While smartphones continue to make great strides in penetrating the domestic market, the third quarter of this year saw a slight lull in the action as consumers awaited the latest offering from Apple, according to a report by Fitch Ratings.
The report found that during the third quarter postpaid smartphone penetration increased just 310 basis points sequentially, which was down from the 370 bps recorded over the previous three quarters. Fitch added that it expects that rate to surge to 400 bps during the fourth quarter due to the launch of the iPhone 4S across multiple carriers, Verizon Wireless’ aggressive LTE data promotions and continued smartphone penetration gains at AT&T Mobility.
The firm said it expects smartphone penetration to grow from just under 47% during the third quarter of this year to the mid-60% range by the end of 2012.
AT&T/T-Mobile USA to dominate 2012
As for 2012, Fitch said the wireless industry’s key issue will continue to be AT&T’s (T) ongoing attempt to acquire T-Mobile USA.
“Fitch believes T-Mobile faces an uncertain future if the deal, which has encountered significant governmental opposition, collapses and could take more aggressive steps using a portion of the proceeds from the break-up fee to stabilize postpaid market share,” the firm noted. “Consequently, these actions could further pressure future profitability and growth for operators.”
Fitch said that if the deal falls through, T-Mobile USA would have to address its longer-term 4G issues that are currently hampered by spectrum constraints. This could force the carrier to seek a “strategic” agreement in a “capital efficient manner” with spectrum-rich operators that are looking for an established carrier in which to enter the wireless market.
“This could include companies like Clearwire Corp., Dish and potentially LightSquared,” Fitch explained. “T-Mobile would also need to use Wi-Fi and spectrum re-farming to increase capacity in certain markets.”
A blocked deal could also empower AT&T to become more aggressive in attempting to acquire spectrum assets to support its own 4G plans.
“This could include building additional cell sites, re-farming existing spectrum and reaching agreements to acquire/share spectrum with other operators,” Fitch added.
AT&T rival Verizon Wireless recently made a play to acquire significant 1.7/2.1 GHz spectrum assets from a cadre of cable operators for $3.6 billion in an attempt to bolster its own LTE network plans.
ComScore begs to differ
While Fitch’s report showed smartphone penetration to be at nearly half of all North Americans, a mobile device survey from ComScore showed that of the 234 million Americans over age 13 that own a mobile device, and 90 million of those own smartphones. Those numbers would put smartphone penetration at around 29% of all Americans. Fitch said its numbers were from carrier results representing 90% of all subscribers, while ComScore’s numbers came from a survey of 30,000 cellphone owners.
The difference in smartphone penetration rates can also be partially blamed on what is termed a “smartphone.” Some carriers put any device with a QWERTY keyboard into the smartphone column, while others go with devices with an “open” operating system. Bottom line: your mileage will vary.
According to ComScore, Samsung continued to lead the U.S. mobile phone market with a 25.5% market share, followed by LG at 20.6% for the three months ending in October. Motorola’s market share slipped half a percentage point from the previous three month period, to 13.6%, and Apple’s market share shot up more than a percentage point to 10.8%. (The iPhone 4S shipped in mid-October.) Research in Motion saw the market share for its BlackBerry smartphone fall a full percentage point to 6.6%.
Among the 90 million U.S. smartphone users, more than 46% are using an Android phone, up from 42% during the three months ended in July. ComScore’s survey found that 28% are using an iOS phone, up from 27%. Those gains for Android and iOS came mostly at RIM’s expense – BlackBerry’s smartphone market share tumbled 4.5 percentage points to 17.2%. Microsoft Windows and Symbian each saw their market share dip slightly. Microsoft now has 5.4% of the market and Symbian 1.6%. Nokia, maker of the Symbian operating system, has said it will no longer make new Symbian smartphones, focusing instead on phones that use Microsoft Windows.
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