Hi all and greetings from retirement. I have given a long thought on this post and finally decided to go for it. The thing is: Tomi Ahonen (author, consultant, motivational speaker) has repeatedly been telling that he is the most accurate forecaster in mobile (usually adding that he has been it for over a decade). I didn’t buy it so I made reviews of his forecasts for years 2010, 2011, 2012 and 2013. As it turned out, those other forecasters must really suck if they’re worse than him. I also gave my thoughts on his year 2014 forecast but naturally it was impossible to give a full review on it as year 2014 was not over. Now it is and I decided to do the review.

Like I said in the forecast accuracy verdict for year 2013, I just love these “most accurate forecasts” that Tomi so much touts he has made. In 2013 Tomi forecasted iPhone market share to be in the 15% to 30% range (compared to 20% of the previous year). First of all, how is spread of 15 points of percentage supposed to be “accurate”? Was that really “most accurate forecast” made for that year by anyone?
If Apple had lost 25% of its market share that year, Tomi’s forecast would have been a hit.
If Apple had gained 50% more market share, Tomi’s forecast would still have been a hit.

And even with these forecasts Tomi still failed in the past, often he failed more than managed to get right. E.g. Android market share for year 2013 Tomi said would be between 60% and 70% – roughly flat from previous year’s 65%. After year 2013 was over, Android had market share of 78% for full year. Over 80% on some quarters.

Knowing this past performance it’s easy to understand that Tomi has been reluctant to give any actual numbers for year 2014. He only talks in terms of “will grow”, “will shrink” and “will stay roughly the same”. I suppose it’s easier to make “most accurate forecasts” that way but let’s try to see his accuracy still, shall we?

Year 2014 Forecast from Tomi Ahonen (with comparison to events that took place in year 2014)

Samsung has already gained the leadership edge of being the world’s largest handset provider, and its competitive advantages out of scale. Scale in manufacturing. Scale in sourcing. Scale in reach. Scale in retail presence. Scale in installed base of users. As long as Samsung doesn’t mess this up (like Nokia did), this is a very strong position and Samsung won’t be dethroned any year soon. If they grow complacent towards the end of this decade, maybe. But by pouncing very strongly when Nokia stumbled the past two years, Samsung has effectively won the decade, and is guaranteed to have well above average profits in a very profitable industry.

[1]

I want to show you a picture I tweeted I while ago:

SamsungNokia

This shows well the Samsung market share decline of last year. Down from 31% to 20.1% (fourth quarter market shares compared YoY). That’s losing over one third of your market share in one year [2]. As a historical comparison point we have market share of Nokia up to beginning of 2011. There we have drop of 26% in six months (Q3 and Q4 2010) and even more in last 3 quarters.
But what comes to profits Tomi mentioned, in year 2014 Samsung was still making more profits than all the other handset manufacturers combined, save for Apple. [3] Therefore Tomi kind of gets it right but this has been bad year for Samsung. They reported YoY profit drop of 60% on one quarter. That’s quite a big pain for any company. [4] Samsung was not safe with its profits, nor safe with its market share and it seems Samsung did not “win the decade” either. Which gets us to:

The real long-term rival to Samsung is not Apple, it is the Chinese vendors. One from the pack will finally get a genuine hit product and propel it to solid second place, in the next few years. That Chinese manufacturer will fight on price and in most consumer segments where Samsung is (and where Apple is not).

[1]

Okay… On fourth quarter 2014 Apple sold almost as many smartphones as Samsung. It was matter of three hundred thousand devices that Apple did not take first place. [2] We could call this part a miss but that would not be fair. The raw market share of Samsung was not eaten by Apple, the cheap high-volume phones competed against Micromax in India, Xiaomi in China, and so forth. But it was Apple that stole the high end. And high end makes majority of the profits and also significant market share in Western markets + Japan. Samsung was beaten from both ends of the price range. I think it’s time to check what I said a year ago:

Since Tomi chooses to use unit sales as a metric, it definitely will not be Apple but one or more Chinese makers that start eating market share from Samsung. Samsung makes phone components for itself and for others and it has always given Samsung a position of advantage. Chinese makers are one of the few that can fight Samsung in price and start eating Samsung from bottom up. And they will as that is their easiest way to challenge the giant. There already are Chinese phones that offer equal quality and user experience as Samsung mid-range phones but with less price. This year we will se phones challenging the high-end.

2014 will not be easy year for Samsung that already threw a profit warning but they will be “largest player” for sure. I would not be surprised if market share of Samsung will decline when Chinese vendors start selling outside China in significant amounts as consumers are finally familiar with the brand and dare to buy one.

