Apple and Samsung currently hold 55% of the global smartphone shipments market, and account for 90% of the market's profit.
This is according to new research released by ABI Research, which notes that while smartphone shipments have grown 41% year-on-year, many smartphone OEMs are not reaping the benefits.
Samsung leads global smartphone shipments with 43 million units, while Apple follows in second place with 35 million units. Nokia trails in third with 11.9 million smartphone units shipped, followed by Research In Motion (RIM) with 11.1 million units, Sony with seven million units, Huawei at 6.8 million units, and ZTE with 4.9 million.
ABI says the key question at this point is whether any other player can break away to become a strong third player in the current market.
Contenders are expected to have an uphill battle as Samsung and Apple's dominance is set to be further entrenched this year with the release of the Samsung Galaxy S3 and the unveiling of the next-generation iPhone in September.
Earlier this year, Samsung overtook Nokia to take up the position as the world's largest mobile phone manufacturer - a position Nokia had held since 1998. Speaking at the local launch of the S3, country manager for Samsung SA, Deon Liebenberg, said the new handset was on track to become the fastest selling gadget in history, having already broken records with over nine million pre-orders.
The S3's predecessor, the S2, has been Samsung's best seller with 30 million units sold worldwide. According to reports, the S3 has already dethroned the iPhone 4S as the most popular smartphone in the UK.
While Apple's iPhone 4S had a lukewarm reception from critics following the hype around a potential iPhone 5, the handset still struck a chord with consumers - selling four million units in its first weekend of sales alone. Apple's iPhone and iPad business also remains the most lucrative in the space. In the January-March quarter, Apple reported earnings of $11.6 billion - more than double those of Samsung.
Shift focus
ABI notes Sony and Samsung were the only smartphone OEMs in the top 10 to show sequential growth in shipments over the fourth quarter of last year. “Nokia witnessed a 40% sequential decline in shipments and may soon be passed by ailing RIM in shipments, despite the BlackBerry maker's 20% sequential decline in shipments.”
While the first of the Nokia Windows Phone devices have been critically acclaimed, they are yet to prove themselves in the market, or significantly impact either of the companies' bottom lines.
Senior analyst for devices, applications and content, Michael Morgan, says: “At this point in the year, Nokia will have to grow its Windows Phone business 5 000% in 2012 just to offset its declines in Symbian shipments.”
ABI Research says OEMs should be looking beyond North America and Western Europe, where smartphone penetration is already at over 50%. Instead, focus areas should be key markets such as China, where shipment growth stands at over 80%. ABI notes, however, that smartphone OEMs will need to compete with local vendors whose cost structures are tailored at the lower price points needed to drive growth.
Practice director for devices, applications and content, Jeff Orr, says: “As Nokia's market share in China plummets, the competition to fill this power vacuum has the potential to make or break smartphone OEMs currently struggling with profitability and differentiation.”
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