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Wireless in 2012 Marked by Continued Dominance or Altered Fortunes of Key Players

05 February 2013

Influential companies such as Apple Inc. and Samsung Electronics Co. Ltd. solidified their standing in a buoyant wireless market last year that saw double-digit growth, while formerly strong brands like Texas Instruments finally hung up on the smartphone space, according to an IHS iSuppli Wireless Communications market tracker report from information and analytics provider IHS.

Total mobile communications equipment factory revenue closed out 2012 at $378.9 billion, up 13 percent from $335.5 billion the year before. Growth, while down from 30 percent in 2011, remained in vigorous double-digit territory. The industry will continue to expand with a 14 percent increase projected this year, as revenue makes its way to $526.9 billion by 2016.

IHS defines mobile communications equipment factory revenue as what manufacturers earn from the sale of devices into the channel-in this case, mobile communications equipment like smartphones and other handsets. The category also includes wireless infrastructure gear such as routers.

For many companies in the wireless space, fortunes changed in 2012. Some thrived and pulled away from their competition, while others were forced to make difficult strategic decisions to exit once-lucrative markets. Between those two points sat companies that worked hard to address the rapidly changing dynamics of the wireless world.

Behind all the change were three major trends that shaped the market:  the transition from 2G to 3G in many parts of the world, especially in the developing countries; the move from feature phones to smartphones among consumers; and the commercial ramp-up of the next-generation 4G wireless technology known as Long-Term Evolution (LTE).

Fueled by those developments, companies like Apple, Samsung, Google and Qualcomm either took the lead in their markets or extended their position at the top.

Apple continued to hold sway with industry-leading sales of the iPhone and the iPad. For its part, Samsung made notable inroads in 2012 with its Galaxy line of smartphones, and now also holds the No. 2 spot in the market for application-specific mobile handset core integrated circuits. Samsung sits just behind Qualcomm, which kept its grip at the top last year after first securing the pinnacle in 2007. Meanwhile, handsets featuring Google's Android platform have also expanded their share of the smartphone market among consumers, giving Apple some credible competition.   

In contrast, brands associated with the wireless market in an older, less competitive paradigm have largely vanished over the course of the past year.

One prominent casualty was Texas Instruments, which is exiting the baseband market for good. TI had first intimated doing so in 2010 when its market share for baseband processors fell to 10 percent, but the company reiterated its intention recently as its market share slipped further to 5 percent.

TI has been attempting to replace revenue originally derived from the baseband business with revenue from its Wi-Fi, Bluetooth and GPS connectivity products targeted at the smartphone space. While initially seeing success with this strategy, the move by Apple and Samsung to use their own vertically integrated applications processors made it extremely challenging for TI to accelerate its revamped wireless business as it had hoped.

Adding to the company's difficulties were the travails of Nokia, its longtime partner. Much of TI's early success depended heavily on Nokia, and as Nokia struggled to recover its lost luster in the smartphone space, TI foundered as well.

Overall, handsets-specifically smartphones-will continue to be a driver in the wireless semiconductor market. Along with the growing adoption of LTE, as well as increased demand for data-centric applications, the smartphone is emerging as the form factor of choice for many mobile consumers. And as both smartphones and LTE gain in popularity, the corresponding influences they exert on wireless design philosophy create paradigm shifts that transform the industry.

In this type of rapidly shifting competitive landscape, companies that identify changes early and are able to reposition core strengths appropriately will reap the rewards, while those slower to react will likely see their market shrink, IHS iSuppli believes.

Read More >> 2012: A Year of Change in Wireless



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