Forgotten Smartphone Companies Disappear

Samsung cemented its position, which is now almost unassailable, as the number one firm in the mobile phone industry. In the third quarter, it took a 23% share of the total of 428 million handsets sold worldwide. And it had 33% of the profitable smartphone segment, which had global sales of 169 million units.

Nokia finished second in the global sales of handsets, with a share of 19%. Its piece of the smartphone market dropped to seventh place from third place last year. Its trouble in smartphones is never ending. despite its new partnership with Microsoft Corp. (NASDAQ: MSFT). Apple finished third in total handset sales with a share of 5.5%. Virtually all of its handset sales are smartphones.

The futures of ZTE, LG Electronics, Huawei, TCL Communication, Motorola and HTC are foggy. None had a share of more than 4% of handset sales last quarter, and most were below 3%. Each firm came by its difficulties differently. Seven years ago, RAZR sales put Motorola in the number two spot in the global handset business. Its new owner, Google Inc. (NASDAQ: GOOG), will find that salvaging a operator as small as Motorola is impossible. HTC was considered the rising star of the industry just a year ago. New models, particularly from Samsung, put an end to that status.

These six companies have a very different problem than RIM’s BlackBerry does. RIM has its own operating system, and a legacy as the leader in corporate handset sales. Each of the other firms relies on Google’s Android, which has a 72% share of the operating systems of all mobile phones. But most of those Android sales come from Samsung. Many analysts believe that RIM cannot remain an independent company. Motorola has a slim chance because of Google. ZTE, LG Electronics, Huawei, TCL Communication and HTC have no such lifeline.

Most of the conversation about the future of handset companies continues to be centered on Apple and Samsung, the features of their phones and the legal battle between them. Nokia’s sales are still large enough for it to have a chance to linger. But profits are slim or nonexistent beyond Apple and Samsung. The cost of marketing, manufacturing, distribution and product design are tremendous, and cannot be supported by companies that hold 3% of the market. Most of the third-tier companies will be gone in a year. Their sales are so small that they will barely be missed.

Douglas A. McIntyre