Yesterday, KantarWorldPanel published their quarterly report of smartphone sales, covering the period from December 1st, 2012 to Feb. 28th, 2013. In the U.K., the Kantar report includes 1 month of sales for the BlackBerry Z10. BlackBerry (NASDAQ:BBRY) sales in the U.K. dropped to 5.1% from 6.5% in the previous quarter, leading Kantar to conclude that the Z10 phone did not make an impact on BlackBerry sales in the quarter. In the U.S., where the Z10 was not available until late March, things were even worse, BlackBerry market share dropped to 0.7%, half of what it was in the last quarter.
It is much too early, however to pass verdict on the U.S. sales, or to pronounce BlackBerry dead based on those numbers. In the UK, the Z10 phone has had two months to get established, the market will have burned out the pent-up demand from the launch, and BlackBerry phones sales should be approaching "steady state". If we can find out how sales are going in the U.K., it could provide a guide for future sales elsewhere.
Carphone Warehouse is the leading seller of smartphones in the UK and Europe, with about 18% of the market. Carphone Warehouse sells all of the major phone brands, and deals with all of the major carriers. It has 794 stores in the UK and is also the leading on-line retailer. On the Carphone website, it is possible to view all of the smartphones, ranked in order of sales.
Two new phones from other suppliers have launched in the UK since the end of February, the HTC (OTC:HTCXF) One and the Sony (NYSE:SNE) Experia Z. One new phone, the Samsung (OTC:SSNLF) S4, is about to launch and is available for pre-order. Changes happen very quickly in the fast growing and very competitive smartphone industry.
Carphone does not publish actual sales, but it is possible to see how one phone is selling relative to all of the others. Using three pieces of market share data from the Kantar report, Apple (NASDAQ:AAPL) (29%), Samsung (36.2%) and Android (58.3%), and adjusting for the newly launched phones, I was able to develop an algorithm which relates sales ranking to market share. That algorithm matches the three key data points to within +/-1%. (I included only one month of Z10 sales and excluded the phones that launched after the end of February)
Using the same algorithm, I added back the four new phones, and developed the graph below:
Some observations based on this analysis:
- Five of the top six phones are high end phones, priced at the equivalent of US$600 or more, which indicates that most people are still willing to pay a premium for a high end phone with the latest technology. However, the second phone on the list, the Samsung Galaxy Ace retails for only $160 and is being marketed in the U.K. on a monthly plan, for $11/month. The U.K. market for carriers is very competitive, prices for monthly plans are generally much lower than the U.S., so the cost of the phone is service plan is lower relative to the cost of the phone. This probably impacts the relative popularity of the lower priced phones, which seem to be gaining share in the U.K.
- BlackBerry is easily winning the race for third place. BlackBerry phones are placed at numbers 6, 8, 16, 24 and 37 on the list. The highest ranking Windows phone, the Nokia (NYSE:NOK) Lumina 820 is at position 21.
- Another surprise is that the older BlackBerry phones seem to be making a comeback. This could be a result of aggressive pricing. The BlackBerry Curve 9320 is being marketed at Carphone Warehouse at $17/month on a two year plan.
- The Samsung S4 is selling very well in pre-orders, taking third place a full three weeks before it becomes available. Look for the S4 to take a bite out of Apple's (AAPL) share of the high end market.
The forecast for sales by manufacturer is:
And by operating system:
If the rankings at Carphone Warehouse are correct, and are representative of countrywide sales, then BlackBerry has doubled its market share in the U.K. since the last quarter of 2013. That number is also fairly close to the forecast I made last week, which was based on the February sales announced by BlackBerry with its financial results. That forecast had BlackBerry picking up 12.6% of the U.K. market.
I am still long BlackBerry. There are some niggling doubts about the rather low-key U.S. launch which might cause some headaches in the short term. However, the U.S. market share only has to reach 3% to match the doubling of share that I am forecasting for the U.K. Line-ups and sell outs are not associated with that kind of market share. Although the U.S. market is important, I don't consider it to be as critical as most of the sell side analysts would have us believe.
In the meantime, I will keep an eye on the rankings at Carphone Warehouse. If the BlackBerry rankings start to slip, or if low priced phones start to take over market share, I will re-evaluate at that time.