Sales to end users reached 38.3 million units in the first quarter of 2013 as Apple was able to burn some of the inventory built at the end of 2012 as iPhone 5 was rolling out in more markets, and as the company prepared for Chinese New Year. China is a key contributor to overall sales for Apple, and Gartner analysts saw evidence of this in the first quarter of 2013, when sales reached close to 7 million units in mainland China alone thanks to the lower price of the iPhone 4. “Apple is faced with the challenge of being increasingly dependent on the replacement market as its addressable market is capped. The next two quarters will also be challenging, as there are no new products are expected to be coming before the third quarter of 2013,” said Mr. Gupta.

LG electronics moved in front of ZTE in the first quarter of 2013 for the No. 4 position. ZTE had a weak performance, failing to grow its smartphone sales, selling 7.9 million smartphones in the first quarter of 2013, a 5.1 percent decline year-on-year.

Table 1

Worldwide Mobile Phone Sales to End Users by Vendor in 1Q13 (Thousands of Units)

Company	1Q13 Units	1Q13 Market Share (%)	1Q12 Units	1Q12 Market Share (%)
Samsung	100,657.7	23.6	89,284.6	21.1
Nokia	63,215.2	14.8	83,162.5	19.7
Apple	38,331.8	9.0	33,120.5	7.8
LG Electronics	15,615.8	3.7	14,720.4	3.5
ZTE	14,606.6	3.4	17,379.7	4.1
Huawei Technologies	11,114.8	2.6	10,796.1	2.6
TCL Communication	8,515.9	2.0	7,396.6	1.7
Sony Mobile Communications	7,955.5	1.9	7,898.4	1.9
Lenovo	7,778.9	1.8	5,820.6	1.4
Yulong	7,478.8	1.8	3,146.6	0.7
Others	150,550.6	35.4	150,229.40	35.5
Total	425,821.6	100.0	422,955.4	100.0

Source: Gartner (May 2013)

In the first quarter of 2013, smartphones accounted for 49.3 percent of sales of mobile phones worldwide. This is up from 34.8 percent in the first quarter of 2012, and 44 percent in the fourth quarter of 2012. On the other hand, sales of feature phones contracted 21.8 percent in the first quarter of 2013.

“Feature phones users across the world are either finding their existing phones good enough or are waiting for smartphones prices to drop further, either way the prospect of longer replacement cycles is certainly not a good news for both vendors and carriers looking to move users forward,” said Mr. Gupta.

Table 2

Worldwide Smartphone Sales to End Users by Vendor in 1Q13 (Thousands of Units)

Company	1Q13 Units	1Q13 Market Share (%)	1Q12 Units	1Q12 Market Share (%)
Samsung	64,740.0	30.8	40,612.8	27.6
Apple	38,331.8	18.2	33,120.5	22.5
LG Electronics	10,080.4	4.8	4,961.4	3.4
Huawei Technologies	9,334.2	4.4	5,269.6	3.6
ZTE	7,883.3	3.8	4,518.9	3.1
Others	79,676.4	37.9	58,537.0	39.8
Total	210,046.1	100.0	147,020.2	100.0

Source: Gartner (May 2013)

In the smartphone operating system (OS) market (see Table 3), Android continued to increase its lead, with nearly 50 percent more Android smartphones in the market than a year ago. “There are two clear leaders in the OS market and Android’s dominance in the OS market is unshakable,” Mr. Anshul said. “With new OSs coming to market such as Tizen, Firefox and Jolla we expect some market share to be eroded but not enough to question Android’s volume leadership. 

Table 3

Worldwide Smartphone Sales to End Users by Operating System in 1Q13 (Thousands of Units)

Operating System	1Q13  Units	1Q13 Market Share (%)	1Q12  Units	1Q12 Market Share (%)
Android	156,186.0	74.4	83,684.4	56.9
iOS	38,331.8	18.2	33,120.5	22.5
Research In Motion	6,218.6	3.0	9,939.3	6.8
Microsoft	5,989.2	2.9	2,722.5	1.9
Bada	1,370.8	0.7	3,843.7	2.6
Symbian	1,349.4	0.6	12,466.9	8.5
Others	600.3	0.3	1,242.9	0.8
Total	210,046.1	100.0	147,020.2	100.0

Source: Gartner (May 2013)

Additional information is in the Gartner report "Market Share Analysis: Mobile Phones, Worldwide, 1Q13." The report is available on Gartner's website at http://www.gartner.com/document/2482415?ref=QuickSearch&sthkw=G00252860.

