Apple

As Apple and Research In Motion have won a greater share in the Wi-Fi handset market over the past year, Nokia has lost share.

Though Nokia is still the leading vendor for dual-mode smartphones (Wi-Fi and cellular), its market share dropped to 35 percent in the second quarter, compared with 50 percent in the same period a year ago, according to a report released Monday from In-Stat.

The report "Wi-Fi in Mobile Phones: Dual Mode Becomes the In Thing" tracked the major Wi-Fi phone vendors, including Nokia, Apple, Research In Motion, HTC, and Samsung. Among those, Apple has enjoyed the greatest growth in market share, from 3 percent in the second quarter of 2008 to 20 percent in this year's second quarter.

Market share for both RIM and Samsung has also weakened the past few quarters, though less so than Nokia's. RIM's 15.7 percent chunk of the market for the second quarter of the year was down from its first-quarter high of 17.6 percent. Samsung's share has been relatively flat but usually dips a bit from the first to the second quarter, notes In-Stat.

In sheer unit volume, Nokia has done well the past few quarters, with 9.3 million Wi-Fi handsets shipped in the second quarter of the year compared with Apple's 5.2 million shipments. However, Nokia's shipments have dropped since the first quarter of 2008 when it saw 12 million units fly out the door. Over the same period, Apple, RIM, and HTC have seen their shipments grow.

As the No. 2 Wi-Fi handset vendor, Apple has also outsold third-place RIM in dual-mode phone shipments, says In-Stat. Though RIM still has a larger market presence, not all of its Blackberry devices include Wi-Fi. HTC and Samsung rounded out In-Stat's list as the fourth and fifth top Wi-Fi handset vendors, respectively.

(Credit: In-Stat)

The report also detailed the growth of the Wi-Fi smartphone market overall. The industry shipped 37 million handsets in 2007, and 103 million units in 2008. That rise is because of several factors, notes In-Stat, including greater functionality, lower prices, and carrier promotions. Initially targeted to the business market, smartphones are also now an entrenched hit with consumers, which In-Stat attributes to the success of the iPhone.

Wi-Fi handset shipments are expected to rise just 25 percent to 128.4 million units for 2009. That compares with a nearly 180 percent jump in 2008.

But In-Stat sees gains ahead. By 2010, the growth rate is likely to climb to 43 percent. Though that rate may not be sustainable, it should remain strong in the coming years. Wi-Fi will also become more prevalent in mobile phones. This year, 11.5 percent of handsets include Wi-Fi; by 2012, that figure will grow to 25 percent, predicts In-Stat.

To compile the report, In-Stat relied on its own data as well as interviews with Wi-Fi equipment vendors.

A recent survey shows that while Research In Motion continues to lead as the smartphone of choice among consumers, Apple's iPhone is quickly catching up.

ChangeWave Research on Tuesday released the results of its week-long September survey of 4,255 consumers, which showed that RIM retains its lead in smartphone ownership with 40 percent market share. That's actually a dip of 1 percentage point since the last survey in June, and the lowest share RIM has registered in two years.

Despite having more models of smartphones, RIM is facing serious competition from Apple, whose iPhone has 30 percent market share among those surveyed. That's an increase of 5 percentage points since June, when the new iPhone 3GS was released.

(Credit: ChangeWave Research)

Among the same group, Palm has maintained a 7 percent share since June. Though it didn't see any growth even with the introduction of the Palm Pre and more recently the Pixi, the two new WebOS-based phones are helping the company to not lose share. Palm has seen its market share of smartphone ownership erode steadily from its peak of 36 percent in June 2006.

When including all manufacturers, the smartphone market is clearly gaining momentum. ChangeWave reports that 39 percent of those polled in September now own a smartphone, an increase of 2 percentage points since June, but more importantly, double the ownership of consumers polled two years ago.

