US Mobile Data Market Update Q2 2012 #CHETANSHARMA


This is the regular update from Chetan on the status of mobile in the US

As usual a massive body of work, this is the summary


The US mobile data market grew 5% Q/Q and 19% Y/Y to reach $19.3B in Q2 2012. Data is now almost 42% of the US mobile industry service revenues. For the year 2012, the market is on track for mobile data revenues in the US market to reach our initial estimate of $80 billion.

The US operators reversed the postpaid decline in last quarter to add almost 400K postpaid subs largely due to the strong performance of Verizon Wireless. Sprint and T-Mobile saw further postpaid declines. For T-Mobile, Q2 marked the eight straight quarters of postpaid losses.

In terms of Y/Y growth, Connected Devices segment grew 21%, Prepaid 12%, Wholesale 4%, and Postpaid was flat. AT&T, AT&T, Sprint, and Verizon are number one respectively in these categories. The connected devices segment has been an area of growth for the industry but for the second straight quarter, the Q/Q growth fell below 5%. This is largely driven by lower growth in the M2M segment.

Driven largely by the economy, the prepaid subscriptions went past 100 M for the first time in the US market. Given that the revenue from new subscribers has fallen below the 5% mark for the first time, the revenue growth will be primarily driven by services to the existing subscriber base. The new revenue will be dominated by data access revenues for the next couple of years.

As has been obvious for some time, the device ecosystem has become a two horse race – iOS and Android. Apple and Samsung. Google’s acquisition of Motorola finally closed and everyone is watching as to what comes next. Amazon showed off its ambition with Kindle Fire and is now getting ready to launch a new set of devices in time for the holiday season. Apple launches its iPhone 5 with LTE and gives some more polish to iOS next month. Microsoft will start selling its Surface tablet in a matter of weeks. The only one left out of the launching musical chairs is RIM which has pushed out its launch into 2013.  

Samsung continued its march of being the undisputed unit leader in mobile device space. After displacing Nokia in Q1 2012, it continued to dominate in units shipped in Q2 2012. However, Apple dominates both the device revenues and more importantly just crushes the competition on device profits. It has only 6% of the global unit shipment share but over 70% profit share. In tablets, Apple completely dominates the landscape in both shipments and revenue. In fact, 97% of the profits in the tablet segment go to Apple with the remaining ecosystem fighting for the crumbs. Apple has the complete stronghold on the supply chain and has sucked out the oxygen from the OEM world.

Nokia’s Lumia launch in Q2 fizzled in the US and elsewhere. It will get another shot at glory and perhaps its last with the Windows 8 launch in Sept.

If we exclude the M2M subscriptions and just look at the human subscriptions, the smartphone penetration went past 50% for the first time in the US market. Smartphone sales continued at a brisk pace crossing the 70% mark (of the devices sold) in Q2 2012.

Verizon and AT&T maintained their top positions in the global rankings by mobile data revenues. A survey of the entire ecosystem shows that the US companies dominate the top 5 rankings of profit share. China Mobile leads the industry with Apple, Verizon, AT&T, and NTT DoCoMo completing the rankings.

Download the full work here