Handset Industry Revenue Market Share and Trend Lines: Wonder No More ...
Jim,
<< mQ, Re: "Nokia has done better than I expected over recent years. .... That's market share based on unit sales. NOK's ASPs continue to decline at a 10% clip YoY, now down to 89 Euro. ... Wonder what the NOK market share is (and trend line) based on revenue rather than unit sales? >>
Don't be misled by falling ASP's, at least in Nokia's case. The trend line for Nokia is nicely up both in absolute terms and relative to the competition, for market cap, revenue, and profitability. Let's look at top line growth (including Nokia Networks) first ...
Revenue Trends for Nokia (Billion Euro and Billion USD)
2004 2005 2006
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€29.37B €34.19B €41.12B
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1998 1999 2000 2001 2002 2003 2004 2005 2006
======= ======= ======= ======= ======= ======= ======= ======== ========
$15.50B $21.16B $28.22B $27.81B $28.09B $32.99B $36.36 $42,82B $54.03B
In 2006 Nokia net sales were up 20% v. 2005. Net profit was up 19%. EPS was up 27%, and their operating margin of 15.3% for mobile devices once again was the highest in the handset industry. The operating margins for handsets below are for the full 2006 year
Nokia SEricsson Samsung Motorola LG BenQ
===== ========= ======= ======== ====== ========
15.3% 11.8% 10.0% 9.5% 1.3% Negative
• Nokia Mobile Device Sales in 2006 increased 22% from €27.653 ($36.332 billion) in 2005 to €33.677 billion ($44.247 billion) in 2006.
• Nokia Mobile Device Operating Profit increased 23.7% from €4.176 ($5.487 billion) in 2005 to €5.161 billion ($6.781 billion) in 2006.
We should also note that in Q4 2006 Nokia captured at least 58% of the handset industry's total profit. They are the global leader in entry level GSM and GSM/GPRS, mid-range GSM/EDGE, and UMTS (WCDMA and WEDGE) feature phones and smartphones for unit sales, revenue, and profitability, and they had over 50% of the growing high end global smartphone market which reached 64.1 million units in 2006 according to Canalys.
In 2006 Nokia clawed back 2.3 percentage points of global sell through unit market share and 1.7 percentage points of sell-in unit share despite beginning a ramp down of marginally profitable CDMA handset sales. Nokia's market share in 3GSM UMTS (WCDMA) handsets is roughly equivalent to their overall global handset market share. QUALCOMM claims some 30+ customers for their UMTS (WCDMA) chipsets but while I don't have precise numbers to cite, Nokia UMTS (WCDMA) handset sales apparently exceeded the UMTS (WCDMA) handset sales of all 30+ combined, as they did last year, although QUALCOMM users collectively increased share.
While Nokia did very well in CY2006 it should be noted that Sony Ericsson was the years big gainer while Moto crashed and burned from the RAZR-thin margin perspective in Q4 despite strong unit sales, and there is evidently no near-term relief in sight for them on that important score. They are also likely to give back some of their 2006 unit share gains in 2007 while they attempt to work back to double digit margins.
"We're actually going to turn down some deals. I don't know what it will mean for market share. I don't really care in the short term. ... Every time you fall off the horse like we did in [the fourth quarter], you don't just end up doing the same stuff. We've got to get discipline back that every product we make we make money on." - Ed Zander -
Message 23334498
The Asians, of course, didn't enjoy a particularly good 2005 and they really sucked wind in 2006. For them the trend is clearly not their friend. Unlike Nokia, Moto, and SE, QUALCOMM's two largest customers -- Samsung and LG -- posted lower revenue sales and lower profit in 2006 than they did in 2005 despite healthy unit sales increases. As Strategy Analytics (SA) noted ...
In Dollar revenue terms, Sony Ericsson (US $4.9 billion) became the world’s third largest handset vendor, overtaking Samsung (US $4.6 billion) for the first time.
Sony Ericsson also passed LG in revenue sales in Q1 and unit sales in Q3, and the gap between Nokia, Samsung and LG has widened whether one is looking at unit sales and share, mobile device revenue and revenue share, or profitability.
I have not yet completed a comprehensive abstract of Mobile Device Sales, Share, and Profit for CY 2006, but the tables below should give you a preliminary idea of how the numbers tumbled for Q4 2006. I've abstracted Q4 starting with borrowed abstracts from Lucas van Grinsven of Reuters¹ and I've made currency conversions to USD based on rates in effect on 12/29/2006 which differ from his.
¹ tinyurl.com
The revenue share and profit share numbers I've calculated are only for Q4 and since very few 'Others' are turning a profit, and overall their operating margins are probably negative, I've plugged in $000 for 'Others' Q4 profit.
Q4 2006 and CY 2006 Unit Sales Sell-in and Sell Through Share
Here ...
