Motorola Leads U.S. Mobile Market, But For How Long?

Despite reports that Samsung captured the U.S. mobile handset market share lead in Q3 of this year, research firm MultiMedia Intelligence predicts Motorola will emerge as the overall leader at the end of the year, though it does notes its dominance is shaky. 

 

According to its latest report, MultiMedia Intelligence pegs Motorola’s market share at the end of 2008 at 21%, slightly below the 22.4% Strategy Analytics placed Samsung at in its November report. Taking into consideration statistical error, what’s clear is that the market share lead once enjoyed by Motorola has nearly disappeared. In fact, MultiMedia Intelligence offers that both Samsung (News - Alert) and LG are quickly closing in on their leader, and may both eclipse its numbers in the coming year. MultiMedia Intelligence says Samsung will close out its 2008 campaign with 20% of the market, up 4% from a year ago.

 

Samsung, in fact, already holds the market share lead among young users (12-17-year-olds) and among African-American and Hispanic subscribers. It’s not difficult to imagine it can best its main competition for the overall lead as well.

 

LG owns the 25-35-year old market, largely due to high adoption rates among male users in that segment. Interestingly, Motorola owns the overall lead with the male population, while Samsung leads among female users.

 

Global leader Nokia leads among older users (65-and-older), but that is not the segment that’s likely to drive growth for any manufacturer. In fact, for users older than 44, sales dropped in every cross-section of demographics. It also has struggles to make major inroads in North America.

 

But the competition between traditional handset makers may not be the big story in this space. Rather, the gains made by smartphone manufacturers — specifically, Apple (News - Alert) and BlackBerry maker RIM — which come at the expense of the rest of the market, are creating a new market dynamic. In fact, Apple now is just behind Nokia, in 6^th place in the U.S. market, and though it still has far to go, its immediate impact is resonating in the market.

 

“The market share gains made by RIM and Apple are coming at the expense of the market incumbents and are affecting the way the entire market competes,” notes Rick Sizemore, chief strategy officer at MultiMedia Intelligence.

 

With the growth of the mobile broadband market, and the introduction of new, innovative applications that are best enjoyed on next generation devices, like the iPhone or the BlackBerry (News - Alert) Storm, it’s not inconceivable that the market leaders will have their work cut out for them in the coming years. As almost mandatory two-year contracts (they’re mandatory if subscribers want to their carriers to subsidize their phone purchases) expire, decreasing prices on new 3G devices will only help grow market share for RIM and Apple. A lower-end model of the iPhone is expected to sell for $99 at Wal-Mart stores.

 

The trend is clear: Nokia is set to introduce its newest device to compete with the iPhone and Storm, its N97, in the first half of 2009; Sony Ericsson has its unlocked (and quite expensive) Xperia X1 on the market already; and the G1 device from HTC  is only the first of many expected Android-based devices.

 

BlackBerry sales are also expected to double this year, driven by three new devices, the Storm, the Bold, and a clamshell version of the Pearl. 

 

Naturally, wireless carriers play a role here. It’s safe to assume the iPhone’s market share would be significantly lower had AT&T not subsidized its cost as it has. The same will likely be seen with sales of the BlackBerry Storm (pictured), which can be had for a penny under $200 from Verizon (News - Alert).

 

But the carrier factor notwithstanding, the simple fact remains that, while the top three are enjoying a nice run, if they are to compete in the future, they will also have to bring new, easy to use, multi-functional devices to market. As of now, Apple and RIM are dominating that market, with the jury still out on the first Android phone, though newer versions are likely to also boost its popularity as well.

 

The name of the game is applications — the carriers know it — and handset makers, if they are to stay in the game, will have to develop devices that are capable of running all the latest and greatest applications, be they for business of pleasure. Right now, the real winner stands to be the subscriber.