Right after I finished my Q1 total Smartphone Market Analysis, Google (Nasdaq: GOOG) came out with the statement that they now sell 100,000 smartphones per day. There are 61 models of Android handsets by 21 branded manufacturers (including Google itself, with its Nexus One as one Android handset model).

Run rates
What does this tell us? Well, the quick math of course says Google is now (in May 2010) selling smartphones at the rate of 36 million units per year. Is that big? World No. 4 manufacturer of smartphones, HTC (who makes mostly Android smartphones but also makes Windows Mobile smartphones) sells currently at the rate of 18 million per year. So where HTC once was manufacturing seven out of every 10 Android handsets in the world, today HTC's share is at best half of all Android phones -- this bodes well for the other big Android manufacturers like Motorola (NYSE: MOT), LG, SonyEricsson, Samsung, etc. HTC is no longer the only game in town.

But yes, what does 100,000 per day mean? How does that compare to Apple's (Nasdaq: AAPL) iPhone? Yes, the world got quite a shock two weeks ago when NPD reported that Android devices were selling more than iPhones in the USA in Q1. So yes, how is Apple doing? Well, its latest sales numbers from Q1 had Apple selling iPhones at 8.75 million per quarter which means they sell at the rate of 35 million units per year. Yes, assuming Apple's current iPhone sales have not exploded in unit sales (reasonable assumption as we await the new iPhone model due in June, and something Apple said in court documents about the Gizmodo 'stolen' iPhone case, Apple actually testified that current iPhone model sales are struggling because customers now await the new model), the family of Google Android smartphones has definitely passed iPhone unit sales globally in Q2.

So how near is Research In Motion (Nasdaq: RIMM), the world's second-largest smartphone maker? It's getting interesting here -- RIM's latest quarterly sales were measured at 10.6 million by the analysts (we await newer numbers from RIM, which reports in a cycle one month off from the normal quarterly calendar cycle) but yes, RIM's current sales is at the level of 42 million per year. Or the daily rate? RIM's daily rate in Q1 was 116,000 smartphones per day. How close is Android? Android reported in Q1, that it was selling 65,000 handsets per day, or about 24 million per year. In just one quarter, Android family has grown unit sales 54% (compared with RIM, who grew 4%, or Apple, who grew 1%, from the previous quarter). This is an amazing growth rate. It's very likely that Android smartphones will pass RIM in quarterly sales during Q3, even if RIM picks up speed and Android slows down considerably. The difference in growth rates is that immense right now. 

Oh, and it's totally certain: Apple cannot recapture third place from Android during Q3. Apple needs to abandon its "one new smartphone model per year" strategy. Android has already 61 phone models in the market -- out of 21 manufacturers, it means that on average each rival maker offers 3 Android models. So think: Just playing the averages, go to an average country, to an average carrier and find that LG offers 3 Android models, Motorola offers 3 Android models, Samsung offers 3 Android models, SonyEricsson offers 3 Android models, ZTE offers 3 Android models -- these are all dumbphone handset manufacturers who produce more dumbphones than Apple's total sales. Then, in the best case, that carrier is an authorized iPhone dealer who offers one iPhone model that is less than a year old (the 3GS) plus another iPhone (3G) which is almost two years old by now. And in the worst case, that carrier does not support Apple, but does offer these 15 Android smartphone models, many of which look to the average uninformed customer remarkably similar to an iPhone (and usually even cost less).

Now, each of those global brands with global distributorships, offering phones through far more carriers than Apple, has on average 3 Android models already released (and more coming). So they can afford to do one "iPhone Clone" with a near-identical form factor, then do another QWERTY smartphone (the QWERTY keyboards still outsell touchscreens, remember, so this is a huge market that Apple is abandoning to its rivals) and then do a third, more special phone -- if you're SonyEricsson, that could be the super cameraphone under the Cybershot brand, or if you're ZTE, that could be the $100 super-cheap smartphone for Africa and India, etc. Apple doesn't have a prayer to catch up -- remember, last quarter, Apple grew 1%, while Android grew 54%. The two platforms are now roughly similar size (it's easier for a small player to grow faster than a larger player; that's just the math of percentages).

So in this quarter, Q2, Android is running neck-in-neck with Apple and passing it. By Q3, Android is challenging RIM and may well pass it, which would make Android the No. 2 best-selling smartphone platform in the world.