That I think sums it up. Samsung had a bad year. Not catastrophic – they made profit – but bad.
And now I want to talk a bit more about that.

First of all, Tomi only evaluates companies by unit sales and units market share. I’ve said several times that it’s silly. It effectively puts Skoda and Rolls Royce in the order where Skoda is “winner” and Rolls Royce is “loser”. This way of evaluation causes Tomi to bet on players that may not be “winning”. Such as Nokia in 2010 or Samsung.

Samsung threw in a profit warning on fourth quarter of 2013 [5] and Tomi (who made his forecast before that) did not see that one coming. However he decided to play the active ignorance card:

Samsung was making strong profits in its handset unit but the profits were down considerably from Q3 – out of a one-time cost of handing celebration bonuses for its employees. So please don’t think Samsung’s handset business is suddenly struggling.

–Tomi Ahonen, February 13, 2014 [6]

That’s nice, but as we can read from reference [5], that bonus only counts for less than half of the drop. Almost as large drop comes from stronger Korean Won, but even in that case we lack few hundred million dollars… And that is assuming it would have been OK for Samsung not to grow at all from Q3 to Q4. (Which is not OK as Q4 is the Christmas quarter that should always cause increased sales in western markets.)
Then Tomi’s numbers come in. Samsung grew zero unit sales from Q3 to Q4. [6] As said it’s totally not OK and Tomi noted it in his blog but gave no explanation on it. Weird.

On we go. On Q1 2014 Samsung had once again decline in profits but as unit sales were up, Tomi was fine with it. [7]

On Q2 2014 Samsung sales drop from 86.8 million units to 74.1 million units. Tomi finally wakes up:

Samsung had a horrible quarter crashing market share from 31% to 25%. While still mroe than twice as big as the number 2 (Apple), Samsung saw its profits take a big hit too and is facing competition on all fronts and the Galaxy line’s lustre is now dulled. Time for Samsung to dazzle us with something new and amazing. If this is a one-quarter one-off blip, then Samsung should be fine, but if they see another quarter of a drop in market share now into Q3, that would be a danger-sign for the boys of Gangnam.

–Tomi Ahonen, August 15, 2014 [8]

One quarter one-off? Apparently two previous did not count? On Q3 Samsung unit sales are up a bit but market share drops still. Profits crash YoY. [9] Tomi still does not report a problem here so I assume it’s fine for him.

And then we get to fourth quarter.
Samsung unit sales dropped.
Samsung market share dropped.
Samsung profits dropped.
Now Tomi has to explain it:

Sammy’s damage was done probably more on the bottom end of the scale. There we do see a heavily surging Huawei who has had a banner quarter (and perfectly timed for its home market, China).

–Tomi Ahonen, January 29, 2015 [10]

Finally he gets it! Let’s see how well his enlightenment holds this time when numbers for 1st quarter of 2015 are in. 😉 But let’s move on to Apple:

Apple will do the iThing. They take the cream off the top, offering less than supreme devices, with some very Apple-ish ooh-aah single feature every few years, but lagging in most tech specs from the leaders. But providing uber-desirable sexy iconic iGadgets that every iGeek has to iHave. And in the process Apple gets to collect the biggest share of iProfits. As long as Apple investors are not under any illusions that Apple would one day ‘rule the world’ of smartphones, and its role will be in the 10%-15% market share mid term, maybe more like 6%-8% in the long term, but taking the biggest profits, that is fine.

[1]
I made my argument on this already a year ago but I suppose I could briefly sum it up: What is this downplay of Apple? Apple sells their phones to 15% of the smartphone buyers. Last year that was 192 million buyers; were they all iGeeks? Are iGeeks so common? And even if they were, that is the specific 15% that can afford to spend $600-$1000 on a smartphone. They are very nice 15% to sell to. Apple owns that end of price spectrum and gathers over 70% of the industry profits. If they do that by selling to these “iGeeks”… Well then everyone wants to sell to iGeeks!
Everyone.
Including Samsung.

iThing“… *sigh*

As said, Tomi did not give numbers when he did his forecast, but he did make additional forecasts later. This is after launch of iPhone 6:

Apple has never felt this level of ‘even’ competition from rivals before. It will be their roughest year. This does not mean that Apple sales will fall. Apple has the best loyalty in the handset business. But this means three things.
It means the news customer acqusition to iPhone will be weakest its ever been.
The growth in absolute unit sales will be worst its been,
the iPhone market share for Christmas 2014 and Spring 2015 will be worst its been in years. (when we combine that with declining iPod sales, flat iPad sales and delayed launch of the iWatch to next year, it means very modest Christmas news for Apple).

