The Mobile Train Has Left The Windows 8 Platform Behind

by John Kirk   |   February 7th, 2013

images-42Yesterday, Canaccord Genuity, came out with a report on the profits taken in by the mobile phone sector and Canalys came out with a report on the market share in the tabet, notebook and desktop sectors – and all anyone could talk about was whether Apple and Samsung could take in more than 100% of a sectors’ profits or whether the tablet was truly a PC or not.

Please. These are accounting and verbal semantics that are as meaningless as asking how many angels can stand on the head of a pin. Let’s focus on the implications of these reports and ignore the bickering over irrelevant rhetorical flourishes.

Handset Profits

According to Canaccord Genuity, Apple took in 69% of the handset (all mobile phones, not just smartphones) profits in 2012. Samsung took in 34%, HTC accounted for 1%, BlackBerry and LG broke even, Motorola and Sony Ericsson both acounted for minus 1 percent and Nokia brought up the rear with a negative 2 percent of the industry profits.

No one not named Apple or Samsung is making any meaningful profits from the handset sector. Considering that both Microsoft and Google’s Android are based on a licensing model, this is more than a little shocking. Licensing is supposed to encourage variety among hardware manufacturers. Clearly, that is not happening.

Many industry observers have the handset market all wrong. They opinie that Andoid is destroying iOS. What is actually happening is:

1) With 69% of the profits, iOS is doing just fine. More than fine, actually.
2) Android destroyed every phone manufacturer not named Apple (BlackBerry, Nokia, Palm, etc.).
3) Samsung destroyed every Android phone manufacturer not named Samsung (HTC, Motorola, Sony Erricson, etc.).

Pundits like to predict the imminent demise of iOS, but those profit numbers say just the opposite. And even as Android’s market share has increased, iOS’s profit share has increased too. Market share is no guarantor of profits. This should be self-evident. But apparently, it’s not.

The big losers here are Palm, Nokia, BlackBerry and Microsoft. Palm is gone and Nokia and Blackberry’s market shares and profits have fallen off a cliff. And Microsoft? After three years of flailing, Microsoft’s Windows 7 is dead and Windows 8 phone manufacturers are all in the red.

Tablet, Notebook and Desktop Market Share

Worldwide PC shipments increased 12% year-on-year in Q4 2012 to reach 134.0 million units, with pads accounting for over a third. ~ Canalys

There are two things that we can take from this statement. First, personal computing sales are growing at a respectable rate, however all of that growth is coming from tablets, not from notebooks and desktops.

Second, tablets now make up one-third of the mix of tablets, notebooks and desktops. In fact, several groups are now predicting that tablets will outsell notebooks and desktops by the end of 2013. This is a monumental shift in form factors and not everyone is making the changes necessary to stay abreast.

Companies like HP, Lenovo and Dell missed the shift to smartphones and now they’re missing out on tablets too. But of all the companies being hurt by the rise of smartphones and tablets, I think that Microsoft has been hurt the most:

…only 3% of pads shipped in Q4 2012 used a Microsoft operating system. The software giant’s entry into the PC hardware market was something of a non-event. High pricing, poor channel strategy and a lack of clarity regarding its RT operating system led to shipments of just over 720,000 units. ‘The outlook for Windows RT appears bleak. ~ Canalys

Who Is Selling All Of The Tablets?

According to Canalys, Apple – despite being supply constrained – sold 22.9 million tablets for 49% share, Samsung shipped 7.6 million tablets, Amazon shipped 4.6 million tablets for 18% share, and Google’s Nexus 7 and 10, combined, shipped 2.6 million tablets.

Again, companies like HP, Lenovo and Dell are almost non-existant in the 10 inch tablet space and Windows 8 tablets aren’t even competing in the rapidly growing 7 inch tablet space.

As an aside, Canalys seemed impressed with the Google Nexus numbers but I’m not. If you’re selling your hardware at cost and making it up in content and advertising sales, then your sales numbers should be much, much higher. And it has to be an embarrassment to Google that the Amazon tablets – which have the same business model as Google – are far outselling Google’s tablets.

Who Will Be Selling The Tablets Of Tomorrow?

