May 9, 2011
After we have published our global findings from our Q1 smartphone forecasts, a number of tech bloggers, journalists, amateur telecom fans, people passionate about their own phones and others picked up on the very last sentence of our précis: “By 2015, Windows Phone will establish itself as the leader in the smartphone OS space.”
Some people have misinterpreted our statement, thinking that Windows Phone (WP) will establish its leadership in 2015. As you can see from Exhibit 1, we actually believe that this will happen much earlier – as early as 2013. Some of you loved this projection and agreed with it, others argued that the potential margin of error was too large, and still others disregarded it. While I respect all the opinions, this blog is mostly aimed at readers who want to understand better how we came to the projection.
Exhibit 1: Smartphone OS market shares, 2009-2015
Source: Pyramid Research, Q1 2011 Global Smartphone Forecast
First, a bit on our methodology. While the margin of error is barely ever zero when it comes to five-year forecasts in telecom, much has been done to make the margin of error as small as possible. Here’s how:
- At Pyramid, we forecast handsets and smartphone demand for 51 markets, and we update the models with fresh information every three months. That means that we have separate forecast models for 51 countries, and one or two regional specialists are responsible for the accuracy of assumptions and projections for the countries and regions they cover.
- Rather than just covering the 15 largest markets, and subsequently extrapolating data for rest of the world, as is the case with many other research companies, our global smartphone forecast is based on such a great number of individual market models – including a large number of emerging markets, those that will actually drive much of the growth through 2015.
- Finally, remember that all our handset projections tie back to our mobile market demand projections, so the forecasted numbers operate in the context of the mobile market realities. The OS-related projections are, of course, linked to our projections related to the total growth rate of the smartphone market, and the estimated market shares of the ten largest smartphone vendors.
Now, a couple of words about the “controversial” projection itself. While we acknowledge the momentum that Android is experiencing and will continue to experience in 2011 and 2012, we believe that Nokia and Microsoft are a very powerful tandem, and that will show in its full force by the end of 2013. Some of the main obstacles to the growth of WP to date will be removed, as Nokia helps with bringing down the price of WP smartphones. Lower price of the devices will be the crucial prerequisite for the expansion of WP models. Nokia knows it and Microsoft knows it, and I am sure they will act on it quickly. It’s also worth mentioning that, apart from Nokia, quite a few other large handsets vendors in the world, such as Samsung, LG and Sony Ericsson are still placing their bets on WP. With the change in the price of WP devices, and the multivendor strategic approach of Microsoft, the main advantage of Android – scale – may be removed.
And although Nokia has suffered a significant loss from dragging out the Symbian story for too long, it’s Nokia we are talking about: They are big enough and strong enough to take on a couple of painful hits and come out of the struggle stronger than ever. They are in a good position to learn and adjust because they know what was bad about Symbian, what’s creating gains and what’s causing problems for Android, as well as what the upsides and downsides of a system such as that of Apple, where the OS only runs on hardware manufactured by the vendor.
Don’t forget that while being late to the party is rude, everybody gets to see you enter the room. When Nokia “enters the room” with new WP-based devices, there will likely be much traction about its new “clothes and shoes,” which will be a good jump start for the new era of WP devices.
While Android will continue to grow beyond 2013, its growth will slow down compared to the skyrocketing surge in 2010 and 2011. Even though WP will maintain the leadership from 2013 through 2015, the battle with Android will be fierce going forward and will result in many overtakings and ties between the two operating systems going forward – all at the expense of iOS and BlackBerry, which will experience a losing streak. While RIM and Apple are powerful players in the smartphone market, their desire to limit their mobile operating systems to their own hardware has antagonized large manufacturers, such as Samsung, LG and Nokia, who have the capacity to enjoy the benefits of economies of scale and whose devices account for an overwhelming portion of the smartphone market.
— Stela Bokun, Senior Analyst
Tracks annual handset sell-through of total mobile handsets and smartphones for a ten-year period including five historical years and five forecast years. Smartphone sell-through is segmented by vendor and by operating system.
Mobile Handsets Forecasts
Tracks handset sell-through for the past five years and projects handset demand five years out, including sales to operators and sales by vendor (vendor market share).