These two smartphones are priced at the top of the price pyramid where competition is rough and rivals are tough. The consumers of smartphones are not now on their first smartphone, they have grown to appreciate certain things and will seek the model they want. These two iPhone 6 models will not set the world on fire in the way that previous new iPhone model upgrades have. Yes the iPhone will set a new sales record of course for Christmas but its market share will be the worst the iPhone has seen for many years and the total annual market share for 2014 will be somewhere down near 14%. As China transitions away from handset subsidies, these two iPhone 6 models will not be very compelling to the Chinese market where local rivals already have competitive offerings and will upgrade their portfolio with even better (more competitive) models for the Chinese gift-giving season (Chinese New Year in early 2015).

–Tomi Ahonen, September 16, 2014 [11]

So how was fourth quarter for Apple?

  • New customer acquisition?
    Best ever, according to Apple CEO Tim Cook.
  • Growth in absolute units?
    Best ever.
  • iPhone market share for Christmas 2014?
    Up compared to Q4 2013 – definitely not “worst its been in years”.
  • How about “modest Christmas news for Apple“?
    Highest profit any company has ever made in any industry.
    Ever.
    On that very specific Christmas quarter.
  • Worst market share for many years?
    I think I said it was up YoY.
  • Full year market share?
    14.8% – very close to Tomi’s 14% (but I do admit it is hard to miss that forecast as one quarter can’t have big effect on full year market share).
  • Chinese market?
    Apple was #1 most selling brand in China as measured in absolute units sold in fourth quarter. [12]

In a sense this is nothing new. Like we could read from Tomi’s past iPhone forecasts, he has categorically made forecasts on Apple with the narrative of “unless Apple does XYZ they can’t grow anymore but if Apple does all of those, they will grow to N%“. Problem has been that Apple has grown exactly like Tomi forecasted Apple would grow if it would do all those things…
…while doing NONE of those.
But this iPhone forecast is the worst ever. If there is any way to be more off than this analysis, I’d love to see-
-Wait! There is and it is even more fresh than previous one!

For the full year iPhone is heading to approx 14% market share (down from 15.5% in 2013 and 19.5% in 2012).

Market share keeps falling. When will it stabilizea d to what level. I expect around 9% in a couple of years. The large screen phablets will not restore iPhone to growth, they may stall the decline for a quarter or two. Then it again continues. But for Apple to achieve a stabilization of its market share erosion year-on-year, would require roughly 64 million iPhone sales for the Christmas Quarter now. Even that would only give a market share annually of about 14.5%. And it would require a herculean jump from the 51 million iPhones sold last year in the Christmas quarter. I think more reasonable is something nearer 58 to 59 million.

–Tomi Ahonen, October 29, 2014 [13]

Apple sold 74.5 million units in fourth quarter. [2] Tomi’s forecast is massively off. Not only that but if we compare Tomi’s forecast to contemporary analyst consensus, he was more pessimistic than average. And boy do we have other options to compare to:

benbajarin_twitter

Not bad, eh? Sure, it was tight race of 0.3M units but still it’s a lightyear closer to reality than Tomi’s forecast. And please note the date – September 4th. He is not only getting it so close about Apple and Samsung but in addition to that he’s making the statement prior to Tomi talking about 58-59 million. (Generally analysts expected over 60M for Q4 2014).

That much for Apple. Moving on:

So this story is a bit boring now. We do have a nice tussle for who gets to call themselves the third largest smartphone maker. That race currently features Asian makers. World’s largest home electronics entertainment company Sony from Japan. World’s largest laptop computer maker Lenovo of China. And several second tier handset players – LG out of South Korea, Huawei out of China, ZTE out of China and Coolpad/Yulong out of China. If you want to be generous you can add HTC out of Taiwan.

[1]
I have to add something here: HTC fell out of top 10. Sony is at the position #10, waiting to be replaced and has implied in public it would like to sell their smartphone unit. For a reason unknown Tomi has repeatedly been downplaying Xiaomi and TCL-Alcatel Tomi did not see coming to the list at all. (In fact it would not even be there unless there had been a comment from a reader of his blog) [14].