‘Those who control ecosystems, such as Amazon and Google, can obtain revenue from content sales, but pure hardware OEMs must accept decreasing margins or exit.’

Samsung made impressive growth in tablets this year, but their tablet future seems uncertain. With Amazon, Google and Apple all able to supplement their tablet incomes with App and content sales, Samsung is left out in the cold.

It’s still early days for Windows 8 tablets, but it’s not looking good. I expected there to be an explosion of Windows 8 tablet sales last quarter due to pent up demand and holiday buying. The question in my mind was whether Microsoft would be able to sustain its large initial sales momentum.

That initial sales explosion didn’t happen. Windows 8 tablet sales were more than disappointing. An ill omen if ever there was one. And as I’ve stated before, regardless of how well the Surface Pro sells, it is a notebook, not a tablet, competitor. In a world where tablets are clearly the next big thing, Microsoft is still insisting that what people really want are hybrids, not pure tablets.

Conclusion

Smartphones and tablets are growing and notebooks and desktops are stagnant or declining. Only Samsung and Apple are competing in phones. Only Amazon, Google, Samsung and Apple are effectively competing in tablets. The mobile “train” has left the station and companies like HP, Lenovo, Dell and Microsoft are standing on the Windows 8 platform, watching it pull away.

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?
  • Friedrich

    In my opinion, you’re spot on on most of your points. I’m just not sure about:

    “Samsung made impressive growth in tablets this year, but their tablet
    future seems uncertain. With Amazon, Google and Apple all able to
    supplement their tablet incomes with App and content sales, Samsung is
    left out in the cold.”

    I see Apple’s content ecosystem less as an income supplement and more as a unique selling point. I’d even say, that all of their non hardware products like OS X, iWork, ILife, iTunes etc. are just there to support hardware sales. After all, hardware is still where their profits come from and they prove that hardware is still profitable after all and thats good news for Samsung.
    I’d be really surprised if Samsung’s tablet division would get into trouble, at least for the near future. They are still a pretty flexible company and also able to put out high volumes to market.

    • jfutral

      Thankfully for Apple, I think they agree with your assessment of the value of an ecosystem. But that doesn’t mean it is not profitable. It is just a drop in the bucket compared to how much Apple makes overall. But compared to the balance sheet of most hardware makers, that could be the difference between making a profit or losing money.

      Ecosystem profit aside (and they are, else Google and Amazon wouldn’t pursue them), the problem for Samsung being at the mercy of someone else’s ecosystem is exactly what you see playing out every few years on the Wintel side of computing.

      Hardware makers who make any money of note come and go, each supplanting their predecessor with whatever is cool this year. I think Samsung sees that lesson playing out with Dell right now. I believe Samsung (if they are as smart as I think they are) is about to do something about that. And, just as with Amazon, I doubt Google will get any direct benefit from it.

      Joe

    • Jocca

      Apple graphic and creative professional programs such as FCP X , Logic Pro , Aperture are key to Apple selling high end computers for movie enthusiasts, musicians and photographers . Even a lot of Mateurs are drawn into these programs, which explain why there are still a lot of demand for the high end Macs.

      • steve_wildstrom

        True, although a lot of high-end Mac users run Adobe products.

  • Rich

    How long will Steve Ballmer be allowed to keep his job?

    • FalKirk

      With the firing of Steven Sinofsky, I believe that Microsoft has committed to Steve Ballmer for another year. However, if it is clear by the end of the 2013 holiday quarter that neither Windows 8 phones nor Windows 8 tablets are gaining significant traction, then the resultant pressure on Microsoft to make a change may be unstoppable.

      • Rich

        They’ll wait another year for Microsoft to fall still further behind the competition and *then* take action. Good. It gives BlackBerry a better chance.

  • diddler

    HPs troubles are well documented, but their original acquisition of Palm showed that someone knew where the market was heading.

    • FalKirk

      True. No one knows how it might have played out, but the sudden and unexpected firing of Mark Hurd killed HP’s nascent webOS efforts.

