Relax everyone. Samsung is not taking over Android. In fact, its influence is in decline for 9 months now
So, the industry is waking up to Android’s little problem called Samsung. You know, the one we have been talking about here, for months. That with its Android sales growing rapidly each month, Sammy is becoming too powerful in Android ecosystem.
Except that its not (becoming too powerful), anymore. In fact, Samsung’s Android market share peaked in Q1 2012 and has been declining ever since.
The reliable data about Samsung’s smartphone shipments is almost impossible to come by. You have pick and choose among various numbers estimated and released publicly by the big analyst houses, and you still can’t be completely sure about their accuracy. Still, the overall trend is pretty clear. I used the average numbers from big 4 analyst shops, collected by Tomi Ahonen, and this is how Samsung’s Android market share dynamics look over 2011 –2012:
Samsung’s Android growth started in Q3 2010, with the release of the first Galaxy S, and then really took off with the launch of the next generation Galaxy S2, in Q2 2011. The new, high quality Sammy flagship took everyone by surprise. Former Android king, HTC, was caught with a bloated portfolio and mediocre products like Sensation and Droid Incredible 2; LG and Sony Ericsson were still trying to figure out what it takes to build great Android phone, and the big Chinese vendors (Huawei, ZTE, Lenovo) haven’t arrived yet.
In the meantime, Samsung applied the lessons learned building Galaxy S line to expand its portfolio up (Galaxy Note) and down (Galaxy Ace, Y) the market. Then used its distribution and marketing muscle built up over the years, to boost its smartphone sales worldwide. By the end of Q1 2012, it owned half of the Android market.
But competitors weren’t sitting still. While more or less ceding the high-end to the newly launched Galaxy S3 for most of 2012, they started chipping at Samsung’s share of Android with their own mid to low-end handsets. LG finally released a moderately popular cheap Optimus L line, while its flagship One X- flopped, HTC still managed to ship millions of less ambitious Ones like S,V, SV, etc; and then the Chinese showed up in force. ZTE got very aggressive with cheapest Androids, Huawei did the cheap too, but also moved to mid range with rather successful Ascend P2, and Lenovo exploded in its home market.
Despite the amazingly successful Galaxy S3 launch in May– double the sales of SGS2, Samsung wasn’t able keep market share gains it made just 3 moths before. By July 2012 Sammy’s ownership of Android pie dropped from 50% to 45%. Then it dropped to 42% in October and today is somewhere around 41%.
Meanwhile, having learned how to compete with cheaper smartphones, rivals are now attacking the high end. LG Optimus G, HTC Butterfly/J/Droid DNA were already viable alternatives to SGS3 in Q4. This year’s flagships, such as HTC One and Sony Xperia Z, should be able to give a good fight to the upcoming Galaxy S4. And the phablets, the category Samsung created and owned in 2012 – the number of them on display here at Mobile World Congress, is simply mind-boggling. LG Optimus Pro, Huawei Ascend Mate, ZTE Grand Memo, etc; – everyone seems to be doing their own version of a crazy big phone. While none of them are better than Galaxy Note II, phablets will not be as easy ride for Samsung as they were last year.
Increased competition both at mid range and high-end has already cut into Samsung’s smartphone profitability. Their margins declined few points in Christmas quarter, and Sammy guided for further contraction in Q1.
With Nexus One and Desire/Droid Incredible, HTC was the first to figure out how to make a great Android phone, back in 2010. With its fast follower roots, Samsung rapidly caught up and then eclipsed Taiwanese upstart, to take over 50% of Android shipments by the spring of last year. However, Samsung’s total dominance of Android has been pretty short lived.
It took a few years, but in 2012 most of the smartphone OEMs finally figured out how to make good Android phones. And they are getting better at it. Even with Galaxy S III, propelled by humongous marketing budget and absent competition, Samsung failed to keep the 50% Android market share it achieved in Q1 2012. This year, it will be even harder to keep the gains, even if Galaxy S IV is amazing.
Of course, Samsung will remain the biggest and most successful Android vendor, by far. But those headlines that mushroomed all over the Web earlier this week, about how Google is worried about Samsung’s increasing influence over Android? They are few months too late. Samsung’s importance in Android ecosystem is not increasing. In fact, it has been on decline for 9 months now.
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