And that momentum is something that PC makers are taking notice of, according to research also released Tuesday from Gartner. The analyst firm believes that more PC makers will start making smartphones to tap into those consumer dollars being spent in that segment. There's far more opportunity for them to court first-time smartphone owners than first-time laptop owners.

Smartphone revenue is expected to reach $191 million by 2012, which is more money than the $152 million users are expected to spend on laptops, according to Gartner. Apple, Sony, Dell, and Acer are the device makers that currently, or have announced they will, sell laptops as well as smartphones.

BlackBerry Desktop software, currently available only for Windows, is coming to the Mac.

(Credit: RIM)

At long last, Research In Motion is bringing its BlackBerry Desktop software to Mac OS X.

In a blog post on Monday, RIM announced that a version of its smartphones' desktop software will be released this September for Apple computers.

According to the smartphone maker, users will be able to sync their iTunes playlists, calendars, contacts, notes, and tasks from their Mac. They will also have the option of adding applications, updating the BlackBerry when new software is made available, and managing multiple handsets on their Apple computers.

BlackBerry Mac software will let you sync your BlackBerry with iTunes.

(Credit: RIM)

Although users will be excited to know BlackBerry software is finally coming to their Mac, some of those users might not be satisfied. RIM said only Mac OS X versions 10.5.5 and up will be supported, meaning that Mac users who haven't updated Leopard or those running Mac OS X 10.4 Tiger likely won't be able to run the software.

Unlike iPhone software, which can be installed in both Windows PCs and Macs, RIM's BlackBerry software has been available only for Windows; a third-party tool has been required to enable communication between Macs and BlackBerrys.

If you want to be notified when the software is available when it's released in September, you'll need to sign up on RIM's Mac page.

(Credit: James Martin/CBS Interactive)

Market research firm iSuppli has taken apart the BlackBerry Storm and discovered that the sum of its parts is worth more than those of Apple's iPhone 3G.

Components used to build new Research In Motion smartphone cost about $203, according to iSuppli. Verizon Wireless, the exclusive carrier of the Storm, sells the device for $199 after rebates and with a two-year service contract. Meanwhile, the total cost of components in Apple's 8-gigabyte iPhone 3G, which was introduced last summer, is $174. AT&T, the iPhone's exclusive carrier, sells the 8GB device for $199 with a two-year service contract.

These total device prices don't include the cost of software, licensing of patents, or distribution, but rather just the cost of the actual physical components. While the roughly $29 difference may not seem like much, it certainly adds up after millions of phones are sold.

Neither Verizon nor RIM has disclosed how many BlackBerry Storms have been sold, but published reports suggest that RIM sold about 500,000 of the devices during the first month the phone was on sale. Apple sold 1.1 million units of the first-generation iPhone, by comparison, in the first two months it was on the market. And sales after that quickly ramped up.

So why are Storm's components more expensive than those of the iPhone?

There are a likely several reasons. For one, the iPhone 3G is a second-generation product, and Apple may be getting better component prices from suppliers. But iSuppli also notes that the Storm is a more complicated device that requires more components. According to the research firm, the Storm's total component count is 1,177, of which 151 are mechanical in nature. The iPhone 3G includes 1,116 components.

The Storm also packs in more wireless technologies than the iPhone. For example, it offers the EV-DO air standard, along with CDMA 2000, GSM, WCDMA, and HSDPA. This allows the device to roam around the world on different carrier networks.

Another reason the Storm may be more expensive is because it's using an expensive chip from Qualcomm. The Qualcomm MSM7600 baseband processor costs about $35 and accounts for 17.2 percent of the Storm's total component cost.

The Storm is also more expensive than other RIM devices, such as the BlackBerry Bold, which costs about $177 to build. The Bold uses Marvell Technology Group's PXA9xx Integrated Baseband processor, which is less expensive than the Qualcomm chip. But iSuppli says the cost differential can mainly be attributed to the Storm's touchscreen and its supporting electronics.

