Android market share dive’s aftershocks rumble through mobile market

“RadioShack is plunging by 27% in the pre-market after a substantial warning,” Tero Kuittinen reports for Forbes. “Nobody expected this retailer to be in rude health – so why are investors responding so violently? Mostly because the long-term mobile strategy of RadioShack now seems to be in jeopardy. The company pinned its 25 cent earnings warning effectively on competitive pressure on Sprint and a vague, overall consumer softness.”
“We know that AT&T and Verizon sub numbers for 4Q11 were rock solid. There was no sudden deceleration in US post-paid mobile sub growth during the Christmas quarter,” Kuittinen reports. “What we did witness in the US handset market was a remarkable decline in Android market share combined with a strong rise in iPhone market share. The 15 point share decline of the Android phone family detected by Nielsen triggered a variety of issues.”

“HTC‘s handset volumes for November and December decreased sharply. AT&T’s profitability deteriorated as more than 80% of its smartphone activations were now taken over by the heavily subsidized iPhone. Motorola delivered dismal 5% handset revenue growth YoY,” Kuittinen reports. “And now Radio Shack, already weakened by other consumer electronics retail trends, is in big trouble. The iPhone is a raw deal for both retailers and mobile carriers – Apple effectively sucks in profits, leaving its partners weighed down by massive subsidy payments, promotional costs and/or low retail margins. This phenomenon is going global – just last week, KPN shocked European investors with lousy results it blamed on iPhone subsidies and certain consumer trends… The iPhone distribution may turn out to be a poison chalice for Sprint.”

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