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October 29, 2013


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Lou Mannheim

And very much worth noting is that Apple regularly gets 60-70% of total operational profits from the whole mobile handset business worldwide. This is likely to grow as Samsung, much more than Apple, feels the pressure from Chinese ultra cheap smartphones.


I keep begging that apple will continue with he current strategy, everyone, EVERYONE was soo wrong about their first weekend sales and numbers that I keep thinking to myself, thanks good they don't listen to anyone, I don't want to own a cheap plastic phone that 6 months down the road is obsolete, I want 64 bit power and soon, world class computer power apps in my computer in my pocket, the iPhone 5s, yes, forget the smart phone term ... this is a small computer that can be used to make phone calls, Samsung and Co are 2 generations behind and when they catch up, their product will last 6 months before becoming obsolete, the beauty of Apple is that hardware last you a year longer than Samsung effectively in the long term making it a cheaper investment.

Earendil Star

I think one factor many are overlooking is that this time all markets, including China, offered the iPhone 5s simultaneously. This means the initial sales numbers should be higher than in the past, given the wider market offering. Will this be reflected in weaker sales during the following period (since buyers in some markets had to wait to put their hands on the new iPhone)?

We'll see...


Wanna bet that the resident Apple-tards will dismiss these numbers as insignificant again?

Now that market share has peaked it's only a matter of time that sales numbers will peak, too, with all the high end markets nearing saturation.

And what then...?


Please post your retarded Apple advertisement elsewhere.


@ RottenApple

Then we ask Mercedes Benz, Porsche, BMW, Harley Davidson, Rolex and many more who care little about market share but care about quality, durability and value. If you care about market share keep drinking Coke and eating hamburgers, i rater drink wine.

Nt everyone considers market share a good measure and plenty of companies that create value don't do it vi market share. Now if one's opinion is so offensive to you it means that anything that is not market share related goes well beyond what you understand about a product and its capabilities.

If you can't discern between and obsolete 32 bit smart phone and a 64 bit pocket computer it's fine with me , not everyone digs deep into technology before commenting, but what i sad is that in a blog like this one you can not control yourself and use a good argument but resort to insult people. Good for you, i do not lower myself to your level and if you want to insult me again, feel free please but remember, my point is not market share, it's quality, durability and 64 bits that 9 million people happily accepted.


"Rolex and many more who care little about market share but care about quality, durability and value."

The funny thing is, that a $5 Digital watch keeps the time better than a $10k mechanical Rolex.

"If you can't discern between and obsolete 32 bit smart phone and a 64 bit pocket computer it's fine with me , not everyone digs deep into technology before commenting,"

This comment makes it obvious that you are one of those who do not dig into the technology before commenting. The iPhone using a 64 bit processor with 1G of RAM has only incremental influence on performance or capabilities.


> Then we ask Mercedes Benz, Porsche, BMW, Harley Davidson, Rolex and many more
> who care little about market share but care about quality, durability and value. If you
> care about market share keep drinking Coke and eating hamburgers, i rater drink wine.

The problem is that Android is evolving much faster than iOS.

Would Mercedes Benz, Porsche, BMW, Harley Davidson and Rolex have kept their status symbol if they became worse than competitors?

A better comparison would be the American versus Japanese car industries. Americans were unbeatable -- until the Japanese came with cars that were not only cheaper, but also better than the American.

That's what happening with Apple right now. We can see the trend now, but the full effect of the change will be only seen in 5-10 years.



>> Then we ask Mercedes Benz, Porsche, BMW, Harley Davidson, Rolex and many more who care little about market share but care about quality, durability and value. If you care about market share keep drinking Coke and eating hamburgers, i rater drink wine.

Yes, because BMW only offers the 760i and the M5, they would never release a 116i. Oh wait...

Porsche has a products like Cayenne, Cayman, Boxster, Carrera, Panamera, 918. You can get sedans, sports cars, racing cars, SUVs, Diesel, Hybrid, 6 or 8 cylinders etcetc.

It is really funny that you don't even manage to troll correctly. At least you could find examples of companies without such a wide price range in their product portfolio. Next time try it with some real exception to the rule, like B&O.

Focusing on profits alone has found another victim lately, Loewe from Germany. As the market share shrinks, negative side-effects add up, economies of scale work against you, and in the end you die.

Note that Apple would have gone bancrupt in 1995 without MS bailing them out. Main reason: Fosusing on profits alone while neglecting market share.

