Gartner’s latest report on worldwide smartphone operating systems (OS) puts Android in the No.2 position, overtaking RIM and iOS. From a 3.9% share in 2009, Android has leapt to a massive 22.7%. Its success comes from being part of the smartphone strategy of multiple vendors, including Samsung and Motorola. Motorola has managed a successful turnaround based on its Android phones and recently split into Motorola Mobility Holdings (NYSE:MMI), which will sell mobile handsets and television set-top boxes, and Motorola Solutions, which will supply wireless technology to governments and enterprises.
Motorola Mobility’s Financials
Motorola Mobility reported fourth quarter revenue of $3.4 billion, up 21%. Net income was $80 million or $0.27 per share versus a loss of $204 million or $0.69 per share last year. For the full year, 2010 net revenues were $11.5 billion, up 4%, and net loss dropped to $0.29 per share from a loss of $4.56 per share in 2009.
Motorola Mobility received $3.2 billion in cash related to its separation from Motorola, Inc. It recently acquired Zecter, Inc., a leading start-up with synchronization and streaming technologies for on-demand digital media consumption, and 4Home, a provider of managed home solutions, to expand its cloud-based Motorola Medios service management software portfolio.
Home segment net revenue in the fourth quarter was $1.0 billion, up 1%, and GAAP operating earnings were $54 million, compared to an operating loss of $30 million last year.
Mobile Devices segment sales were $2.4 billion, up 33%, while GAAP operating earnings were $72 million, compared to a loss of $117 million last year. It announced seven new smartphones including the DROID PRO, DROID 2 Global, Motorola DEFY, and Motorola BRAVO, bringing its total smartphone launches for the year to 23.
During the quarter, Motorola shipped 11.3 million handsets, including 4.9 million smartphones. For the full year, it shipped 37.3 million handsets, including 13.7 million smartphones.
Motorola recently launched its first tablet, XOOM, at the Consumer Electronics Show (CES). XOOM is the first tablet with Android’s OS for tablets, Android 3.0 Honeycomb. XOOM features a dual-core processor and high-definition 10.1 inch widescreen display.
For the first quarter, Motorola Mobility expects net loss of $26 million to $62 million and net loss per share of $0.09 to $0.21. Its stock is trading around $31 with market cap of about $9 billion. It hit a 52-week high of $36.54 on January 19.
Samsung Electronics (005930.KS) recently reported fourth quarter revenue of 41.87 trillion Korean won ($37.26 billion), up 7%. Net income was up 13% to 3.42 trillion won ($3.04 billion) driven by its smartphones and memory semiconductors. For the full year 2010, Samsung reported annual revenue of 154.63 trillion won, up 13% and net income of 16.15 trillion won, up 65%.
Semiconductor revenue was up 16% to 9.25 trillion won ($8.23 billion) while its revenue from its telecommunication business was up 19% to 12.11 trillion won ($10.77 billion). Driven by strong year-end demand for its flagship smartphones, Samsung’s mobile device sales reached 80.7 million units for the quarter, up 17%. This brought total sales for the year to 280 million units, representing growth of 23% to outperform the overall market.
Following its introduction in June, Samsung’s flagship Galaxy S smartphone has achieved worldwide sales of 10 million units, while the Galaxy Tab – an Android-powered tablet device – attracted strong year-end demand. Samsung announced it will introduce the successor to its Galaxy S smartphone during the first half of 2011, and it will feature a dual-core processor and Super AMOLED Plus display to further improve the user experience. The company is targeting smartphone sales of 60 million units for the year, double that of 2010.
What Next for Motorola and Samsung?
As an increasing number of vendors try to latch on to the success of the Android OS, it is losing its appeal. Nokia recently announced that it has chosen to go with Microsoft and its Windows 7 platform. Joan Lappin on Forbes points out that Nokia didn’t have much choice:
“Had [Nokia CEO Stephen Elop] picked Google’s Android operating system he would be only one of many serving that market in the end and like Motorola wouldn’t have much that was unique. Frankly, I think Elop had no choice in his decision. If his choice was being yet another also ran with Android products where Google owned the software or going with Microsoft in the development of a third ecosystem with which to compete, I believe his choice was simple.”
Nokia needs to reinvent itself, and though Microsoft is less proven than Android in mobile OS, it could still help Nokia gain a foothold in the U.S. smartphone market. Microsoft, on the other hand, could use Nokia’s help in being relevant in the smartphone space again.
Motorola and Samsung will soon face the problem of differentiating their Android phones. While Samsung has its own operating system, Bada, Motorola Mobility has bet it all on Android. This strategy has worked fine until now, but with the Verizon iPhone around, things will get tougher. Nonetheless, we can certainly expect to see more great innovation in this market, which has been the tech industry’s most exciting over the past five years.