Mobile Phone Makers Double Down on Android
Asia's major handset makers are redoubling their efforts to make smartphones based on Google Inc.'s Android software, a development that looks to intensify competition in the fast-growing business of high-end phone gadgets.
Increased sales of devices running the free Android software have given Taiwan's HTC Corp. and South Korea's Samsung Electronics Co. a shot in the arm after losing market share to Apple Inc.'s iPhone handset in previous years.
Shipments of Android-based smartphones surged sevenfold on-year to 33.3 million units in the fourth quarter, driven by strong sales from Samsung and HTC, research firm Canalys said Monday.
That growth gave Android a 33% share of the global market, making it the most widely used smartphone operating system in the fourth quarter. It eclipsed Nokia Corp.'s Symbian software, with 31%, and Apple's iOS operating system, which had 16%.
This year, HTC, Samsung and Korean rival LG Electronics Co., which made a late but enthusiastic entry in Android phones, plan to further this push with ambitions to release more Android products to hit lofty sales goals, executives and analysts say.
Google says more than 300,000 Android devices are activated globally every day, compared with 160,000 daily activations in June. More than 50% of Samsung's smartphones last year were powered by Android in terms of the number of models and it plans to increase that number this year, though it didn't disclose details. Samsung this year is targeting the sale of more than 50 million smartphones in total.
Samsung reached its goal of selling more than 20 million smartphone units in 2010 and "the Android operating system played a key role in achieving this goal," said Won-Pyo Hong, executive vice president at Samsung's mobile communications business. "Android continues to play a significant role for Samsung's smartphone portfolio."
In June, the company released the Samsung Galaxy S. While Samsung is the world's second-largest maker of cellphones by shipments behind Nokia, the company had been slow to launch compelling touchscreen devices that could compete with the latest iPhone. Many of Samsung earlier smartphones used the company's own software, which customers found weren't as user-friendly as the iPhone.
LG, which last week reported a 256.4 billion won ($229.3 million) fourth-quarter loss, offered signs of improvement with sales results from its Android-based Optimus One handset, saying it sold three million units since its launch in the second half of last year. The company plans to have Android phones be the majority of the 30 million handsets it expects to sell this year.
David Jung, LG's chief financial officer, said last week that new smartphones may help the company post a profit in the current quarter. "LG was simply late to Android and wrongly bet on Windows Mobile early last year," said CK Lu, a senior research analyst from Gartner.
At the International Consumer Electronics Show in Las Vegas in early January, LG launched a fourth-generation smartphone based on Android called Revolution that supports long-term evolution, or LTE technology. The company plans to launch the phone in the first half of this year in the U.S. through Verizon Wireless.
HTC declined to disclose details of its Android phones, but analysts credit its recent earnings resurgence to a shift toward the platform and away from Microsoft Corp.'s Windows Mobile platform. HTC saw its fourth-quarter profit more than double to $14.49 billion New Taiwan dollars (US$499 million) from $5.53 billion New Taiwan dollars a year earlier.
The flood of new Android offerings, however, could eat into handset maker's earnings. "Profit margins for Android phones are currently above the industry average for all types of cellphones, but with so many brands piling into the Android category it is hard to see how such levels can be sustained in the longer-term," said Neil Mawston, director at market research firm Strategy Analytics.
The strong growth at Samsung and HTC come on the backdrop of disappointing earnings from rivals in the U.S. and Europe. Motorola Mobility Inc., another big Android supporter, warned of weak sales in the current quarter.
Meanwhile, Nokia Chief Executive Stephen Elop said his company must work faster to improve its products and hinted it was considering taking on another operating system in addition to its current Symbian platform.
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