Competition Spikes As More Smartphones Are Sold Than Ever Before

Strategy Analytics: Apple's Marketshare in Q2 2010

There’s one thing this market isn’t: Dull. In the past year, smartphone shipments have soared by 43 percent, hitting a record 60 million in sales during the second-quarter 2010.

A number of factors are leading to robust sales, but at the same time, heated competition is driving prices down. Carriers are heavily subsidizing the phones, and handset-makers are willing to trade lower margins for higher sales. Despite all the pressure, Nokia (NYSE: NOK) eked out a 40 percent marketshare due to heavy discounts, RIM (NSDQ: RIMM) grew sales abroad to maintain its share at 19 percent, and Apple’s blotched launch of the iPhone 4 led to slower growth, according to Strategy Analytics.

The strongest words in the quarterly report were reserved for Apple (NSDQ: AAPL). Even though it shipped 8.4 million iPhones worldwide during the quarter, representing a 61 percent increase compared to the year-ago period, an alarm has been triggered because Apple’s marketshare gains are slowing. In the second quarter 2010, its marketshare was calculated to be 14 percent, which is lower than four previous quarters over the past two years. It peaked twice before at 17 percent. Strategy Analytics maintains that in order to grow, Apple will need to sign up more carriers in the U.S., China and Japan — the dominant smartphone markets.

All-in-all, it’s not Apple’s profitability that is at stake, it’s the company’s reputation. “The honeymoon period for Apple in the mobile world is clearly coming to an end. We believe Apple may have lost some heartshare in recent weeks because of its perceived mishandling of the antenna problem,” the report claims.

However, while Apple may have to deal with perception (err, reception) issues, other top manufactures, like Nokia and RIM, are dealing with the ability to stay innovative. Both Nokia and RIM are getting ready to release a new version of its operating system which will either allow them to maintain their leadership positions. Android is also on the horizon, although doesn’t show up here, because the report tracks handset-makers not operating systems.

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