  • jfutral

    What I’ve been thinking about latey is Apple’s philosophy of the tablet vs everyone else and that affect on profits. Apple actually has said in agreement with their critics that iPad is not a PC replacement. Apple has the benefit of developing iPad in a PC ecosystem background. Do you think this is an additional advantage Apple has over most tablet makers? I wonder if this is another reason Microsoft pursued their own hardware.

    Joe

    • FalKirk

      Apple’s key insight was that tablets should use the finger as the primary input device rather than the pixel specific mouse, trackpad and stylus. This requires a totally different user operating system because the input targets are so differently sized. Its not just size, of course. Things like menus and scroll bars that have worked well for decades on pixel input devices don’t work at all on touch devices. The entire user operating system has to be redone from the ground up.

      Apple believes that the touch and pixel inputs and their associated operating systems are wholly incompatible and need to remain separate. Microsoft feels otherwise. We’ll see how this plays out, but I think the market has already spoken, loud and clear.

      On the other end of the spectrum, Apple was the only one to create a tablet user interface that was different from their phone user interface. While using a phone operating system may work well on tablets as large as 7 inches, it becomes awkward over and above that size. As a result, Amazon and Google are competitive in 7 inch tablets but they are nowhere to be found in the 10 inch realm. I believe that Google has recognized their mistake and is doing everything possible to encourage their developers to create applications that are tablet specific rather than one-size-fits all.

      • jfutral

        Right. But I do think Apple sees some sort of synergy or symbiosis (for lack of a better word) between iPad/tablet and PC that no one else understands except possibly and to a lesser extent, MS. And MS is addressing it in a different manner than Apple. Google does not understand this and thus none of the Android makers either, which I think is evidenced by Google’s poorer showing in mobile ads vs PC ads revenue. They just think the tablet, as you point out, is a big phone.

        I can’t help but wonder if this philosophic underpinning is yet another advantage for Apple. And it makes me wonder if MS might actually pull out better than Android in the long run.

        If so, Samsung may need to do more than just develop their own ecosystem. Or at least expand their understanding of a tablet (which I think they should do anyway).

        Joe

      • Rich

        “I think the market has already spoken, loud and clear.”

        The market *has* already spoken but there’s a guy who likes to get on stage and bluster, and he can’t hear the market. Maybe if he wasn’t making so much noise he’d be able to.

      • BillH

        Great article John. I have a rather large quibble with one point however.

        “Apple’s key insight was that tablets should use the finger as the primary input device rather than the pixel specific mouse, trackpad and stylus. This requires a totally different user operating system because the input targets are so differently sized.”

        This should have read something like ‘different layer on Apple’s (OSX) operating system’. The market/ananlyst/pundit never seems to quite grasp the significance of what Steve Jobs said at the time the iphone was introduced which as I recall was “and it runs OSX”. To me it means that ultimately all of OSX’s capabilities and development tools are ultimately available to iOS and merely waits for the ARM chips and/or battery optimizations to appear. Others can speak to this with exponentially greater understanding than my own but I’m pretty sure it’s a big deal.

        • Kizedek

          Indeed, I too always feel this is overlooked and deserves a mention.

          The ironic thing is that Microsoft touts the Windows 8 / Metro hybrid as “one OS”, ie. “Windows Everywhere”. When in actual fact, where the Metro layer acts as its own environment with its own apps, it is very much a “Me-Too” Mobile OS of far less significance.

          Metro is no more than a Web-OS, Kin, Zune, or Android-like OS that is highly dependent on Java underpinnings and has had accretions of Touch capability added over time as they see where Apple has taken Mobile computing.

          But somehow MS has been lauded in the popular press for somehow hitting on some amazing secret — like either they have a secret ingredient or special sauce that somehow makes their stab at tablets this go around much better than their stabs at it over the last 25 years; or, they are innovating ahead of Apple as though Apple wants to merge its two disparate OS’s into one super OS, but MS got there first!

          Hello, OS X and iOS are have long been co-developed, they are fraternal twins, they go hand in hand. The Touch paradigm was deemed so important by Apple that it required its own approach — and yet iOS has the same undergirding and desktop-class power as OS X. It’s THE TOUCH PARADIGM and the form factor of Tablets and the nature of mobile computing on the go that dictates the strictures on iOS mobile apps — NOT the mobile OS itself in the first instance.