Quantity has a quality all its own, xou know.

>> If you can't discern between and obsolete 32 bit smart phone and a 64 bit pocket computer it's fine with me

Your '64 bit pocket compute' does not even have a real file browser. You cannot decide which programs you install because all you are allowed to use are Apple-controlled Apps from their App Store. You cannot even attach an MP3-file to an E-mail.

But for some people this is a blessing instead of a curse because they are too stupid to handle the complexity of a real computer.



We all know the growth in the smartphone market is in the low end, so it should not be surprising that a company which sells nothing under $400 is not growing market share. I am not saying this is insignificant, just that its not really all that insightful.

I'll take this one step further and suggest maybe its time to stop counting smartphones separate from all devices. If there is no distinction between a $50 Coolpad and a $700 Note3, why make the distinction between smart and non-smart? I think we are at the point where market share of total mobile phones is more telling since the denominator less subjective and the growth of which is better understood.


Tomi, Next quarter (Oct-Dec) quarter will *not* have full impact of the iPhone 5S/5C launch. Those phones have launched in a very small number of countries (11) for the entire quarter, and even in those, not on every carrier - For example China Mobile will launch later.

By the middle of the quarter, November 15, those phones will be launched on only 35 countries.

And calling peak iPhone before it is even fully rolled out in the major operators is highly premature. Just look at what happened in Japan. YoY iPhone sales are up 41% on the strength of a few days of sale on DoCoMo.

It is, in fact, apparent that it is Android that has reached peak in the USA and Japan and now sees its share and units declining.

iPhone volumes will likely continue to increase at low double digits pace, and it is not out of the question that Apple will have a $60B CY Q4/FYQ1.

Worldwide market share should remain largely the same with maybe a couple of points pick up due to CM launch.



"Focusing on profits alone has found another victim lately,"

Let's not forget that Apple already was almost there once. There's no guarantee it can't happen again.


You predicted peak Android last year and it didn't come. So what? Making anylyses with an intended bias to a specific company is never going to yield good results.

Also, let's not forget that despite not having launched everywhere, the iPhone 5 is already available in all major markets. What's left is more or less peanuts, except for China Mobile. Also, Tomi's numbers all contain 4 quarters so that seasonal effects are mostly eliminated. And the trend is clearly visible. Apple had its peak last year.

As for the Japan numbers, big deal. That's typical one-time effects that are just evening out the shrinking numbers in other countries.


@Rotten Fruit. Android has peaked in the US and likely this quarter in Japan as well. And possibly in the UK, Canada and other advanced economies that I don't track too closely.

Also, full Google Android has peaked even on a global basis.

If you are talking about global Android market share (lumping Google Android with forked,no services Android), that is not likely to happen until after the full migration to smartphones - circa 2017.


I like Baron95. He's really simple. As in "Apple are winners, everyone else are losers".

Consider a situation where market share of a given company A is flat and is only growing because it's becomes available in a new countries.

Well, if A==RIM or A==Nokia then conclusion is "This is a story of market by market battles. Looking at aggregate number means nothing. That is simply the point where Nokia and RIM ran out of places to hide."

And if A==Apple then it's "And calling peak iPhone before it is even fully rolled out in the major operators is highly premature."

Well, technically that's correct in both cases but if we'll go by his own words alone (more-or-less flat wordlwide market share with growing number of markets == collapse is imminent) then Apple should be bankrupt in a few years. Which is NOT the prediction many are ready accept today (me included).

Of course if Apple *will* collapse in a few years then Baron95's past explanations WRT fate of Nokia and RIM will suddenly be justified... although I doubt Baron95 will like such justification.


"Also, full Google Android has peaked even on a global basis."

That is not an operating system.

So what is it you want to say? That you cannot bear the thought of "competition", and are mentally unable to combine offerings from different companies into a single category?


Those discussions about peak vs. non-peak, selected-markets vs. global-market, quarter X vs. quarter Y, operator X vs. all operators, flagship launch vs. stead state make me think that one should probably look at smoothed moving averages to compare the performance of various manufacturers, and not raw monthly/quarterly figures.


"make me think that one should probably look at smoothed moving averages to compare the performance of various manufacturers, and not raw monthly/quarterly figures."

Which is what Tomi was doing above.

Also, all such data show that Android is gaining relative to iPhone.


An improvement in analysis. I concur that you have indeed demonstrated peak iPhone in a way that is meaningful. 4qtr rolling should be your measure going forward.

