Apple’s results in 4Q11 were marked by a strong performance in smartphone sales which saw it become the third largest mobile phone vendor by volume – up from number five just a year ago. Handsets sales reached another record in 4Q11 with almost 440 million shipped in the quarter, of which more than 35% were smartphones.
In 2011, Apple led the mobile phone market in terms of both volume and value, but in the final three months of the year (reported as 1Q12 in the company’s financial year) it also became the third largest mobile vendor by volume alone, after Nokia and Samsung.
Apple’s market share rose to 8.4% in the quarter, up from 4.2% recorded in 4Q10. The company managed to double the shipments of its iPhone year-on-year in the quarter to 37 million, not only thanks to the impressive performance of the iPhone 4S introduced in October 2011 but also to its strategy to conquer the mass market by keeping earlier versions of the iPhone in the market.
There were mixed 4Q11 results from the other leading handset vendors. Nokia, LG, Sony Ericsson and Motorola all lost market share to the challengers, mainly Samsung and Apple. These two companies dramatically improved their performance in 4Q, thanks to the impressive sales of Apple’s iPhone and Samsung’s Galaxy Android smartphones.
Although LG’s mobile devices division came back to profitability in 4Q after two consecutive quarters of loss, the company has now officially lost its position as the third best seller of mobile phones to Apple. Sales of LG mobile phones declined to 17.7 million in 4Q11 from 21.1 million recorded in 3Q11, and the company dropped a place in the rankings and lost volume share to 4% from 7.8% a year ago. As with Motorola and Sony Ericsson beforehand, in order for LG to return to profitability, it was forced to reduce sales of low-margin feature-phones and focus more on profitable smartphones, mainly LTE devices.
One of the most striking results of the quarter is the significant loss in the cumulative market share of the top five vendors to challengers. Until recently, mobile handsets sales have been dominated by these companies, which had an overwhelming cumulative share – often exceeding 75%. However, the migration towards smartphones is now changing the game, making the competition in the market stiffer than ever. In 4Q11, the cumulative volume market share of the top five vendors was only 58% – a fall that was mainly attributed to the bad performance of Nokia and LG. It is also an indication of the success of challengers that include Apple (which became a member of the “Top Five” club only at the end of 2010), ZTE, Huawei and, to certain extent, a number of other smaller Asian manufacturers.
Malik Saaldi is a principal analyst at Informa Telecoms and Media. For more information visit www.informatandm.com/