          Also, Apple has been working with ARM chips for at least 25 years, and is now creating industry-unique custom silicon using its license. Can MS say the same thing? Is MS doing anything special with its hardware components, or are they off the shelf? MS is what, five years behind? Hardly the innovative front-runner they would like us to believe! Furthermore, iOS is testament to the experience and success Apple has had in making OS X (due to its NextStep origins) quite platform and processor agnostic. Indeed, OS X itself has been on both PowerPC and Intel. MS can’t get Windows off X86 it seems! How far behind are MS in this regard? Decades probably.

          Mobile OS’s like Android, Danger/Kin, Web-OS, Symbian, etc. are pretty much a dime a dozen — all waiting for MS to swallow one and make a hash of it, having ditched their own CE-based efforts. Ducktaping one of these onto Windows 7 and calling it Windows 8 is quite the “innovation”, and its full of compromises of the worst sort. But that’s what passes for “innovation” these days — pure surface-level marketing hype (pun intended).

    • Walt French

      John’s observations are all on point but perhaps don’t directly address your concern as the fact that Apple realized that an iPad would be used for different tasks in different modes (finger v mouse).

      I am really happy to pull out my wife’s iPad when we want to get some quick info at the kitchen table but there’s no conceivable way for it to meet my needs here at my office—where a HP runs very high-powered industry-specific tools against large data bases on our network and shows status/results on 3 monitors.

      Nielsen and others are being bone-headed by calling iPads (merely) “media consumption tablets” but there’s a nugget of truth in that the lightweight, easy-to-hold and quick-to-pop-in-and-out form is better for some jobs than others. (Just as graphics interfaces are better than command-line for some things and worse for others. There’s a reason that airline agents and reservationists still use those hideous things; it’s because they’re faster for a trained operator than scrolling or mousing.)

  • Jon T

    These numbers always intrigue me. Apple is the only one who provide actual sales numbers. All of the other numbers are guesses. Someone should make this clear more often. Canalys?

    • Walt French

      The non-release by manufacturers creates Canalys’s business. This article clearly spelled out, “according to…” and didn’t quibble with some possible inconsistencies, perhaps because it could only distract from the main point.

      Which I assume you accept regardless of the source.

  • Walt French

    @Falkirk wrote, “Considering that both Microsoft and Google’s Android are based on a licensing model, this is more than a little shocking.”

    But I differ. Android was designed to disrupt the Microsoft licensing model by making the license free, profiting asymmetrically from ad revenues, which Microsoft couldn’t. (This, BTW, is part of the reason non-licensing Apple was less disrupted by Android.)

    Apple disrupted everybody, most notably Nokia, which was too slow to pivot to high-touch gizmos—maybe because their US business was relatively minor. Methinks RIM was most blindsided by Apple since their business was so anti-“toy.”

    Amazon has added to the Android disruption the further margin pressure of low prices subsidized by sales. Given their ultra-low profits, I’m not yet convinced that they’ll be able to keep a it long enough to knock out competitors and still grow, but they ARE showing nice sales if Canasys is to be believed.

    • FalKirk

      I don’t disagree with anything you said, Walt, but I don’t see how it addresses my point. Android is given away for free. There should be a diverse collection of Android manufacturers. That’s one of the strengths of an open or licensed model. But, unexpectedly, Samsung has swallowed all of Androids sales and all their profits.

      • Walt French

        I watched Dediu’s dynamic charting of phone units and revenues last night. (The vid hung on the part of the slide that showed profits, so I can’t cite actual evidence.)

        But Samsung was the #2 vendor long before Android took off. The company made a major commitment to it, and I’m sure you’re familiar with their huge ad budget of late.

        AFAICT, none of today’s second-tier Android vendors ever made much money in mobile. Enough to hang in and hope for better, perhaps, but not enough to deal with the explosion of demand—extra factories, distribution, etc—and therefore got stuck on the short end of the economies-of-scale metric. Samsung’s heavy marketing is simply a sensible business move to leverage that advantage.

