Samsung profits are sliding, Lenovo has bought Motorola, Chinese vendor Xiaomi is growing, Nokia is disappearing and Apple reigns surpreme. The mobile market remains as volatile as ever and shows no sign of changing soon.
"Mobile is an extremely competitive industry, where one hit or miss is rewarded or punished in a flash,” said Neil Mawston, executive director of Strategy Analytics, speaking to V3. “There is a constant state of evolution and revolution.”
The end of an era
Nokia, Motorola and BlackBerry know this well. These companies dominated the mobile market in the early 2000s but have now been subsumed into other companies or are struggling to remain even a fringe player.
The acquisitions of Nokia and Motorola close the book on a story of decline that has gone on for a number of years. BlackBerry, while still going solo, remains in a perilous state and could well find itself snapped up by a bigger fish in 2015.
The downfall of these brands coincided with the rise of others. Apple, of course, but also Samsung, which fought off Android rivals HTC, Sony and LG to cement its position as number two, reaching a peak of success in 2012.
Now, two years later, Samsung is suffering. Profits were down 60 percent for its most recent quarter and it is under pressure from a raft of new vendors and existing rivals.
Carolina Milanesi, chief of research at Kantar Worldpanel, told V3 Samsung is just the latest victim of the mobile market’s relentless competitiveness, which has seen China emerge as the next disruptor.
“You are basically seeing a domino effect where the Chinese push on tier 2 players [such as LG and Motorola] and they push on tier 1 [Samsung, Apple],” she said.
This has seen a flurry of devices hitting the market with high-end specs but at price points far below what Apple and Samsung usually charge.
In emerging markets, especially China, this is a major selling point. "Lower end consumers will continue to look for the best deal and this is what local brand and whitebox vendors will benefit from," noted Milanesi.
The brand currently benefiting the most from this Chinese charge is Xiamoi. Few had heard of Xiaomi when Google's Android chief Hugo Barra announced he was joining the company but many will be watching with interest now.
Recent IDC data showed the company had a staggering 211 percent shipment growth in Q3 2014 compared with the same period last year - when Barra joined.
This helped to catapult the company into third position in the market, behind the big two of Samsung and Apple. For Mawston at Strategy Analytics, this is indicative of a major shift in the market.
“We are moving into the 'Chinese decade', where most phones are built and sold,” he said. "No mobile vendor will be safe from the Chinese growth wave in 2015 - not even other Chinese brands.”
These words proved prophetic. No sooner had Xiaomi reached the number three spot than Lenovo revealed its deal for Motorola had completed, pushing it to bronze medal position and knocking Xiaomi into fourth place.
All of this will be hard for Microsoft to stomach. It has been targeting the number three spot - a sign of how far it has fallen in the mobile world. Its purchase of Nokia was meant to achieve this but it looks increasingly unlikely.
"Nokia-Microsoft is still struggling to make a major breakthrough will a 'killer' Windows Phone model," said Mawston.
"Nokia-Microsoft has lots of 'nice' devices, but no must-have models like Apple’s iPhone. Microsoft will keep plugging away, but they are likely to continue drifting until they can innovate a genuinely breakthrough or revolutionary smartphone."
Apple on top
Meanwhile, as this maelstrom takes place all around it, Apple sits calmly at the centre of the storm. Its iPhone 6 and iPhone 6 Plus helped it post profits of $8.5bn for the most recent quarter, and Christmas sales will undoubtedly be strong.
Apple's success is, in part, due to two factors that no other vendor can match. First, its customer base is loyal/locked in to its iOS platform so cannot easily move to a rival vendor and secondly, buyers are not as cost-conscious so will happily pay top whack, rather than consider lower-priced devices.
However, it cannot rest on its laurels: "I do believe Apple is best positioned but they are not immune. The pressure on them to keep coming out with killer devices will remain," Milanesi said.
Apple faces other challenges for 2015, with its Watch device set to arrive at some point, but it can at least rely on its iPhone range to continue raking in the cash for another year.
For the rest of the market, though, the year ahead will no doubt be just as volatile as the past 12 months.
"We expect next year to be a bumpy ride for the mobile phone industry, characterised by highly volatile market share rankings and perhaps a handful of mergers involving companies such as BlackBerry, HTC and others," said Mawston.
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