The Storm, RIM's first touch-screen device, was supposed to be Verizon's iPhone killer. But customers who bought the device are complaining of buggy software and hardware glitches. A Wall Street Journal article published earlier this week suggests that Verizon and RIM rushed the device to market, perhaps before it was really ready. The newspaper notes that Jim Balsillie, RIM's co-CEO, said the companies reached the Black Friday deadline "by the skin of their teeth," after they had missed a planned October debut.

The Palm Treo 750, Palm's flagship product the last time it was a major player in corporate smartphones almost two years ago.

(Credit: CNET)

Perhaps no one has benefited as much from the downfall of the Treo than Apple.

On Thursday, ChangeWave released the results of an otherwise dismal survey predicting a tough time ahead for anyone who relies on corporate IT spending for their livelihood. But the news was good for those in the smartphone business not named Palm; smartphone shipments to U.S. corporations are expected to grow even as overall IT spending falls.

And Apple's iPhone is seeing the bulk of the growth, according to ChangeWave. Companies still love Research in Motion's BlackBerry, as we covered earlier this month, but the iPhone is picking up ground. Seventy-eight percent of respondents said they planned to buy BlackBerrys for their employees in the next quarter, compared with 22 percent who plan on buying iPhones and just 5 percent planning on buying a Palm product. That compares August results that had RIM at 79 percent, Apple at 17 percent, and Palm at 6 percent. The results indicate that some companies are buying smartphones from more than one vendor, as last week's report on the iPhone in business noted as a growing trend.

The survey fails to break out results by operating system, which shafts Windows Mobile to some degree. Microsoft has been losing share to the iPhone overall, but smartphones that use Windows Mobile are still the second-most widely used phones inside corporations, according to J.Gold Associates. However, since that operating system is spread across so many different handset makers, no one handset maker is outpacing the three mentioned in the survey.

Palm has been trying to make a comeback with products like the Centro and Treo Pro, but Centro is a consumer-oriented product and the Treo Pro doesn't seem to have set the world afire.

In February 2007, Palm was on the shopping lists of 22 percent of companies surveyed by ChangeWave. Times have changed.

Updated 3:15pm PT with comments from conference call.

Doubling revenue and earnings per share wasn't good enough for Research in Motion's investors, who punished the company Wednesday after its outlook fell short of expectations.

RIM recorded first-quarter revenue of $2.24 billion, up 107 percent from last year's first fiscal quarter. Earnings per share were 84 cents per share on net income of $482.5 million, compared to last year's first quarter, when earnings per share were 39 cents per share. Both of those numbers were within guidelines set by the company last quarter but slightly off of what analysts polled by Thomson One were expecting: $2.27 billion in revenue and earnings per share of 85 cents.

The real ire, however, came as the result of RIM's outlook for the next quarter. The company said it expects revenue between $2.55 billion and $2.66 billion as well as earnings per share between 84 cents and 89 cents for its second fiscal quarter. But analysts had been expecting earnings per share of 90 cents, and investors hammered RIM's stock in after-hours trading, sending it down more than 9 percent. Before the earnings announcement, shares of RIM rose $1.87, or about 1 percent, to close at $142.35 Wednesday.

RIM added 2.3 million new BlackBerry subscribers during the quarter, and shipped 5.4 million devices, it said. The company is expected to hold a conference call later today to discuss its quarter, and I'll update this post if anything interesting comes out about RIM's performance and its outlook for the rest of the year.

UPDATED 3:15pm - RIM co-CEO Jim Balsillie and Adele Ebbs, vice president of investor relations, told analysts that the company plans to spend more money in the upcoming quarter on marketing initiatives, among other things, designed to lift RIM's profile with consumers. If you've been watching television lately--especially the NBA Finals--you've seen dozens of BlackBerry ads, and with the BlackBerry Bold expected to make its debut later this summer, expect to see more.