        Android exacerbates, rather than ameliorates this. Now, all the competition is strictly on efficient volume production; capabilities, support and branding are merely minor differentiators. Samsung has played the game near-perfectly, using some high-quality models to position the brand at the top, while offering lower-cost models.

        • steve_wildstrom

          Moto made a fair amount of money when the RAZR was flying high. HTC was probably better off when they were building Treos for Palm and iPAQs for Compaq/HP.

  • http://twitter.com/ebernet ebernet

    69% + 34% = 103%. I stopped reading at that point…

    • pdq3

      Actually, this is an accurate transcription of the Canaccord report. Apple and Samsung were the only ones making a profit. The others all lost money (ie a “negative profit”). By Canaccord’s reckoning, this makes the Apple and Samsung total 103% (presumably the others lost 3% collectively).

      I don’t quite grok it myself, but the author is accurately reflecting the report.

    • steve_wildstrom

      If you add up the shares of the companies that made money (Apple, Samsung, and a tiny bit for HTC) then subtract the shares of the losers, you get 100% (up to rounding error.)

    • FalKirk

      Thank you for your comment, ebernet, you confusion is totally understandable. This is what I referring to in my initial paragraph when I said: “all anyone could talk about was whether Apple and Samsung could take in more than 100% of a sectors’ profits”. Yesterday when Canaccord Genuity came out with their report, about half the comments on the various sites that reported the data were on whether or not that 103% figure was right or not. Let’s not fight over that. It’s accounting semantics. Just scale the numbers if they bother you. :)

  • Defendor

    Great article as usual. No real disagreement. Just some thoughts that cross my mind:

    Android Tablets:

    I don’t think Samsung is really enjoying much of their “tablet success” this year. Google sucked all the profit margin out of the Android tablet market with Nexus 7, and Samsung followed with (likely forced) price cuts and I see lot of Samsung tablet clearance sales with no real updates in a long time.

    I find it amusing to watch these companies OEM for Googles Nexus line that essentially destroys their own product lines viability. That line about capitalists selling you the rope to hang them comes to mind.

    Microsoft Phones:

    I really don’t think they did much overtly wrong. Just late to the party with what is essentially another me-too product, once you get beyond the superficial Gui differences. Perhaps they also concentrated too hard in going after a more closed Apple like model, while Google took over the more open model. Now they have neither and they have a fight on two fronts against entrenched competitors. At best I see a very long hard fight for distant third.

    Microsoft Windows 8 (for Desktop/laptop/tablets):

    This last year was like watching the keystone cops squabble about how to launch a product. Would Window-ARM have Office? Would it be called metro? Would ARM have a working desktop. There seemed to be internal struggle that happening about how to position Metro-not-Metro and ARM. That confusion seemed to play out as rumors and the story changed. Beyond this confusion, more huge mistakes were made:

    1: Alienating many Windows Desktop OS enthusiasts. Taking the nearly perfect for Desktop Windows 7, and mucking up the UI to force Metro-not-Metro elements on desktop users seems like a pointless battle. No doubt some “genius” (Sinofsky?) figured that forcing Metro-not-Metro on Desktop users would eventually gain them a few more tablet sales, from forced Metro familiarity. I really think it was a mistake to alienate people already on your side. Enthusiasts are free sales for. Alienated, they are friction to overcome.

    2: Having no product to compete with what is likely the biggest tablet category (sub $350, sub 8″). Microsoft product starts at $500 10″. Giving away more than half the market before the selling begins.

    3: Clinging to the keyboard for dear life. The major selling point of tablets has been freeing us from the keyboard. Microsoft is trying to tether us back to it.

    4: Trying to sell one device, where two work better and guess what? two licenses generate more revenue than one!
    How many of these things will Microsoft fix? I am betting very few. The arrogance of a Monopolist runs deep.

    • FalKirk

      Great post, as always, Defendor. Agree with every word.

      • Secular_Investor

        +1 Yes great post Defender (also a great article John Kirk)

        You make an important observation when you say

        “Google sucked all the profit margin out of the Android tablet market with Nexus 7, and Samsung followed with (likely forced) price cuts and I see lot of Samsung tablet clearance sales with no real updates in a long time.