Gartner Says Worldwide Sales of Mobile Phones Declined 2.3 Percent in Second Quarter of 2012; Smartphone Sales Increased 42.7 Percent

Android Extended Lead While Apple iOS Market Share Growth Paused

Kuala Lumpur, 16 August 2012 — Worldwide sales of mobile phones to end users reached 419 million units in the second quarter of 2012, a 2.3 percent decline from the second quarter of 2011, according to Gartner, Inc. Smartphone sales accounted for 36.7 percent of total mobile phone sales and grew 42.7 percent in the second quarter of 2012.

"Demand slowed further in the second quarter of 2012," said Anshul Gupta, principal research analyst at Gartner. "The challenging economic environment and users postponing upgrades to take advantage of high-profile device launches and promotions available later in the year slowed demand across markets. Demand of feature phones continued to decline, significantly weakening the overall mobile phone market.

"High-profile smartphone launches from key manufacturers such as the anticipated Apple iPhone 5, along with Chinese manufacturers pushing 3G and preparing for major device launches in the second half of 2012, will drive the smartphone market upward. However, feature phones will continue to see pressure," Mr. Gupta said.

In the second quarter of 2012, Samsung's mobile phone sales remained very strong — up 29.5 percent from the second quarter of 2011 (see Table 1), and managed to extend its lead over both Apple and Nokia quarter on quarter. This quarter's growth was driven by record sales of Galaxy smartphones, meaning smartphones now account for 50.4 percent of all Samsung mobile devices, or 45.6 million units. Demand for the new Galaxy S3 was particularly strong, exceeding Samsung's own expectations, with a reported 10 million units reached in the two months after its release. The Galaxy S3 was the best-selling Android product in the quarter and could have been higher but for product shortages.

In the second quarter of 2012, consumer demand for the Apple iPhone weakened as sales fell 12.6 percent from the first quarter of 2012, but grew 47.4 percent year on year. Depending on the exact launch date of the new iPhone, Apple might experience another weaker-than-usual quarter in the third quarter of 2012, while Apple will be ready to take advantage of the strong holiday sales in North America and Western Europe that have historically remained immune to economic pressure.

"Samsung and Apple continued to dominate the smartphone market, together taking about half the market share, and widening the gap to other manufacturers. No other smartphone vendors had share close to 10 percent," Mr. Anshul said. "In the race to be top smartphone manufacturer in 2012, Samsung has consistently increased its lead over Apple, and its open OS market share increased to one-and-a-half times that of Apple in the second quarter of 2012."

Table 1

Worldwide Mobile Device Sales to End Users by Vendor in 2Q12 (Thousands of Units)

Company	2Q12 Units	2Q12 Market Share (%)	2Q11 Units	2Q11 Market Share (%)
Samsung	90,432.1	21.6	69,827.6	16.3
Nokia	83,420.1	19.9	97,869.3	22.8
Apple	28,935.0	6.9	19,628.8	4.6
ZTE	17,936.4	4.3	13,070.2	3.0
LG Electronics	14,345.4	3.4	24,420.8	5.7
Huawei Device	10,894.2	2.6	9,026.1	2.1
TCL Communications	9,355.7	2.2	7,938.9	1.9
HTC	9,301.2	2.2	11,016.1	2.6
Motorola	9,163.2	2.2	10,221.4	2.4
Research In Motion	7,991.2	1.9	12,652.3	3.0
Others	137,233.4	32.8	152,989.70	35.7
Total	419,007.90	100.0	428,661.15	100.0

Source: Gartner (August 2012)

Nokia's mobile phone sales declined 14.8 percent in the second quarter of 2012. Nokia is battling fiercely with white-box and new emerging device manufacturers to defend its feature phones sales. Nokia succeeded, to a certain extent, in winning feature phone market share as its sales grew quarter-on-quarter. While posting sequential growth in the feature phone market, Nokia's Lumia devices continue to struggle to find a place in consumers' minds as a replacement for Android.