Message 23334126
Q4 2006 Mobile Device and Revenue Sales and Share
The 1st table below has revenues in millions of euros, unless otherwise stated (ranked according to absolute size of revenues after conversion):
Q4 2006 Q3 2006 Q4 2005 % change y-o-y (currency unconverted)
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Q4 2006 Q3 2006 Q4 2005 % Change y-o-y
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Nokia¹ (€) 9,517 8,298 8,394 +13%
Motorola($) 7,806 7,034 6,538 +19%
SEricsson² (€) 3,782 2,913 2,310 +64%
Samsung (bn KRW)³ 4,310 4,450 4,450 -3%
LG (bn KRW)³ 2,187 2,126 2,452 -11%
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¹ Combined sales of Mobile Phones, Multimedia, Enterprise divisions
² 3,782 million euros is $4.92 billion ($1=.7689 Euro [per Reuters]
³ 4,310 billion won is $4.14 [per Reuters]
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Q4 2006 Mobile Device Revenue Sales and Share of Big 5 in USD
Q4 2006 MD Revenue Big 5 Revenue Share Big 5 Unit Share¹
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Nokia $12.504 Bln 38.9% 42.4%
Motorola $7.806 Bln 24.3% 26.8%
SEricsson $4.969 Bln 15.4% 10.7%
Samsung $4.700 Bln 14.6% 13.0%
LG $2.187 Bln 6.8% 6.9%
------------- --------- ---------
Total Big 5 $32.166 Bln 100.0% 100.0%
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¹ Sell-In Share of Big 5 per Strategy Analytics
Q4 2006 Estimated Overall Mobile Device Revenue Sales and Share in USD
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Q4 2006 MD Revenue Q4'06 Revenue Share Q4'06 Unit Share¹
================== =================== ================
Nokia $12.504 Bln 32.8% 35.2%
Motorola $7.806 Bln 20.5% 21.9%
SEricsson $4.969 Bln 13.0% 8.7%
Samsung $4.700 Bln 12.3% 10.7%
LG $2.187 Bln 5.7% 5.7%
Others² $5.981 Bln 15.7% 17.8%
------------- --------- ---------
Total $38.147 Bln 100.0% 100.0%
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¹ Strategy Analytics (SA)
² $112 estimated ASP (my estimate) x 53.4 million units (SA)
The Pre-Tax Bottom Line (Operating Profit) for Mobile Devices
The following is income from operations in millions of euros, unless otherwise stated (ranking by absolute size of profit):
% change % of
Q4 2006 Q3 2006 Q4 2005 y-o-y sales
======= ======= ======= ======== ======
Nokia¹ 1,519 1,080 1,234 +23% 16.0%
Sony Ericsson 502 433 206 +144% 13.3%
Samsung (bn KRW) 350 520 520 -34% 8.1%
Motorola ($) 341 819 663 -49% 4.4%
LG Electronics (bn KRW) 59 79 198 -70% 2.7%
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Q4 2006 Operating Profit and Mobile Device Industry Profit Share in USD
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Q4 2006 Industry Profit
Profit Share
======= ===============
Nokia¹ $1.995B 58.0%
Sony Ericsson $0.660B 19.2%
Samsung $0.382B 11.1%
Motorola ($) $0.341B 9.9%
LG Electronics (bn KRW) $0.064B 1.8%
Others $0.000B (or less) 0.0% (or less)
------- ------
Total $3.442B 100.0%
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¹ Combines profit of Nokia Mobile Phones, Multimedia, and Enterprise
Returns to Shareholders
Exclusive of dividends paid, this is how the market leader and market challenger in 3 mobile wireless categories -- mobile wireless handsets (NOK/MOT), infrastructure (ERIC/NOK), and wireless ICs (TXN/QCOM) -- treated shareholders in 2005, and in 2006:
2006¹ 1 Year¹ 2 Years¹ ¦ 2005³
======= ======== ========= ¦ =======
Ericsson ERIC +16.95% +17.25% +25.72% ¦ +9.24%
Nokia NOK +11.04% +9.96% +28.85% ¦ +16.78%
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S&P 500 +13.62% +13.06% +16.88% ¦ +3.00%
Nasdaq +8.89% +6.75% +11.14% ¦ +1.40%
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Motorola MOT -8.99% -9.82% +19.81% ¦ +31.34%
Texas Instruments TXN -10.20% -11.14% +18.37% ¦ +30.26%
QUALCOMM QCOM -12.28% -13.21% -11.79% ¦ +1.60%
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¹ As of 12/29/2006 Close:: Reuters ProVestor Plus Company Reports
² 12/31/2004 Close to 12/30/2005 Close: Reuters ProVestor Plus Reports
Caveat
The usual caveat applies. It is possible that I have made calculation, transposition, or currency conversion errors and/or typos. If anyone spots one please advise.
One of these days I'll get around to abstracting the complete year in more detail ... maybe.
Cheers,
- Eric - |
