With Samsung, Apple dominating smartphones, where's the rest of the field?

Some question whether Nokia, RIM, Motorola and others can grow, much less hold on

While Samsung and Apple thrive in the overall smartphone market, the situation is uncertain, perhaps dire, for several cell-phone vendors, including Research In Motion, Nokia and Motorola.

Gartner on Tuesday reported that smartphone sales surged in the second quarter, by nearly 43%, to 153.7 million units compared to the same quarter a year ago, with Apple and Samsung taking about half the total. Samsung reached 29.7% share for smartphones in the second quarter, while Apple reached 18.8% share.

No other smartphone vendors had even close to 10% of the smartphone share. Samsung and Apple have been steadily widening the gap between themselves and the rest of the field in recent quarters, Gartner noted.

Year over year, RIM smartphone sales declined from 3% to 1.9% in the second quarter, while Nokia's Symbian OS declined from 22% to 5.9%, Gartner said. Motorola saw its share of Android devices decline from 9.4% to 5.9%, as it sold about 1 million fewer phones.

Other vendors, such as LG, Sony and HTC, also saw declines in phone sales, including smartphones. Gartner credited HTC with selling 9.3 million smartphones in the second quarter, after selling 7.7 million during the first quarter. Still, the 9.3 million was down from 11 million sold in the second quarter of 2011.

Phones running the Windows Phone OS had an uptick in the second quarter over the same period in 2011. It jumped to a 2.7% share of smartphones over 1.6% a year earlier, on an increase of nearly 1 million more sold, reaching a total of 4 million.

That Windows Phone improvement offers some promise for Nokia, which sells Windows Phone amid declining sales of Symbian. Even so, Gartner noted that Nokia hasn't had impressive results with its Lumia line.

Nokia, RIM and Motorola are all seeing significant job cuts largely due to the competitive smartphone market. The most recent was from Motorola, owned by Google, which announced Monday it will cut 4,000 jobs, or 20% of the total, amid plans to produce fewer phone models. Nokia has pinned its hopes on Windows Phone 8 models coming soon, while RIM is touting its BlackBerry 10 OS and phones for the first quarter of 2013.

Analysts said the unfolding story for the smartphone competitors to Apple and Samsung will reach a climax in the next six months, if it hasn't been reached already. Some analysts doubt that any of these competitors will surge ahead by much, although Gartner found HTC's second quarter encouraging.

"The numbers all tell a very straightforward story at the moment. You either have a strong brand or differentiate your offering enough to stand out or make it cheap enough so it sells," said Carolina Milanesi, a Gartner analyst.

She predicted that with new brands emerging, such as Huawei and ZTE, there will continue to be multiple competitors to Samsung and Apple and not necessarily consolidation around the two leading brands.

The value of smartphones will be delivered more through apps and services and less through the base OS, Milanesi added. "As the big OS owners call the shots, it will be increasingly difficult for vendors to stand out," she said.

Jack Gold, an analyst at J. Gold Associates, said he doubted that Motorola, Nokia and RIM face any immediate risk of going under because of the smartphone competition. "Most analysts have simply written them off, but I'm not so quick do so," he said.

RIM has plenty of cash on hand and Motorola has the reserves of Google, leaving Nokia the weakest financially unless Microsoft steps in.

Each of those three "can carve out a reasonable niche and do well if they position themselves and play their strengths," Gold said. "You don't have to have 50% or greater market share to do well. "

Taking each of the three, Gold said Motorola "should do OK" if the company focuses on business users at the mid- to high-end of the market.

Nokia can also do well, Gold said, but it still has only a 10% to 15% market share in two to three years with Windows Phone 8 devices gaining popularity. "While those numbers are substantial, they are certainly no where near the share of Android," he added.

To Gold, RIM is in the most trouble competitively of the three, with its new smartphone running BlackBerry 10 the farthest from being launched, in January.

"RIM still has a loyal but shrinking base of users, and I think many will upgrade to BlackBerry 10, but I also think RIM will have trouble recapturing much market share, short term," he said. "That doesn't mean they can't be profitable and have a good niche to play in. I don't see RIM simply disappearing any time soon, as some suggest." Longer term, RIM can regain a 10% to 15% market share, "which is not insignificant," Gold said.

Milanesi questioned that analysis for RIM, however. "There might always be a segment of the enterprise market that values security and will always pick RIM, but the question is, will that be enough? I would say no. RIM needs to find a different way to stay ahead of the game, after they catch up."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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