        I find it amusing to watch these companies OEM for Googles Nexus line that essentially destroys their own product lines viability. That line about capitalists selling you the rope to hang them comes to mind.”

        Microsoft have done the same to their OEM partners with the Surface and now seems to be rushing into a desperate partnership with Dell, which will further alienate their OEMs.

        It is ironic that after years of ridiculing Apple’s integrated vertical software and hardware model and denigrating Apple’s closed “wall garden” eco-system of Apps and media, both Microsoft and Google are now scrambling to copy and catch up with Apple, but making a complete pigs ear of it! In the process they are both competing head on with their erstwhile OEM partners, undercutting them and creating havoc in their respective markets.

        Most of Android’s smartphone growth is now coming from China, where most Chinese OEMs are using forked versions of Android (according to MIT as much as 89%), thereby increasingly excluding Google from the Chinese mobile advertising market, while Bidu takes the cream.

        Samsung is presently the only viable Android OEM outside of China, but it is probably just a matter of time before they also fork in order to create their own ecosystem. Where will that leave Google’s mobile advertising model?

        In the tablet market, if anything, things are worse for Google.

        Notwithstanding IDC and IT analysts exaggerated Android “shipments” claims v Apple’s real $$$ sales, when it comes to what really matters for Google, namely internet usage where they can leverage their mobile advertising model, the iPad is totally dominant. According to Chitika the iPad has 81% share in the all important North American market, while forked Kindle has 7.7%.

        Despite IDC’s hyped up, embellished claims that Samsung had 15.1% tablet “shipment” share last quarter, the Galaxy tablet in fact only had a minuscule 3.9% internet usage share and and Google Nexus a microscopic 1.7%. If Samsung forks what market share does the leave Google with?

        So it is not just “The Mobile Train Has Left The Windows 8 Platform Behind” as John Kirk so rightly says, but it looks as though the Android train is becoming decoupled from its carriages, leaving Google’s mobile advertising model in tatters.

        • Defendor

          While the Media made a bigger deal of Microsoft competing with it’s OEMs, I don’t think Microsoft is really hurting it’s OEMs, at least not yet. IMO Surface isn’t even a very good form factor.

          More important is that Microsoft did not kill the margins with it’s Surface product. Margins are still quite healthy. So healthy they have almost priced their product out of the market. So it isn’t quite the blow that Googles No/Narrrow margin Nexus 7 for $200 that completely devastated Android tablet profits.

          When Android 7″ tablets showed up they were aslo $500 compared to the iPads $500. Nice fat margins. IIRC before the Nexus 7, the Samsung Galaxy Tab 2 was still $400. Today it is selling for $200, just like the Nexus.

          The Google thing is just bizarre. The OEMs supply the Google Nexus tablets to undercut themselves. Asus doesn’t offer a 7″ tablet as good as Nexus 7, they supply Google with. Likewise Samsung doesn’t have a 10″ tablet anywhere as good as Nexus 10 they supply to Google.

          Google Effectively says to its OEMs:

          “Give me your best tablet work and I will sell it for no margin and salt the earth for your other tablet products.”

          Google must have some persuasive folks to keep pulling that one on their OEMs.

          • FalKirk

            ” I don’t think Microsoft is really hurting it’s OEMs, at least not yet.” – Defendor

            I’ll disagree, slightly. I think that several manufacturers abandoned their plans to even produce a Windows RT machine once the Surface was announced.

            However, I heartily agree with your argument regarding margins. Google’s Nexus tablets are undercutting the price of Samsung’s. In my mind, it is intolerable for Samsung to have the provider of their operating system selling a competitive product, at cost. Something has to give.

          • Defendor

            I don’t think that was from any real fear of Surface RT cutting into their business, but of the questionable marketability of RT products in general.

            Perhpas with a bit of a dig at Microsoft as a bonus. No one is ever going to be happy to see a supplier turn into a competitor even if not a disruptive one.

    • ChKen

      Well done.