Next Tomi moves to Nokia/Microsoft. I cut off some half-truths and unnecessary rant and stick to forecasting:

A player who is not in the race for the third ranking among smartphone manufactuers is Microsoft, with its Nokia acquisition…
…now ranked barely 9th largest smartphone maker by the end of 2013…
…Can this improve under Microsoft? In the long run, maybe…
…during 2014 Microsoft takes over the Nokia handset business and tries to figure out how to fix it. A big sign of will Microsoft do this intelligently or dumbly, will be how quickly Stephen Elop is removed from running the handset business of Microsoft. If Bill Gates (and Steve Ballmer) knew what they were doing with the Nokia acquisition then soon after the deal is completed in April, or during the spring they will reassign Elop to do something less damaging than running Microsoft’s handset business.

But during 2014 no matter what miracles Microsoft were able to achieve with its new Lumia (Nokia) unit, much of 2014 will be just adjustments and corrections and this is not a year of Microsoft/Nokia comeback. Microsoft-Nokia will be fighting just to remain relevant and in the Top 10 throughout this year. If you want to see the glass as half-full, then maybe in year 2015 we can hope for a comeback. If you want to see the glass as half-empty, we are now counting time till Microsoft shuts the lights out from the futile purchase of the Nokia handset assets. Although with Microsoft’s deep pockets. that will take years still.

[1]
Elop was not removed from head of devices position during the whole year.
Microsoft didn’t shut down the unit.
Unit sales increased and market share fell.
But we have to admit this was not a year of comeback (although I wonder if anyone else forecasted that anyway to make Tomi “most accurate forecaster”?) so let’s call it a hit.

Blackberry already fell out of the Top 10 and are in such a bad shape they won’t be doing major returns any time soon.

[1]
True, and real surprise would have been if they had made a return.

We already have seen Chinese Xiaomi pass Blackberry taking 11th ranking during Q4 of 2013 (they may even pass HTC and enter the Top 10 by the time the final Q4 numbers are in around early February)

[1]
They didn’t kick HTC out in Q4 but it was close. Call it a hit.

If you are interested in the race for who is 3rd they are all essentially full Android houses now, all from Asia, with very similar products and prices in their product range. This industry from the hardware side is Samsung, Apple and the Nine Dwarfs (Huawei, Sony, Lenovo, LG, ZTE, Yulong/Coolpad, Microsoft/Nokia, HTC and Xiaomi). Yes I will be monitoring the races and reporting on the stats but yeah, this is not anymore the exciting times it was three and four years ago.

[1]
Lenovo bought Motorola. Apple almost beat samsung in terms of units shipped in one quarter. Nokia/Microsoft dropped out from top 10 (let’s not start to argue about on which quarter that happened), so did HTC. Sony is lingering at the edge and they already told they plan to exit smartphone business altogether.
Yeah, this is not anymore the exciting times it was. 😉

We did see the ‘son of Nokia’ ie Jolla launch on the evolution of Nokia’s next generation operating system MeeGo, called Sailfish (which is also Linux based and can run Android apps natively… cool). Jolla in December outsold the iPhone on the one carrier/operator that offered it in Finland DNA. From small things big successes can grow. Wishing Jolla and Sailfish all the very best.

[1]
That’s not really a forecast but I’ll throw in mine:

So it is good sign Jolla sold so well. Kind of sad that it has to end in January and it is even more sad that Sailfish OS won’t see even 1% market share for full year 2014, but I really, REALLY hope Jolla has big enough target group to keep sales at profitable level for every quarter of the year.

That is Jolla/Sailfish in a nutshell. Sailfish OS has so small marketshare it disappears to rounding errors. It’s interesting that after all the rooting for MeeGo and Jolla Tomi has done we haven’t heard him giving a single forecast where Jolla would be heading towards massive growth. It’s as if he doesn’t actually believe that OS by itself would be a significant sales factor.
Which brings us to:

On the software side the biggest potential disruptor is Tizen. We should see the first Tizen smartphones from Samsung this Spring and likely sold among first markets in Japan on NTT DoCoMo’s network. My guess is that Samsung wants to create a big spash with its first Tizen device so they are putting extra effort to make it noteworthy. If a couple of other hardware vendors also deliver on expected Tizen handsets, it could be a fascinating world. Samsung also intends to use Tizen on its TVs and Tizen has many car makers and other tech providers lined up in that ecosystem

[1]
In my year 2013 forecast accuracy verdict I said that Tomi failed his Tizen forecast by ∞ percent for full year 2013 and I added that probably for year 2014 too. Well, it turned out to be true. When Samsung finally launched Tizen smartphone it was a low-end model (totally killing Tomi’s idea that Samsung intentionally delays the phone “to create a big splash”) and year was 2015. No other handset vendors have launched devices on Tizen either and my forecast is that Samsung will be only Tizen manufacturer (actual devices brought to market, not just “partnership agreements”) for the full year 2015 too.

