The smartphone as we know it was born on January 9, 2007.
That’s the day Apple’s Steve Jobs took the stage at Macworld and announced that the company would release a mobile phone, the iPhone.
The first iPhones left Apple stores and entered history on June 29, 2007.
There were mobile phones before the iPhone. But none had the impact of the iPhone. Jobs’s brainchild combined a cellular phone, a high-resolution touchscreen, and a powerful general-purpose computer capable of installing and running apps. It wasn’t just a mobile phone, but a smartphone. With subsequent releases, Apple has continued to dominate American smartphone market share.
The iPhone’s groundbreaking design is omnipresent now, but in 2007 the combination of a touchscreen, modern apps, and a customizable user experience was revolutionary. The iPhone and its competitors are now essentially tiny supercomputers that are gradually taking task after task away from the once-dominant PC.
Smartphone makers are among the largest, richest, and most influential corporations on the planet. Their market positions seem unassailable, but innovative competitors continue to enter the market. Leadership in market share of smartphones has changed over the years, and it will change again. In technology, change is the only constant.
Mobile Market Generations: From the Analog Era to the Digital Age
The first ever mobile phone call was made on April 3, 1973. That’s the day Martin Cooper, a senior engineer at Motorola, called his greatest rival in the telecommunications industry and informed him that he was calling on a mobile phone. This demonstration happened at the New York Hilton in Manhattan. Witnesses watched Cooper dial numbers on Motorola’s DynaTAC prototype phone and place a call to Dr. Joel S. Engel who worked at AT&T. “Joel, this is Marty.” he said. “I’m calling you from a cell phone, a real handheld portable cell phone.”
And just like that, a new industry was born.
The 1980s: The Launch of 1G
It would take Motorola 10 more years and an additional $100 million in R&D costs to bring the first commercial mobile device, the DynaTAC 8000X, to the phone market. By then, Nippon Telegraph and Telephone had already blanketed Japan with a nationwide cellular network. The Nordic Mobile Telephone network soon followed. In 1981 it was launched simultaneously in Denmark, Finland, Norway, and Sweden, becoming the first mobile phone network featuring international roaming.
America’s first 1G network was launched by Ameritech in 1983. It supported Motorola’s DynaTAC 8000X, which cost $3,995, had a battery life of 35 minutes, and needed 10 hours to recharge. Consumer demand was strong – Motorola had a waiting list of thousands of customers. Motorola dominated cell phone market share in America. The brand was associated with the very idea of a mobile phone.
First-generation mobile phones were so expensive they were really only for the wealthy and for corporate executives. It would take a few more years for mobile devices to appear in the hands of average consumers.
The 1990s: The Shift to Digital With 2G
The consumer market started to widen in 1990. It had become evident by then that 1G simply wasn’t able to deliver low-cost solutions for the masses.
The solution was 2G, a technology that represented a shift from competitive to cooperative development. The technology was pioneered by European countries that created working groups like R21, GSM, and ETSI. The second of those, GSM, would become the dominant 2G technology, used in over 80% of the world’s phone market share. It has served as a foundation for building new technologies and a gateway for competitors enter the mobile market.
Among the most prominent newcomers was Nokia, a Finnish company that exploded onto the scene with a GSM-based digital phone. The Nokia 1011’s huge success induced the company to sell off its other divisions and focus solely on mobile phones. Nokia’s internal projections forecast about 400,000 unit sales for the follow-up 2100-series phones. The company wound up selling 20 million.
Nokia’s annual sales grew from a comfortable $6.5 base to $31 billion in 1988 when it was the clear mobile phone market leader. The company entered the 21st century as the dominant mobile manufacturer, holding 30.6% market share compared to Motorola’s 13.3%. Ericsson held third place with 9.7%.
The 2000s: The Rise of Smartphones
Nokia retained its grip on the global market for most of the next decade. The company hit 40% market share in 2007, but by then the Finnish giant had already shown signs of problems bubbling under the surface. Its 3G line of phones with experimental designs hadn’t been as successful and popular as Nokia hoped, but the real issue was the company’s Symbian operating system.
Unlike smartphone market newcomer Apple, Nokia underestimated the importance of software in digital phone era. Nokia’s hardware was first-rate, but its support for applications was lacking.
The iPhones sold quickly from the very start, partly because the iOS operating system was so powerful. Google released its phone, the HTC Dream, establishing Android as an operating system to watch. Sticking with Symbian began to look like a fatal mistake for Nokia.
By the end of 2008, smartphone markets showed Nokia sales dropped by 3.1% while Apple’s were up 327.5%. A new era had begun. As the decade came to an end, so did the age of Nokia’s dominance. Desperate for a strategy, Nokia partnered with Microsoft, sold its phone division to Microsoft, and finally vanished from the market.
The 2010s: Growing Power in the East
China’s unprecedented economic growth has made the most populous country in the world a huge market. With the world’s largest middle class and a key role in manufacturing cell phones for companies based elsewhere, China inevitably developed and offered the globe its own smartphones.
At the beginning of 2010, Chinese phone makers almost made no mark on world smartphone market share. With each passing year, the threat that Huawei and other big Chinese companies presented to Samsung and Apple became more and more evident. Huawei’s 3% 2011 market share grew to 14% by 2018, when it managed to overtake Apple in smartphone unit sales.
Huawei’s success is more remarkable considering the fact that the US government is hostile toward the manufacturer. No American carrier offers Huawei or even markets it in the country. Huawei is facing new troubles recently, like being deemed a threat to America’s national security, but the rise of the Chinese powerhouse manufacturer doesn’t seem to be slowing down.