What of No. 1? In Q1, Nokia (NYSE: NOK) was selling at the rate of 86 million smartphones per year (more than twice the size of Android today). If measured on a daily sales rate, Nokia sells 236,000 smartphones every day. Nokia grew 3% from the previous quarter. So Nokia is not "threatened" by the Android invasion yet -- not at all. But even the boys in Espoo take notice when a rival grows more than 50% in just one quarter. Android could become an unstoppable force if that continues.

The upside rosy scenario for Android
Let's assume for the sake of argument that Android maintains its enormous growth rate for several consecutive quarters without slowing down (an unlikely scenario; currently, its major handset makers have been doing their ramp-up, so the growth rate in total Android sales is likely to slow down). Note that I am simplifying the pattern, ignoring the Christmas sales peak, but just doing some linear projection. So let's see how the numbers stack up, if Android grows every quarter by 54%. And let's assume that Nokia would also manage to continue to grow at its current rate of 3% per quarter. If that happened, Android would pass Nokia as early as Q1 of 2011.

Please note, I am not making that forecast now. I don't think it's plausible for Android to keep growing at such speeds for the next three quarters to come. But it is so close to RIM already today, that almost certainly before the end of the year, and quite possibly already in Q3, Android will become the second-best-selling smartphone OS in the world, behind only Symbian, and ahead of RIM and Apple. And by the end of the year, Symbian will start to feel the heat. Not from Apple, not from RIM, but yes, from Google Android.

I think a far more reasonable scenario has Android taking a solid second place by end of the year or early next year, and then doing a more gradual race against Symbian and Nokia in the next few years.

The reality bit
Three important caveats to bear in mind. First, many major dumbphone handset makers who support Android, also support Microsoft's (Nasdaq: MSFT) Windows Mobile (including its newest incarnation, Windows Phone 7, due out end of this year). So especially Samsung, SonyEricsson, HTC, and Motorola are certainly going to consider how good the new Phone 7 OS will be, and may well use the Phone 7 platform to release some phones at least to differentiate from the 21 manufacturers who now offer very often "clone-like" copies of each others' phones on Android. So there may be some "leakage' of market share away from Android to Phone 7 toward the end of the year and early in 2011, when perhaps some makers shift their flagship models to the Microsoft OS. For this to happen, it is absolutely crucial for Microsoft to deliver a well-debugged, highly competitive OS upgrade on time. Microsoft's surprise announcement of its first two Kin phones gives evidence that Microsoft is serious in the smartphone wars. So don't count them out.

Secondly, remember Samsung, the biggest of the dumbphone makers who support Android. Samsung sells 21% of all phones on the planet, and it sells for example more touchscreen phones than all Apple iPhones. Samsung supports four smartphone OS platforms (Symbian, Android, Microsoft, and its own new OS, Bada). Samsung said that for 2010, they intend to sell 24 million smartphones; half of those will be on Android, and a third on Bada. As Bada is Samsung's own OS, they will no doubt increasingly prefer their own OS, so toward the end of the year, Samsung's 'mix' of OS platforms supported may well be tilted so, that in 4Q, over half of all smartphones are Bada and only a third on Android. So some of the early hot growth in Android smartphone sales we see now in Q1 and Q2 of 2010, is that heavy push by Samsung to shift to Android, which will then move to Bada toward the end of the year. That will very likely cause Android sales growth to slow down as Bada ramps up. Note again that since Samsung's dumbphone maker rivals LG, SonyEricsson, Motorola and ZTE all support Android, but no others support Bada, there is no danger that if Samsung shifts its balance from Android to Bada, Android sales would stall. But it does mean Android is having its golden time now, and that will probably change toward the end of the year.

And third, remember that Symbian is more than Nokia. Symbian is the best-selling phone operating system in Japan, where the world's most advanced phones are made. The typical Japanese "featurephone" runs on Symbian, but is not considered a "real" smartphone, because it does not allow end-users to install apps (the phone OS is closed to the user). Yet this means significant Symbian sales out of Japan, come what may. And NTT DoCoMo, the biggest operator in Japan, just announced a partnership with half a dozen Japanese mobile industry giants to create an app store, and a smartphone OS evolution path, to Symbian (and to Linux Mobile, the other major smartphone OS platform used in Japan). So yes, there is the occasional Samsung Symbian phone, and the Japanese contenders, and every so often even a SonyEricsson, etc. So Symbian is not just Nokia, Symbian's market share is about 45% of the new phone sales globally, and the installed base of all smartphones in the world is nearly 60% Symbian. Now that Symbian is an open-source foundation, it is also finding new support, even as the OS obviously shows its age in many ways.

