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But some of the countries are relatively small markets

Microsoft Corp. (MSFT) was quick to seize on good news from market analytics firm International Data Corp.'s (IDC) survey of international phone sales.  While the report unsurprisingly showed Android to be the king of virtually every region, the report showed that in some nations Windows Phones are outselling Apple, Inc.'s (AAPL) iPhone.

But before Apple fans explode with indignation, yes there is a catch.  Windows Phone outsold the iPhone in a smattering of emerging markets, where the high price of Apple's trendy phone is probably a barrier to sales success.  In total Windows Phone led the iPhone in Argentina, India, Poland, Russia, South Africa, Ukraine, and "rest of central and eastern Europe".

The success in India is a pretty big deal because that's going to be a huge smartphone market.  But other regions like Ukraine, South Africa, and "rest of... Europe" (smaller countries) are all markets of 100,000 or less smartphone units annually.

Lumia 520
The Lumia 520 [Image Source: Nokia]

The arrival of low-end Windows Phone devices -- namely Nokia Oyj.'s (HEX:NOK1VLumia 520/620 -- has certainly boosted Windows Phone.  Much like Android, Microsoft and its third-party hardware partners appear to be starting their assault on the iPhone at the low-end.  While today's flagship Android phones put the iPhone's hardware to shame, the earliest Androids were largely budget devices.

It remains to be seen, though, whether Windows Phone can duplicate Android's successful creep into the high-end of the market.  Microsoft is betting big on the Windows Phone Blue refresh, which will likely be the next major platform refresh.  That update is expected to land sometime in the October/November window.  The good news for Windows Phone 8 device owners is that Microsoft reportedly will be supporting current generation devices in the upgrade this time around.

Source: Microsoft [TechNet]

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By zilexa on 3/28/2013 5:54:28 AM , Rating: 2
Mike, clearly you enjoyed US education and didn't learn anything about European demographics. Eastern Europe is a huge area where hundreds of million people are living. They are currently starting to switch to smartphones. Becoming the no.1 in these countries might be easy by releasing cheap phones, but its still huge. And together with European Russia (thats alone 110million people) you are looking at 40-50% of the European population.

Take that into account.. plus the fact that UK, France, Germany, Holland, are all completely saturated markets with very little movement (everyone already has a very good smartphone), eastern Europe should be the target of any new player in the mobile segment.

So this is not about WP versus iOS, this is about the success of a new player.. and it would be more interesting to compare with Android since iOS is a small player there and becoming smaller in Western Europe.

By MadMan007 on 3/28/2013 6:53:43 AM , Rating: 2
Yup, having good share in growth markets is what matters for those playing catch-up now. Ecosystem lock-in makes share growth in saturated markets even harder.

On the hardware side, it's why Intel's strategy of low-end and mid-range hardware in developing market makes so much sense. It's a different strategy from a hardware+software combination like Apple but it makes lots of sense for Android, much like focusing on those markets makes sense for MS. The general American population has always been bad at seeing the world beyond its own borders until something crazy bad happens, and even then they don't care *too* much or get bored of it.

By 91TTZ on 3/28/2013 10:51:57 AM , Rating: 3
Becoming the no.1 in these countries might be easy by releasing cheap phones, but its still huge. And together with European Russia (thats alone 110million people) you are looking at 40-50% of the European population.

The problem for a manufacturer is this: You have to sell the phone for a loss in developing countries in order for it to be cheap enough for them to buy it. Then you need to hope that those customers stay with you when they get enough money to buy a more expensive (and profitable) phone. Historically, customers do not have that kind of loyalty and begin buying luxury items as soon as they can afford them. Once people in second and third world countries get the money, they don't buy new Ladas and Tatas, they buy Mercedes and BMWs to show off their newfound wealth.

By MadMan007 on 3/29/2013 1:16:27 AM , Rating: 2
What evidence do you have of phones being sold for a loss? (Obviously talking about net loss not talking about subsidies here.)

By 91TTZ on 4/1/2013 2:23:45 PM , Rating: 2

Apple held 69 percent of handset profits earned in all of 2012, more than double that of the South Korean Samsung, which hauled in 34 percent of phone profits last year, according to Canaccord Genuity… By comparison, Nokia dropped to -2 percent of handset profits in 2012. The Finnish cell phone pioneer saw its profits flatline during the fourth quarter. Meanwhile, Motorola and Sony handset profits were much better, along with LG ending the year with -1 percent. Although it ended the year as the third most-profitable handset maker, HTC struggled to post a profit of just 1 percent. In other words, Apple was 69 times more profitable.

So you see that the third place finisher had a profit of just 1%. And even that was good for them. The future is looking worse:

The Taiwanese mobile handset maker, HTC, showed the extent of the squeeze it is suffering from South Korean rival Samsung as it warned first-quarter revenues could fall 17% compared to the last three months of 2012, and operating profit margins could drop almost to zero. Profits for the fourth quarter had crashed by 90% year on year to just NT$600m (£12m) on revenues of NT$60bn, down 40%, the company said as it unveiled its annual results.

So to sum it up, if you're not Apple or Samsung you most likely sold phones for a loss. If you're HTC, you eeked by with a 1% profit but those profits have since fallen 90%.

By Fed P on 3/29/2013 10:32:00 AM , Rating: 2
For one, phones are not being sold at a loss or even for cheaper in developing countries. You can see bug77's links, but the HTC One is launching in Russia for 900-1000USD, which is actually *more* than it costs in "developed" countries.

Second, I totally agree with zilexa, Russia in total is 140m+ people, and the other markets are huge as well, and while the average wage may be low, there is a massive wealth gap and what you don't see in the average is that there is a large amount of potential clients with enough money to buy premium items.

However, what the research no doubt also didn't factor in (because you can't, scientifically), is that probably ~90% of iPhones in Russia, of which there are A LOT, much more than WP, are "grey market" import units. This happens for 2 reasons, one being that the launch is much later than in the US, so people buy them online and ship them over, or have their friends bring them over if they can, etc. The second reason is just as with the HTC One example: they are much more expensive in Russia than in the US, so you can save a lot by importing a unit instead. So it's not really a win for WP, I'm afraid.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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