"Declining smartphone sales is worsening Nokia's overall position, as it had already lost the No. 1 position to Samsung in the previous quarter and is facing reduced profitability due to continuous declining sales of premium smartphones," said Mr. Gupta.

In the smartphone OS market, Android extended its lead with an increase of 20.7 percentage points in market share in the second quarter of 2012 (see Table 2). While Apple's iOS market share slightly grew year over year (0.6 percent), it declined 3.7 percentage points quarter on quarter, as users postponed their upgrade decisions in most markets ahead of the upcoming launch of the iPhone 5.

Gartner analysts said the arrival of the iPhone 5 should provide the greatest upgrade opportunity yet as the expected new design with a larger screen and likely other stylistic changes to the form factor will certainly make a strong case for iPhone 4 users to upgrade.

Table 2

Worldwide Mobile Device Sales to End Users by Operating System in 2Q12 (Thousands of Units)

Operating System	2Q12 Units	2Q12 Market Share (%)	2Q11 Units	2Q11 Market Share (%)
Android	98,529.3	64.1	46,775.9	43.4
iOS	28,935.0	18.8	19,628.8	18.2
Symbian	9,071.5	5.9	23,853.2	22.1
Research In Motion	7,991.2	5.2	12,652.3	11.7
Bada	4,208.8	2.7	2,055.8	1.9
Microsoft	4,087.0	2.7	1,723.8	1.6
Others	863.3	0.6	1,050.6	1.0
Total	153,686.1	100.0	107,740.4	100.0

Source: Gartner (August 2012)

Additional information can be found in the Gartner report "Market Share: Mobile Devices, Worldwide, 2Q12." The report is available on Gartner's website at http://www.gartner.com/resId=2117915.

Gartner Says Worldwide Sales of Mobile Phones Declined 2 Percent in First Quarter of 2012; Previous Y-o-Y Decline Occurred in Second Quarter 2009

Smartphone Sales Grew 45 Percent in First Quarter of 2012
Samsung’s Android-Based Smartphone Sales in First Quarter of 2012 Represented More Than 40 Percent of Android-Based Smartphone Sales Globally; No Other Vendors Achieved More Than a 10 Percent Market Share


Kuala Lumpur, 17 May 2012 — Worldwide sales of mobile phones to end users reached 419.1 million units in the first quarter of 2012, a 2 per cent decline from the first quarter of 2011, according to Gartner, Inc. This is the first time since the second quarter of 2009 that the market exhibited a decline.

“Global sales of mobile devices declined more than expected due to a slowdown in demand from the Asia/Pacific region,” said Anshul Gupta, principal research analyst at Gartner. “The first quarter, traditionally the strongest quarter for Asia – which is driven by Chinese New Year, saw a lack of new product launches from leading manufacturers, and users delayed upgrades in the hope of better smartphone deals arriving later in the year.”

All vendors were impacted at different levels; however, white-box vendors seem to have suffered the most. While tier one players such as Nokia were negatively impacted on sell-in numbers (sold into retail), white-box vendors were unable to adjust production and were left with a build-up in inventory by the end of the quarter. Gartner expects some of this volume to be sold during the next couple of quarters, because the channel is likely to lower the prices to dispose of the stock.

“The lower results in the first quarter of 2012 have led us to be cautious about sales for the remainder of the year,” said Annette Zimmermann, principal research analyst at Gartner. “The continued roll-out of third generation (3G)-based smartphones by local and regional manufacturers such as Huawei, ZTE, Lenovo, Yulong and TCL Communication should help spur demand in China. In addition, the arrival of new products in mature markets based on new versions of the Android and Windows Phone operating systems (OSs), and the launch of the Apple iPhone 5 will help drive a stronger second half in Western Europe and North America. However, as we are starting to update our market forecast we feel a downward adjustment to our 2012 figures, in the range of 20 million units, is unavoidable.”

Samsung became the world’s top mobile handset vendor during the quarter, displacing Nokia which had held the No. 1 spot since 1998. Samsung’s mobile phone sales reached 86.6 million units (see Table 1), a 25.9 percent increase from last year. Samsung took back the world’s No. 1 smartphone position from Apple, selling 38 million smartphones worldwide. In addition, Samsung’s Android-based smartphone sales in the first quarter of 2012 represented more than 40 percent of Android-based smartphone sales worldwide; no other vendors achieved more than a 10 percent share of the market.

