You can't trust Gartner's smartphone OS forecast, or any other
Gartner and IDC agree on something: Microsoft's mobile operating system will rank second to Google's by 2015. Both analyst firms largely, and possibly wrongly, assume that Windows Phone 7 will take over share given up by Symbian -- as Nokia swaps its mobile OS for Microsoft's. Meanwhile, Windows Phone would have little, perhaps no, organic sales growth. I don't believe it, and neither should you. The smartphone market is too volatile to predict that far ahead. The problem isn't specific to Gartner; every analyst firm is in the same boat trying to find land in stormy seas.
Gartner released its smartphone OS forecast today, and it is more bullish about the Symbian-Windows Phone switcheroo than IDC. Gartner predicts that Symbian will go from 19.3 percent market share this year to 0.1 percent in 2015. Windows Mobile will have 19.5 percent share, Gartner claims. IDC sees Symbian with 20.9 percent share this year and Microsoft's smartphone OS with the same percentage in 2015.
After IDC posted its forecast last week, I responded by promising to kiss Microsoft CEO Steve Ballmer's feet should Windows Phone 7 be No. 2 in 2015. I'm here to reaffirm that pledge -- that's how little confidence I have in these forecasts. Neither analyst firm has a good track record making predictions about the immediate smartphone market -- even just six months out -- which is reason enough to question forecasts four years ahead.
Forecasts that Missed
Anyone remember when Gartner was bullish on netbooks? Sales growth stalled after Apple shipped iPad last year. Now who's talking about netbooks in the enterprise? In September, Gartner forecast that Android would have 17.7 percent global smartphone OS market share for 2010. Reality: 22.7 percent. For this year, Gartner predicted 22.2 percent share, less than Android's 2010 actual. New 2011 prediction: 38.5 percent.
That Gartner's forecast is so radically changed in about seven months reflects the volatility of the smartphone market. Windows Phone was a goner by 2014, in the last forecast, falling to No. 6 -- get this, behind Meego. One Microsoft-Nokia deal later and Windows Phone is destined to be No. 2 in 2015, and that's way behind Android, which Gartner predicts will have 48.8 percent smartphone OS share. There's a reason why I asked in September: "Are IDC and Gartner mobile OS forecasts trustworthy?" The answer is an emphatic no.
Gartner predicts 468 million smartphones sold globally in 2011, up 57.7 percent year over year. By the way, in September Gartner under-forecast smartphone sales, predicting 268 million when they really were about 297 million. By that margin of error, NASA could never have successfully sent Apollo to the moon.
Ignoring the Larger Platform Battle
Any forecast involves risk. Analysts build their models based on assumptions they often can only guess at. For example, Gartner, like IDC, doesn't see much growth in Apple's iOS through 2015. IDC puts iOS market share as 15.7 percent this year and 15.3 percent in 2015. By comparison, Gartner sees iOS share going from 19.4 percent to 17.2 percent during the same time period. Among Gartner's reasons for predicting iOS declines: Apple putting margins before market share gains.
That's a fair assumption, but one likely to be proved wrong -- well, it already has been. Apple and AT&T offer the iPhone 3GS for about $50, or $150 less than iPhone 4. The pricing for an older model is clearly designed to grab market share. The iPhone 4 is a much better handset than 3GS, and it will be a compelling option should Apple, AT&T and Verizon make it available for that same 50 bucks after iPhone 5 ships.
Then there is the broader platform battle, where Apple has an early and growing lead. Just this week, David Willis, Gartner research director, described Apple as being "far ahead of any competition" in the tablet market. Simply stated: "Apple's lead will be very difficult to be beat." The broader platform is iOS and supporting Apple App Store behind both iPad and iPhone. The smartphone forecast seems to ignore the larger platform's impact on iPhone sales.
In a statement, Carolina Milanesi, Gartner research vice president, said that media tablets' sales growth would "widen the ecosystem" and "function more as a driver than an inhibitor for sales" of devices like smartphones. "Consumers who already own an open OS communications device will be drawn to media tablets and more often than not, to media tablets that share the same OS as their smartphone. This allows consumers to be able to share the same experience across devices as well as apps, settings or game scores. At the same time, tablet users who don't own a smartphone could be prompted to adopt one to be able to share the experience they have on their tablets."
So, if Apple's lead in media tablets is "very difficult to beat," consumers will be drawn to a mobile OS available for smartphones and tablets, Apple offers iOS for both kinds of devices and consumers buying tablets will also buy smartphones, what conclusion does that lead to? There's huge strength in the broader platform, and that's not necessarily reflected in Gartner's smartphone forecast.
Gartner redefines "Open"
The most interesting part of Gartner's forecast is adoption of so-called "open" operating systems. The analyst firm predicts open OSes will account for 26 percent of all handset sales, not just smartphones, this year. Gartner predicts the number will rise to 47 percent -- that's 1 billion units -- by 2015. However, Gartner's "open" doesn't refer to open source. The analyst firm counts any operating system with published SDK and APIs, including Apple's iOS and Windows Phone, to be open.
"By 2015, 67 percent of all open OS devices will have an average selling price of $300 or below, proving that smartphones have been finally truly democratized," said Roberta Cozza, Gartner principal analyst, in a statement.
Cozza sees Android's move down-market as having significant impact on ASPs: "Android's position at the high end of the market will remain strong, but its greatest volume opportunity in the longer term will be in the mid- to low-cost smartphones, above all in emerging markets."
Now there's something else I hope Gartner is wrong about. Do you really want to pay $300 for a smartphone in 2015? Wouldn't $100 be better?