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Smartphone Wars and Console Wars

April 19, 2011

The war of the big tech companies to dominate the smartphone market seems to be turning into a 2-horse race:

New figures provided exclusively to The Guardian by Kantar WorldPanel Comtech shows Nokia’s market share for smartphones dropping from 10% to just over 1% in the US over the past six months, meaning it sold only about 160,000 top-end devices there. The story is the same for the troubled Finnish phone manufacturer in every country over a 12-month or six-month period, with a collapse in market share that bodes badly ahead of its quarterly financial results due this Thursday.

The story is no more encouraging for RIM, which according to Kantar has seen a huge fall in the number of sales in the US, the world’s biggest smartphone market. There its share has fallen from 32.5% in June 2010 to just 10.6% in March 2011, meaning that it only sold an estimated 1.4m devices there.

Apple is also being rapidly eclipsed by Android devices, though Kantar notes that the introduction in the US of its iPhone to the Verizon network provided an uplift to sales, so that it actually increased its market share there. But in other countries, notably the UK, Germany, France and Japan, the iPhone saw double-digit falls in market share – which could mean that even if it is selling more phones, it is not growing the number as quickly as the market is expanding.

Not only that but smartphones (and tablets) also seem to be eating into the current 3-horse gaming race between Sony, Microsoft and Nintendo:

The traditional home console business is quickly losing revenue share to the smartphone market, according to a new report from mobile analyst firm Flurry.

The report is based only on publicly available data and the company’s own estimates, but appears to show that the revenues from smartphone and tablet games rose from 19 per cent of the U.S. portable game software market in 2009 (iOS only), to 34 per cent in 2010 (iOS and Android combined).

At the same time the market share for the Nintendo DS family of consoles fell from 70 per cent to 57 per cent, while the PSP dropped from 11 per cent to 9 per cent.

However, both portable consoles were nearing the end of their lifetime by 2010 – when their revenues might naturally be expected to fall. It is also unclear whether the smartphone revenues represent a true loss in market share on the part of consoles or simply an expansion of the whole category.

However, Flurry characterises Nintendo as, “struggling with its own burning platforming: Nintendo DS”. The report is also adamant that smartphone revenues are increasing “at the expense of portable gaming”.

Flurry’s data for the video games market as a whole in the U.S. suggests that the smartphone and tablet market has risen from 5 per cent in 2009 to 8 per cent in 2010. This is estimated as an increase of $500 million to $800 million.

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