Apple beats Nokia as smartphone sales grow

By Jonny Evans

All Apple [AAPL] needs to do is sit tight and it could sell 190 million iPhones in 2016 alone, new research shows. Apple has also beaten Nokia to become the world's biggest smartphone manufacturer for the first time, while AT&T confirms 3.6 million iPhone activations.

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Age of the iPhone?

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Juniper Research data claims the global smartphone industry will reach one billion handsets by 2016, accounting for the majority of mobile phone shipments.

Data-grinding this, with Apple pegged at c.19 percent global share by recent Canalys figures, even if the company fails to increase its share it can anticipate selling around 190 million iPhones in 2016.

Since Apple declared war in 2007, it has become the world's biggest smartphone vendor, beating Nokia for the first time. Nokia shifted 16.7 million units in its most recent quarter, the company announced this morning. Apple sold over 20 million iPhones in its most recent quarter, driving ahead of its Finnish competitor.

It may get worse for Nokia because despite the legal hubris between Apple and Samsung, the latter is also expected to eclipse Nokia's smartphones sales within the just gone quarter.

Apple needs a pre-paid play

Other than continuing to innovate within iOS 5 and litigation against imitative handset makers, what's Apple going to do to see off the Android army?

Some (myself included) anticipate Apple will diversify its iPhone range with the potential introduction of new low cost iPhone-style handsets.

Daniel Ashdown, research analyst at Juniper Research, doesn't see it, telling me: "Given Apple's latest results (their Q3), there doesn't appear to be a need to diversify its product range. Apple has shipped 69 million iPhones in last four quarters (since the iPhone 4 was launched), compared to 60 million in the thirteen before that. There have been rumors of the next model being an iPhone 'Nano' but, given the previous models have stuck with a screen size of 3.5", and its competitors largest devices are up to 4.3", I wouldn't be surprised if they went big rather than small."

I also believe Apple needs to make a better effort to address the pre-paid market, as developing markets don't always possess the appropriate credit systems for monthly fee-based packages.

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What would Steve do?

The question on the lips of everybody inside and outside of the company when considering Apple's challenge to retain its ascendancy in the smartphone sector will likely remain, "What would Steve do?".

Carriers as well as handset manufacturers are behind the Android machine, praying that through increasing the level of industry competition they can avoid becoming another Apple-dominated industry.

AT&T this morning confirmed iPhone sales remain strong, saying it activated 3.6 million of the handsets in its most recent quarter. However, Android devices accounted for 40 percent of smartphone activations as the carrier moves to diversify its smartphone line-up in the wake of the no longer exclusive US iPhone distribution deal. AT&T reported Q2 earnings of $3.6 billion on $31.5 billion revenue. AT&T also added "379,000 connected devices, such as the Kindle and iPad."

However, Apple is unlikely to sit on its laurels. Speaking during its Q3 financial results this week, CFO Peter Oppenheimer pretty much confirmed that something big is planned for September.

"As we announced at WWDC, we have a lot going on in the fall with the introduction of iOS 5 and iCloud. We also have a future product transition that we're not going to talk about today and these things will impact our September quarter. We remain very confident in our business, our new product pipeline and our momentum," he said.

Calling out Android

iOS 5 in conjunction with iCloud and the newly-available Lion OS (which I'm kicking through its paces at present) will spark new life into iPhone 5 sales. iPhone demand in the just-gone quarter surprised everyone, with over 20.34 million unit sales despite the imminent product transition.

The new iPhone is likely to deliver even more features, to be faster, lighter and thinner, and to use the A5 processor. Some predict the device may be introduced in August, but Oppenheimer's statement seems to support the notion that it won't ship in quantity until the following month.

This suggests that in classic form, Apple intends allowing excitement surrounding the device to increase after its public announcement, leading to the customary international queues as iPhone fans wait to be among the first in the world to wrap their hands tightly around the new-to-market device.

Living up to the hype

Given that Apple continues to innovate in the sector and the company's clear intent to wield the combined power of all its platforms as part of its market pitch, it is open to question if competitors can stymie company growth.

With a billion smartphone sales expected in 2016 alone, each percentage point by which Apple can increase its market share equates to 10 million iPhones, which, according to its own most recent figures, equates to around $6.5 billion in additional revenue, according to its own financial statements (available here).

This might be a good time to reflect on the ill-fated words of Palm Inc President and CEO, Ed Colligan, way back in June, 2007: "I've never seen the kind of feeding frenzy we've seen in the media. We expect it [iPhone] to be a very successful product -- but I don't know how it can possibly live up to the hype."

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