Gartner, Inc., one of the
world's most respectable market research firms, has announced [press release]
that its research supports
our hypothesis that Microsoft Corp.'s (MSFT) Windows Phone 7
smartphone OS will become the market's second largest player when the phase-out of Nokia Oyj.'s (NOK) Symbian OS
In a research report released this week, it
estimates that this year the platform will only rise modestly from 4.2 percent
market share in 2010 to 5.6 percent in 2011 (still behind Symbian, in fifth
place). But by 2012 it will jump to a 10.8 percent, switching places with
Symbian. And three years later in 2015, it will have surpassed iOS and
Research in Motion, reaching 19.5 percent market share, taking the #2 spot in
world market share.
The report is most pessimistic about Canadian
smartphone maker Research in Motion, Ltd.'s (RIM) prospects. It
predicts that RIM
will fall from a 2010 peak market share of 16.0 percent to 11.1
percent by 2015. It also predicts that Apple, Inc.'s (AAPL) iOS will rise this
year, but fall by 2015.
Aside from Microsoft, the other big winner if
Gartner's predictions hold true will be Google. Gartner predicts that
Google will rise from a narrow lead of 22.7 in 2010 world sales, to a dominant
49.2 percent market share by 2012.
Variety of handset options, bleeding edge
hardware, and a relatively strong brand image continue to drive
Android sales upward even as some of its other competitors flounder.
On Wednesday in the Asian markets, Taiwan's HTC
Corp. (2498) passed
Finnish phonemaker Nokia in total market cap. Market cap isn't the best
measure of true performance or company reach (Apple recently passed Microsoft),
but it does off a bit of a thermometer to the market's perception of a company.
HTC's cap hit $33.8B USD after shares rose 5.3
percent in the day's trading. Nokia managed a modest 1.1 percent raise,
with its cap closing at $33.6B USD.
Nokia ships far more phones than HTC. HTC,
currently Asia's second largest phone maker (in market cap), shipped 24.7
million handsets in 2010, according to Gartner. By contrast, Nokia
shipped 461 million units last year.
However, HTC's phones are largely high-profit
smartphones, whereas Nokia's sales are still heavily driven by low-margin older
phone designs. In that regard the companies are much closer in profit
than the sales numbers might indicate. HTC's operating margin, a measure
of profitability was 16 percent during 2010's final calendar quarter, while
Nokia's was 7 percent.
Traders' valuation of HTC may also be based on the
fact that the company has a great deal of upward momentum. Nokia,
meanwhile, has a degree of downward momentum as it tries to make the painful
transition from Symbian to Microsoft's Windows Phone 7.
HTC's rise in the smartphone market has been
nothing short of meteoric. The largely unknown device maker has risen to
become one of the premier Android smart phone makers, trailing only South
Korean giant Samsung Electronics (005930).
Its success largely owes to its decision to fully throw its support
behind the "winning horse" in the smartphone race -- Android.
The company does face some threats, though, such
as Chinese Android phone-maker ZTE (000063).