Balsillie also professed to be unconcerned about the pending debut of the iPhone 3G, pointing out several times that RIM has been gaining market share in recent quarters. When pressed by a financial analyst on whether he sees an overlap with Apple's customer base, Balsillie emphatically said "Nah, nah," and you could almost hear him shaking his head over the conference call bridge.

Perhaps the unanswered question is if RIM isn't concerned about the iPhone, why does it feel the need to boost advertising spending at this particular point in time? Balsillie briefly touched on that notion in terms of the expected growth in the overall smartphone market, which he sees as "a bit of a land grab game right now." This town may very well be big enough for both RIM and Apple as the overall market grows; "all roads lead to adoption right now," he said.

We're about to see what full-blown competition for the future of the computing industry looks like when multiple players get a shot to make an impact.

The next great operating systems wars are about to be fought, as traditional computing companies collide with teams representing the mobile phone industry. Nokia's decision Tuesday to unify, then open-source, the Symbian operating system for smartphones clarifies how today's most-widely used handset operating system will evolve to match the open-source initiatives headed by Google and the LiMo Foundation and competition from companies like Microsoft, Research in Motion, and Apple.

Forget RIM and Apple for a moment, since those companies are taking a different tack than the rest of the industry by building the entire widget themselves: both hardware and software. The Symbian Foundation's goal is by 2010 to develop a royalty-free open-source operating system based on Symbian's existing software that phone makers will license to use on their phones.

Nokia's N95 smartphone, which runs Symbian's operating system and the S60 user interface.

(Credit: CNET Networks)

Unless RIM and Apple change their strategy to start licensing their operating systems, Nokia and Symbian will be competing for the affections of phone makers and carriers with Microsoft's Windows Mobile, Google's Android, and Linux-based mobile operating systems from the likes of the LiMo Foundation and others.

"(Symbian) is transitioning from a profit making licensor of the leading mobile device operating system, to an open source provider of a mobile OS that anyone can use on a royalty free basis," wrote Jack Gold, principal analyst at J.Gold Associates in a research note distributed Tuesday. "This is a direct challenge to Google's Android initiative, although somewhat belated."

The opportunity is clear: the smartphone market is growing by leaps and bounds as people start to realize what is possible with an Internet connection and a powerful operating system in the palm of their hand. But despite the fact that Symbian's operating system is used by 60 percent of the world's smartphones--most of which were sold by Nokia--upstarts like Apple and Google have pushed the established smartphone industry to evolve their software with the times.

As Om Malik puts it, and as I've written before, phone makers can't get by on flashy hardware anymore. "Indeed, the mobile industry's old guard is experiencing the business equivalent of heartburn as players like Apple prove that software platforms, and the innovation they foster, are the only way to withstand the whiplash-inducing forces of commoditization," Malik wrote Tuesday.

Prior to Tuesday's announcement, Nokia owned 47.9 percent of Symbian. That close relationship with Nokia--the world's largest handset vendor--ensured its software would appear on a large number of devices sold throughout the world. But application development for Symbian phones was somewhat confusing in that there were several different user interfaces in use, depending on the phone vendor. Nokia's phones used the S60 interface. Motorola's Symbian-based phones used the UIQ interface. Symbian phones that ran on NTT DoCoMo's network used the MOAP interface.

The Symbian Foundation will unify those user interfaces, which will likely make application development easier and more consistent across a wide range of phones. This is exactly what Google wants to do with Android: unify the mobile Linux community behind a consistent interface that's compatible across a wide variety of phones and available under an open-source license.

Nokia, Symbian, and their main partners--Sony-Ericsson, Motorola, and DoCoMo--have all agreed to contribute their user-interface technology under the open-source Eclipse license to any company that wishes to join the Symbian Foundation. Those components will start to become available in 2009, when the Symbian Foundation is formally established, and will be available as open-source projects up until the point when the first formal Symbian Foundation operating system is released in the first half of 2010, the companies said Tuesday.