The Leaders of Global Smartphone Market Share in 2019
By the end of the second quarter of 2019, Samsung had regained its spot as the top smartphone company by market share. The South Korean manufacturer bounced back from its November 28 low point of 28.34% market share, and throughout 2019 it has held steady above the 30% line. On the last day of July, Samsung smartphone market share amounted to 31.13% of the entire market. A closer look into sales figures for the company’s flagship phones did show a worrying trend.
The Galaxy S10 and S10+ have performed way below what the company projected. Although Samsung recorded an 8% increase in revenue during the first half of 2019, profits for Samsung Mobile dropped by 42% compared to the previous year. This is the hardest hit Samsung has taken since the Galaxy Note 7 and its tendency to spontaneously self-combust.
The company is shifting its focus to the Q3 launch of the Galaxy Note 10 and Galaxy Fold products, which are expected to ship before the end of the year. Samsung’s plan is to take the early lead in 5G devices and increase its smartphone industry market share before the competition catches up.
Samsung’s display business, which is thought to produce the best smartphone screens in the world, continues to rake in profits. In the second quarter of 2019 it reached $6.64 billion in profits, up from $4.79 billion the year before. With a high demand for OLED and slimmer mobile screens, it is estimated that this increase in profits will not slow down in the second half of 2019, spelling good news for the South Korean company.
Apple has had an even more turbulent year than Samsung, and it has experienced a downward trajectory in smartphone manufacturer market share. Apple’s market share peaked in November 2018 at 24.44%, dropping to 22.01% by the end of July 2019.
Like Samsung, Apple recorded an increase in revenue by the end of Q3, but sales of iPhone products are not impressive. In fact, the revenue generated by iPhone sales was the lowest in two years, dropping 13% compared to the same period last year. While tariffs and trade wars are playing a factor in this, seeing that Apple is almost completely dependant on China for manufacturing, there is also growing competition within China.
Local smartphone brands like Huawei, Xiaomi, and Oppo are gaining popularity, and Apple’s outlook for Q4 doesn’t seem great. Apple smartphone market share is expected to shrink further, as the company itself is now predicting that it will fall short of last year’s numbers. Apple says it projects $61 to $64 billion in revenue, compared to $62.9 a year ago.
Huawei is facing a completely different set of issues, as it has recently been deemed a threat to national security by the US government. This means that the leader in China‘s smartphone market share has been placed on the Commerce Department’s entity list, forbidding it from acquiring technology from American firms.
Huge tech companies like Google, Intel, and Qualcomm have complied with the ban, and Huawei CEO Ren Zhengfei believes that this move will cost his company $30 billion in just two years. Despite all this, Huawei made 221.6 billion yuan ($32.2 billion) in the April-June quarter, a 23% increase over the previous quarter.
Huawei sold 118 million phones in the first half of 2019, a 24% increase compared to its smartphone market size numbers from 2018. The increase is attributable to a patriotic rise in Chinese sales after the start of the trade war. How much these home-country purchases have affected Huawei’s revenue can be seen in the fact that even though the overall market experienced a 6% downturn, the company managed to grow 31% year-on-year to capture 38% of Chinese market share.
This means that every other major competitor in China – companies like Xiaomi, Oppo, Vivo, and Apple – experienced double-digit declines as Huawei shipped 64% of its phones to the home country.
iOS vs. Android Smartphone Market Share Data
Two operating systems compete for a piece of the global mobile pie. Google’s Android and Apple’s iOS are found in almost all of the smartphones around the globe, and it’s hard to see anyone changing that picture at any point in the near future.
Global market share data shows that Android devices dominate the industry. By July 2019, Android was used by 76.08% of all smartphones, while iOS held a 22.01% share. In most countries, open source Android phones hold a huge majority of the market, but US smartphone market share data tells a different story.
Apple has managed to retain its grip on the American consumer and even increase its stake of the market to 55.67% in July 2019. As the top choice in the richest economy in the world, the Silicon Valley tech giant has remained a force to be reckoned with, even though cheaper and more diverse Android phones are dominating the rest of the globe.
Smartphone Market Trend Projections: 2020 And Forward
Recent developments in the tenuous Sino-American trade relationship and the subsequent American ban on working with Huawei have negatively affected smartphone market share worldwide. Initial forecasts for 2019 smartphone sales dropped from 1.417 billion to 1.35 billion units after the Chinese manufacturer was deemed a threat to national security.
Data suggests that the trade war has slashed the global smartphone market by almost 5% this year alone. It indicates that 2019 will most likely see an overall 3.1% year-over-year decline in phone sales compared to 2018, when 1.393 billion units were shipped. For now, the US government’s measures seem to have derailed Huawei’s journey toward dethroning Samsung as the market leader by 2020.
Now it is Samsung that might profit from political tensions and Huawei’s troubles. The Korean company is more than able to compete on price and production. The crisis between the world’s superpowers is perhaps the perfect storm for the South Korean giant, coming right before 5G phones are projected to go mainstream.
The lack of meaningful innovation is one reason sales numbers and smartphone company market share have recently plateaued. With 5G rolling out and foldable phones entering the market, 2020 projections show smartphone sales rising slightly, especially since history has shown us a public interest in new generations of phones. Current projections call for 220 million 5G phones to be sold in 2020 before rising to 930 million in 2023. This means that 5G phone sales will account for almost half of all mobile phone sales in the next five years.
The Bottom Line
The mobile phone market has been competitive since the start. Nowhere else have we seen giants fall so hard and so low, and nowhere have we witnessed true challengers for the crown appear so late in the game. After decades of success, established giants in other tech industries seem almost untouchable, and yet the smartphone market is different.
This industry is not only younger, but it is also evolving at a more rapid rate. And the market rarely forgives missteps. That is why it is likely that the list of smartphone market share leaders will look much different only a decade from now. It is in fact a very real possibility that by then some of today’s biggest manufacturers may have buckled under the pressure and faded into history.