      “This last year was like watching the keystone cops squabble about how to launch a product. Would Window-ARM have Office? Would it be called metro? Would ARM have a working desktop. There seemed to be internal struggle that happening about how to position Metro-not-Metro and ARM. That confusion seemed to play out as rumors and the story changed. ”

      You know, someday when we really find out what happened behind the scenes, I truly HOPE that there was some internal squabble that resulted in the mess we see today. What if there wasn’t?!?

    • AdamChew

      I believe MS is taking a bet of W8 becoming main stream probably in 10 years time (when they stop supporting the earlier OSs) but one problem here is the world can get on without having the latest and greatest from MS. With the tablets being mobile and capable in tasks that don’t need the full OS.

      I believe the ones who develop a new range of enterprise apps to take advantage of the increasing powerful chips in the tablets will be the ones reaping the rewards.

      I don’t know whether they have the luxury of time and probably by then the world have gone mobile with the back room boys still using the trucks.

      Nevertheless you have come up with many good points.

    • CharlesKGim

      Brilliant analysis. I agree with all of your points except 3 (unless you are talking about tablets needing a keyboard ala surface). Otherwise, very insightful.

  • SunFlyShoo

    Samsung builds a lot if the mobile pieces, giving them some advantage. But they are big enough to spend over 12 billion a year in advertising (12-13x apple). They see an opening and are spending like crazy to own the future.

    • bubba2020

      So having to spend 12-13x apple in advertising is a good thing? Hmmmm, kind of makes you think Apple is in no danger, at least in terms of profits which is what matters. That silly idea about “losing money on every sale but making up for it in volume” just won’t go away even after probably thousands of years of trying.

  • jimbotomy

    Great article.

    One of the things I wonder about in the tablet space is whether any Android manufacturer can possibly differentiate themselves enough to overcome the profitless Google and Amazon offerings. Google in theory makes money off the ads and services on the Nexus, while Amazon is apparently uninterested in making profit, preferring instead to make money off its stock as investors who are convinced it can flip a switch and turn those revenues into profit buy the stock in droves. Against those two giants, how can you possibly hope to make a profit?

    Samsung evidently has enough brand loyalty from its phones to eke out a bit of an existence in the tablet market, though I wonder how many people buy them under the impression that they’re getting an iPad or alternatively because they think it’s just like an iPad only cheaper. I can’t see anyone else selling significant numbers of Android tablets. I think for these manufacturers Windows 8 might be the only hope, although it doesn’t seem like that’s much of a hope right now.

  • ChKen

    Nicely done, John!

    I particularly like the simple 3-part explanation of what happened. Android destroyed the non-Apples, and Samsung destroyed the other Android manufacturers. Clear and simple. Nice.

  • ron s

    as for desktops and laptops…windows 8 has hurt their sales tremendously …..its sad microsoft did this to those oem manufacturers…had got to one of the biggest busniess mistakes ever

  • LA Stone

    The first we ever saw of Windows Phone, it was obvious that it didn’t stand a chance. It came to the market and did not do anything better than anything already in the market. There was no reason for anyone to buy a Windows Phone. There was plenty of reason not to buy one though. It offered less of everything than the currently entrenched competition. Well, Microsoft said it was in this for the long run so we’ll have to wait and see. So far though, it’s not happening.

    People hate the Windows name and brand. Tarnished Windows Mobile made the prospect of a new OS called Windows whatever a harder sell. Microsoft was so out of touch. You could tell just from how they attempted to name the thing. Something crazy like Windows Phone 7 Series, or something like that. After much laughter, they shortened it to something less silly.

    Then, because we loved Windows PHone so much, Microsoft decided to shove it down the throats of desktop Windows users. If this were a suspense thriller on Netflix, I’d be guessing that there is a highly placed saboteur at Microsoft.

    Personally, I just want Microsoft to continue to develop Windows 8 desktop as a traditional desktop OS rather than trying to force me to care about Metro or Modern apps. LOL Does modern mean, non-productive? Because that’s all I can see in Metro. Twitter, people, cool weather, and other goofy “apps” that don’t help to pay any bills. Adobe Photoshop is not there. Even Microsoft Office is not there. Why would anyone still buying a full desktop use it to mess around with the things available in Metro? Microsoft is so out of touch it’s crazy.