According to research firm IDC, Android has leapt to the number three position in the operating system (OS) market with 16.3%, overtaking iOS with 14.7%. A number of smartphone vendors including HTC, Samsung and Motorola (NYSE:MOT) have launched many successful devices based on the Android OS and helped it to gain market share. Let’s take a closer look.
Android Devices Improve Motorola’s Financials
The popularity of Android has proved a turning point for Motorola. Last month, Motorola reported a revenue increase for the first time in four years. Third quarter revenue was $4.9 billion, up 13% excluding $871 million from the discontinued operations of its Networks business to be acquired by Nokia Siemens Networks. Net income was $109 million or $0.05 per share versus $12 million or $0.01 per share last year. The company ended the quarter with total cash position of $9 billion and net cash of $5.6 billion.
During the quarter, Motorola shipped 9.1 million handsets, including 3.8 million smartphones driven by the success of its new Droid X and Droid 2 smartphones. Mobile Devices segment sales were $2.0 billion, up 20%, while GAAP operating loss was $43 million, down from a loss of $216 million last year. In the quarter, the company launched three new smartphones in the MING series targeting the China market. It also announced three new smartphones for the holiday season at AT&T: Bravo, Flipside, and Flipout, and on Verizon it added three devices to its Droid portfolio: Droid 2, Droid Pro, and the limited edition Droid RS D2. Motorola introduced a total of 22 smartphones in 2010.
Enterprise Mobility revenue was $1.9 billion, up 9% and Home segment revenue was $912 million, up 5%.
For the fourth quarter, Motorola expects EPS of $014 to $0.16. Sinead Carew of Reuters reports that Motorola is looking to split the company by January into Motorola Mobility, which will sell mobile handsets and television set-top boxes, and Motorola Solutions, which will supply wireless technology to governments and enterprises. Its stock is trading around $8 with market cap of about $18 billion. It hit a 52-week high of $9.23 on September 15th of last year.
Samsung Electronics (005930.KS) recently reported third quarter revenue of 40.23 trillion Korean won ($35.1 billion), up 12%. Net income was up 17% to 4.46 trillion won ($3.9 billion) and operating profit was 4.86 trillion won ($4.2 billion). The increased profitability was driven by its semiconductor business as well as its mobile communications businesses, driven by the success of its Galaxy S smartphone. Semiconductor revenue was 10.66 trillion won ($9.3 billion), with an operating profit of 3.42 trillion won, representing a profit margin of 32.1%. The Memory division grew 60% to 7.49 trillion won. In DRAM, cost competitiveness and strategic investments allowed Samsung to outperform the market, amid a decline in prices due to market oversupply. For NAND, strong demand for embedded products, especially for smartphones and tablet PCs, led to increased profitability.
In its Mobile Communication business, Samsung sold 71.4 million handsets in the third quarter driven by the roll-out of its flagship smartphones, Galaxy S and Wave. Since its introduction in June, Galaxy S has been launched in 90 countries and has been selected by 210 carriers worldwide. Samsung projects sales of 10 million units by the end of 2010. The Samsung Wave, which operates on Samsung’s open smartphone platform, bada, has also shipped more than two million units in 80 countries. During the quarter, Samsung also launched its tablet, Galaxy Tab, which again is based on the Android OS.
Even Motorola plans to launch a tablet, Motopad, based on the Android OS for tablets called the Honeycomb. IDC expects Android to gain market share from Symbian and reach the number two position by 2014, overtaking BlackBerry. It also expects that the market share of iOS will decline gradually. I, however, still believe that once the iOS goes to Verizon, its market share will rise substantially.