Sales of smartphones continued to drive mobile device market growth, reaching 144.4 million units in the first quarter of 2012, up 44.7 percent year-over-year. This quarter also saw the top two smartphone vendors, Apple and Samsung, raising their combined share to 49.3 percent, up from 29.3 percent in the first quarter of 2011, and widening their lead over Nokia – which saw its smartphone market share drop to 9.2 percent.

Table 1

Worldwide Mobile Device Sales to End Users by Vendor in 1Q12 (Thousands of Units)

Company	1Q12 Units	1Q12 Market Share (%)	1Q11 Units	1Q11 Market Share (%)
Samsung	86,567.6	20.7	68,782.0	16.1
Nokia	83,162.5	19.8	107,556.1	25.1
Apple	33,120.5	7.9	16,883.2	3.9
ZTE	17,439.3	4.2	10,788.7	2.5
LG	14,720.4	3.5	23,997.2	5.6
Huawei Device	10,796.1	2.6	7,002.9	1.6
Research in Motion	9,939.3	2.4	13,004.0	3.0
Motorola	8,368.2	2.0	8,789.7	2.1
Sony Mobile Communications	7,898.4	1.9	7,919.4	1.9
HTC	7,703.4	1.8	9,313.5	2.2
Others	139,392.6	33.3	153,809.0	35.9
Total	419,108.3	100.0	427,845.7	100.0

Source: Gartner (May 2012)

Nokia's mobile handset sales reached 83.2 million units, a 22.7 percent decrease from the first quarter of 2011. “Smartphone sales are becoming of paramount importance at a worldwide level. For example, smartphone volumes contributed to approximately 43.9 per cent of overall sales for Samsung as opposed to 16 per cent for Nokia,” Mr. Gupta said.

Driven by the continued success of the iPhone 4S, Apple’s sales grew 96.2 percent in the first quarter of 2012 as the new model expanded into new markets and carriers. Sales in China were particularly strong this quarter. With more than 5 million units, China became the second-largest market for Apple after the U.S. On top of the sales through official carriers’ channels, there was an increase in transshipments from Hong Kong where volume has been growing over the past few quarters to reach a sell-in of more than 3 million units.

RIM sold 9.9 million mobile handsets in the first quarter of 2012, with its global share declining to 2.4 percent as competition increased in its international market strongholds. “RIM desperately needs to deliver winning BB10 products to retain users and stay competitive. This will be very challenging, because BB10 lacks strong developer support, and a new BB10 device will only be available in the fourth quarter of 2012,” said Mr. Gupta.

In the smartphone OS market, Android accounted for more than half of all smartphone sales (56.1 percent) in the first quarter of 2012 (see Table 2). Gartner analysts said the smartphone market has become highly commoditized and differentiation is becoming a challenge for manufacturers.

“This is particularly true for smartphones based on the Android OS, where a strong commoditization trend is at work and most players are finding it hard to break the mould,” Mr. Gupta said. “At the high end, hardware features coupled with applications and services are helping differentiation, but this is restricted to major players with intellectual property assets. However, in the mid to low-end segment, price is increasingly becoming the sole differentiator. This will only worsen with the entry of new players and the dominance of Chinese manufacturers, leading to increased competition, low profitability and scattered market share.”

Table 2

Worldwide Smartphone Sales to End Users by Operating System in 1Q12 (Thousands of Units)

Operating System	1Q12 Units	1Q12 Market Share (%)	1Q11 Units	1Q11 Market Share (%)
Android	81,067.4	56.1	36,350.1	36.4
iOS	33,120.5	22.9	16,883.2	16.9
Symbian	12,466.9	8.6	27,598.5	27.7
Research In Motion	9,939.3	6.9	13,004.0	13.0
Bada	3,842.2	2.7	1,862.2	1.9
Microsoft	2,712.5	1.9	2,582.1	2.6
Others	1,242.9	0.9	1,495.0	1.5
Total	144,391.7	100.0	99,775.0	100.0

Source: Gartner (May 2012)

Additional information can be found in the Gartner report "Market Share: Mobile Devices, Worldwide, 1Q12." The report is available on Gartner's website at http://www.gartner.com/resId=2015915.