Replies

Mark, I’m an economist and this is my field of expertise. You have to know what you are looking at, and what’s being counted and compared. It isn’t what you think or they say it is.

First of all, that lovely green yellow line claiming to represent “shipments” of Android “smartphones” ain’t. It is IDC’s guess at the number of ALL phones shipped that have an Android operating system loaded on them. Nobody making Android phones, not one single manufacturer, breaks out the product mix of smartphones, feature phones, and plain-old dumb limited function phones. Not one. This is the dirty secret of the Android phone market.

Apple is the only phone manufacturer that reports actual phones sold through to end users, not phones shipped into the supplier channels to eventually perhaps be sold to end users. Apple’s numbers are always actual phones delivered to consumers. All others are observed guesses by industry insiders statistically estimating by looking at indicators and surveys how many may have been shipped. A lot are wild assed, pluck it out of their navel, make it up, cross your fingers, and no one will ever really know anyway fabrications, because there simply is no data on which to even make an intelligent estimate!

In 2013, during the Apple v. Samsung patent infringement trial, the Samsung attorneys made the mistake of commenting that Apple shouldn’t base its damages on Samsung’s shipment claims, first because a lot were returned unsold and heavily discounted or destroyed, and second because not all shipped were “smartphones.”

Judge Lucy Koh then ordered Samsung, the largest Android manufacturer in the world, to disclose exactly what percentage their shipments of phones were comprised of, on an annual basis for the current year, so the damages could be equitably calculated. She also required figures on unsold returns which was a huge eye opener, especially in tablet sales! However, what was most interesting was the product mix in phones. The audited shipment records showed that in 2013 Samsung shipped (not sold) only ~30% Android smartphones, ~40% limited function Android Feature phones, and ~30% Android basic function dumb phones. Competition and market forces would likely force the big five Android phone manufacturers to independently create similar shipment product mixes.

Research shows that many of the smaller Android phone makers do not even attempt to manufacture a smartphone, concentrating their efforts instead in the Feature phone or even basic phone products, many of which run old versions of Android, aimed at poorer third world markets with little access to the Internet. These back alley makers can’t break through the lock the bigger Android makers have on the upper tier smartphone market. They just can’t compete and often turn out crippled feature phone look-alikes to actual real smartphones but which lack smartphone capabilities. IDC, Gartner, Canalsys and the other market metric organizations lump these makers into the “other” category and merely guesstimate their output. . .

The upshot of this is that only about 25-28% of the Area below the Android trend line represented on that and other charts of this kind, actually represents smartphones. The balance is made up of Feature phones and junk basic phones targeted to third world markets. Don’t believe me? Go into any metroPCS, GoPhone counter, Walmart, or other store that gives away phones with contracts and see how many of them are flip phones, candy bar phones, etc., and then think about the millions of Obama phones, and others of their ilk. Add in the phones in poorer countries and areas in Africa, India, and South America and think about the numbers. They are all included in the reported Android phones shipped, but fraudulently counted as Android smartphones because some version of Android is loaded in them, even though the majority of those phones can’t use the HIGHER capabilities of the OS.

This is why when push comes to shove, Apple takes home 94% of ALL mobile phone manufacturers profits, not just smartphone profits, 94% of ALL profits. . . because they are all in there!