I think it’s time for Tomi to end his forecast. But how about finishing it by throwing out some random ideas so he can call himself “most accurate forecaster” if some of them actually happen? [1]

Will Sony use the Playstation brand to boost Xperia and other Sony smartphone sales?

They didn’t.

Will Nikon launch a smartphone?

They didn’t.

Will Nintendo correct its strategic mistake (of missing the smartphone challenge in pocket gaming).

They didn’t.

Will Microsoft use the Xbox branding to help its Nokia handset sales?

They didn’t.

What will LG do with the Palm WebOS platform it acquired from HP.

TVs, not phones.

And how will HP re-enter the smartphone space as it signalled last year.

Okay, one hit from Tomi. He can now say he “most accurately” forecasted HP to launch a smartphone almost two weeks before HP actually announced HP Slate 6… ...except that HP told they’ll launch phone-capable Android devices already in December [15] – oops. (Tomi also didn’t give any forecast for actual HP performance which has been negligible at best.)

Its likely that Apple breaks the iPhone release cycle from 12 months into 6 months, releasing a new flagship in the Spring and new cheaper models in the Autumn, likely starting this year

They didn’t.

and they will probably spread the price difference between flagship model (current 5C) and discount models (5S).

They didn’t.
At the time of launch the price of iPhone 5C 16GB was $100 USD less than that of iPhone 5S 16GB. [16] When iPhone 6 and iPhone 6 Plus were launched, the price of iPhone 6 Plus 16GB was same $100 USD more than that of iPhone 6 16GB. [17]

So much attempt, so little results. Let’s call it a day then, thanks for reading.

REFERENCES:

[1] http://communities-dominate.blogs.com/brands/2014/01/so-previewing-smartphone-bloodbath-year-5-who-is-still-left-alive.html

[2] http://communities-dominate.blogs.com/brands/2015/02/smarphone-year-2014-final-stats-brand-top-10-os-top-5-installed-base-regional-split-and-bloodbath-q4.html

[2] http://communities-dominate.blogs.com/brands/2015/02/smarphone-year-2014-final-stats-brand-top-10-os-top-5-installed-base-regional-split-and-bloodbath-q4.html

[3] http://iphone.appleinsider.com/articles/14/05/08/apple-samsung-combine-for-106-of-handset-profits-as-competitors-continue-to-bleed-cash

[4] http://www.cnet.com/news/samsung-expects-60-percent-drop-in-profit-for-q3-2014/

[5] http://bgr.com/2014/01/24/samsung-q4-2013-earnings/

[6] http://communities-dominate.blogs.com/brands/2014/02/final-2013-smartphone-market-share-numbers-full-year-and-quarterly-q4-data-by-top-10-brands-plus-os-.html

[7] http://communities-dominate.blogs.com/brands/2014/06/final-q1-smartphone-market-shares-top-10-brands-os-platforms-and-installed-base.html

[8] http://communities-dominate.blogs.com/brands/2014/08/smartphone-top-10-for-q2-of-2014-same-ole-same-ole.html

[9] http://communities-dominate.blogs.com/brands/2014/11/smartphone-bloodbath-q3-full-results-top-10-brands-os-platforms-and-installed-base.html

[10] http://communities-dominate.blogs.com/brands/2015/01/bloodbath-news-lg-reports-final-2014-number-also-outside-top-10-we-have-lumia-number-and-some-though.html

[11] http://communities-dominate.blogs.com/brands/2014/09/lets-discuss-the-iphone-6-models-apple-now-in-me-too-mode-only-following-the-leaders.html

[12] http://www.idc.com/getdoc.jsp?containerId=prHK25437515

[13] http://communities-dominate.blogs.com/brands/2014/10/iphone-393-m-units-in-q3-sorry-i-missed-this-news-a-week-ago.html

[14] http://communities-dominate.blogs.com/brands/2014/11/smartphone-bloodbath-q3-full-results-top-10-brands-os-platforms-and-installed-base.html?cid=6a00e0097e337c883301bb07a7a07e970d#comment-6a00e0097e337c883301bb07a7a07e970d

[15] http://www.phonearena.com/news/HP-soon-to-release-phone-capable-Android-tablets_id50661

[16] http://www.apple.com/pr/library/2013/09/16iPhone-5s-iPhone-5c-Arrive-on-Friday-September-20.html

[17] http://www.apple.com/pr/library/2014/09/09Apple-Announces-iPhone-6-iPhone-6-Plus-The-Biggest-Advancements-in-iPhone-History.html

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