And while they are a microscopic player today, Palm (Nasdaq: PALM) just got bought out by Hewlett-Packard (NYSE: HPQ) the world's biggest PC maker. HP is a huge giant corporation -- it's twice the size of Microsoft or Nokia, and four times as big as Apple or Motorola. If HP wanted to make a serious effort as a latecomer to smartphones, it could turn Palm around and become a significant player. Not in a year, but in a few years, it could be rivaling the Apples and RIMs of the world, with their own small OS families. And then, if HP wanted to really try a major play, they might go open source and try to build a family of manufacturers around Palm's OS. I am not suggesting this is happening; I am just imagining. Alone, HP can't hope to even match Apple in the next three years -- much less what Apple achieved in the previous 3 years -- so even by the end of 2013, HP and Palm cannot hold as much as 3% of the global handset market. So if HP wanted it as a niche mobile strategy for its own branded PCs in the shfit to the pocket, that is fine. That would be in line with Apple's OS/X strategy, building iPads and other Apple exclusive devices on that platform, even as its share of phones is tiny. But if HP wanted Palm to become a rival to, say, Microsoft (and Google), then it also would need to build partnerships quickly with other handset makers. Let's monitor this space; it could be interesting.

But consider the "armies" involved
What do I think? I think the trend for Android is strong. It can well be holding something like 25% to 30% by the end of the year (Q4 market share), and for the full year 2010, sales will edge past RIM in something like 22%-24% levels of the total new smartphone sales market share. Nokia will still be the clear leader, but no longer will Nokia be as big as No. 2 and No. 3 combined (as it still is today).

I also want to mention something about the manufacturers supporting Android. Every major company in mobile seems to be suddenly a smartphone maker. As I've written, the competition by giant global brands in smartphones has tripled in three years. Back in 2006, before the iPhone, only seven of the Global Fortune 500 largest corporations on the planet were involved in marketing smartphones under their own brands. Today, that number is 23 and growing. Also, a few years ago, most dumbphone makers were ambivalent about smartphones -- whether they would remain a niche luxury bracket item, or become a global major market opportunity. Today, all major dumbphone makers have announced strong commitment to smartphones. And obviously, the biggest PC makers, software makers, Internet companies, etc. believe in smartphones being relevant to their business future.

Provocative scenario
So, let's take a quick "provocative" look at the market shares of the Global 10 biggest handset makers, and see how many of them support Android. I am simplifying, and assuming Samsung will eventually shift from Android to only supporting Bada:

  • Nokia 35% - Symbian (and in future MeeGo)
  • Samsung 21% - Bada
  • LG 9% - Android
  • ZTE 5% - Android
  • RIM 4% - Blackberry
  • SonyEricsson 4% - Android
  • Apple 3% - iPhone OS/X
  • Motorola 3% - Android
  • Sharp 2% - n/a (supports Symbian and Windows Mobile and Linux Mobile)
  • Huawei 2% - Android

If we assumed all who make smartphones for multiple OSes would only pick their primary one, and if we assumed all dumbphone makers could transfer their existing dumbphone market share to smartphones (a very unlikely scenario, as seen by the troubles of Motorola and SonyEricsson to achieve this) then Android-supported major brands of dumbphones would give Android just 23% out of these companies -- even allowing Samsung to "escape" completely.

So in that hypothetical model,  the market shares among the Top 10 in a couple of years would be something like:

  • Symbian (Nokia) 35%
  • Android (LG, ZTE, SonyEricsson, Motorola, Huawei) 23%
  • Bada (Samsung) 21%
  • Blackberry (RIM) 4%
  • iPhone OS/X (Apple) 3%

All other smartphone makers, which would include 15 more brands for Android, plus HP/Palm, Microsoft, plus some Japanese, etc., on Symbian, Linux Mobile, etc., would share the remaining 14%.

Note, I do not see this split of market shares as plausible. In particular, I do not see Bada being able to capture nearly all of Samsung's current market share. But consider, just by "market power" of the support of its "committed" partners in Android (even allowing Samsung to be promiscuous, to be opportunitistic with Android now while it builds the rival Bada platform) -- the other five major dumbphone makers in the Top 10 of the world who support Android have a dumbphone market share of 23%. Compared to RIM at 4% or Apple at 3%, I think it's safe to say that Android will soon be one of the biggest smartphone platforms on the planet, come what may. And by the end of this year, they are likely the second largest behind only Symbian.

So yes, the announcement of 100,000 Android handset sales per day is a very important milestone for Google's smartphone platform.

More from The Bright Side of News*