The Symbian Foundation will also match Android and the LiMo Foundation in a key way: the operating system and its components will be available to phone makers royalty-free. One of the main attractions of mobile Linux was the low cost of getting a mobile Linux operating system up and running, as opposed to paying Symbian or Microsoft royalties or licensing fees for the software. This could cause major problems for Microsoft, who is expected to continue its pay-for-play mobile operating system business, Gold wrote in his report.

Scott Rockfeld, group product manager for mobile communications at Microsoft, said that putting together a modern mobile phone represents a significant investment of time and money even if you choose a royalty-free path, and that Windows Mobile demonstrates enough value in getting that system up and running quickly that certain phone makers will continue to pay for it.

Gold wasn't so sure. "It may be difficult for Microsoft to continue to justify its relatively high license fees for an OS that competes with a fully featured one that is offered for free. While I do not expect Windows Mobile to simply fade away, I do expect that ultimately Microsoft will have to be more competitive (i.e., free or close to free) if it wants to remain a major factor in the wider mobile device platform marketplace. It will have to make its revenues on applications and services instead," he wrote.

It's not immediately clear how the Symbian Foundation will affect the LiMo Foundation, which actually has phones out in the market using a Linux-based operating system developed by a consortium of industry players. Morgan Gillis, executive director of the LiMo Foundation, called Nokia's move a "strong endorsement of the philosophical underpinnings" of the LiMo Foundation, although the LiMo Foundation focuses more on the plumbing of the operating system rather than the user interface.

But is LiMo now caught between two giants, Nokia and Google? Motorola and DoCoMo were founding members of the LiMo Foundation, but have chosen to hedge their bets by participating in both the Symbian Foundation and the Open Handset Alliance.

Google's Android phone software, scheduled to arrive later this year.

(Credit: Stephen Shankland/CNET News.com)

Gillis recognizes that by the time the Symbian Foundation releases an operating system in 2010, some of today's current players may have fallen by the wayside. "The question is really what is the right number of platforms from the industry. Major players say there has to be rationalizations down to some number, but the right number is not bigger than four. ...It's much more efficient to have a small number," he said.

Right now, with Symbian, Microsoft, LiMo, Android, Apple, RIM, Palm, and other Linux consortia all fighting for a place at the table, somebody's going to have to lose. Malik thinks that LiMo, Symbian, and Apple have the best chance of "winning big," with Android and Microsoft fighting for that remaining spot at the table.

The next two years will be fascinating ones for the smartphone industry as processing power increases, software grows more sophisticated, and wireless networks become faster and more prevalent. This evolution of computing will not follow the PC industry's lead and coalesce around a dominant player anytime soon, and there's no better spur for innovation than competition.

The evolution of the mobile operating system is being defined by traditional players like Microsoft and Apple, the younger establishment represented by RIM, Nokia/Symbian, and the Linux consortia, and the 800-pound gorilla of the 21st century: Google. They are raising the bar with features and design while attempting to make sure developers have a chance to participate, and the results of this competition should delight the smartphone buyers of the next decade.

RIM just released the BlackBerry Bold shown here, but could have a touch-screen model coming soon.

(Credit: RIM)

Research in Motion has a touch-screen BlackBerry in the works that should be out in the third quarter, according to a report Thursday.

The Wall Street Journal has echoed a previous report from The Boy Genius Report that RIM's BlackBerry Thunder will arrive later this year exclusively on Vodafone and Verizon's networks. The device is seen as an answer to Apple's iPhone, which will likely be running on AT&T's 3G network by the time the Thunder arrives.

RIM is by far the leading smartphone company in the U.S., but Apple has come out of nowhere to take second place, and the competition should intensify with Apple's plans for business-friendly software and RIM's continued advance into the consumer market. RIM has started advertising the BlackBerry during consumer-friendly shows such as the NBA playoffs, and Apple's getting set for The Second Annual Month of iPhone Ridiculousness in the coming weeks.