Missing from your bloodbath analysis is any mention of Docomo and Apple capturing a larger slice of the Japan market than ANY phone has EVER at 34%. Japan, the market that you have long hailed as the most sophisticated with the most demanding customers.

And the next shoe is about to drop with China Mobile launching their LTE service with the iPhone 5s as the flagship model just in time for Chinese New Year.

This is the iPhone's last hurrah. Will it be enough to counter act "peak iPhone"? If 91million is the number for Q4 Apple has to hit, then I'd say no. And after 1st qtr 2014, there are no more big wins to be had by adding huge more Verizon, China Mobile, or Docomo to add to get significant growth.

However, proper analysis would recognize that we have TWO smartphone markets. There is the super phone/computer in your pocket/ecosystem participating market represented by the iPhone, Galaxy S, HTC One class phones. Then there is the "used as a feature phone" segment of the "smartphone" market.

The latter customers do not participate much at all in the ecosystem sales. The phones are sold at razor thin margins. After the sale these customers don't buy apps, music, or other content in any meaningful way. This is the market that is seeing explosive growth. Sales in this market compete against feature phones. A sales here is not a missed sale for a super phone. Apple not participating in the growth of this segment is no different than Apple not competing in the feature phone market.

How else do we recognize the two markets? We've long wondered just how it is that Android can have 4 times the market share of the iPhone and not attract 4 times the developers for it's platform. Drive 4 times the revenue from it's apps store and music store and ad revenue. On the contrary, Apple maintains it's lead in all these metrics of engagement and profit (not just for Apple, but for those participating in the ecosystem). Apple in fact, dominates the super phone market. Samsung is slipping here with disappointing sales of it's S4 in the last qtr.

How else might we recognize the two markets? In light of the 5 qtrs of decline in marketshare of the overall "smartphone" market...Apple should be losing it's power with telecoms, not gaining. This very quarter we see the complete capitulation of Docomo. They carry the iPhone when the said they wouldn't. There is no carrier branding on the phone. No carrier services on the phone. It is the same "Apple way or the high way" deal that Apple has gotten with every carrier before.

This coming quarter we will see the very last major hold out in China Mobile taking on the iPhone. It will have no carrier branding, no carrier preinstalled apps or services. These are not the types of actions won by a weakening product.

The iPhone is still doing the job the carriers hire it to do. The iPhone attracts the most desirable and the most profitable customers who buy the carriers premium data services and are locked in to multi year contracts. The $100 android phones bring in the feature phone crowd to the carriers.

You aren't witnessing "peak iPhone" in any meaningful sense. You are witnessing a bifurcation in the smartphone market. Apple did not enter any new market with it's iPhone 5c. It's the same strategy as they've had since the second year. And then the third year. 3 models. Current technology, last year's, and the year before. Same pricing. Apple not changing it's pricing strategy is yet more evidence that there are two markets. Apple isn't competing in the "smartphone as feature phone" segment.

How else can we see the two markets? Apple's profits remain greater than all the other participants combined. Which is the same thing as saying "more than Samsung" as Samsung is the only other company making meaningful profits. Samsung is the dominant player in both markets by marketshare. And yet, Samsung is showing weakness in the super phone segment of late and has the most to lose by the rise of the Chinese in the low end.

Two markets, not one.

Finally, it would be nice to see Apple's share of the total mobile phone market. I doubt we have "peak iPhone" there.



"The latter customers do not participate much at all in the ecosystem sales. "

It is not just apps, mp3, e-books and fancy cases you know.

Tomi will probably disagree and may fire off a salvo of statistics showing how much content is being bought on feature phones (in your general sense).

A problem is that the perspective of what an "ecosystem" entails differs amongst countries. For instance, how much e-money banking is taking place via mobile phones in the USA compared to, say, Kenya or South Africa?

No, not paying for electronic content in app stores, or replacing a credit card at the POS; e-money -- transferable to anybody with a corresponding mobile e-money bank account. Tomi has been talking about that kind of unglamorous, below-the-radar applications for a while -- they are growing, are major factors in Africa, and have the potential to become major factors worldwide. And Apple, Google and Microsoft are absent from that ecosystem...


What is this "Ecosystem" you talk about? From the use it seems to be an euphemism for "paying consumer".

A BUSINESS ECOSYSTEM in the original meaning of the word is:

“An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.”

Paying consumers are only a small part of the ecosystem. And consumers generate only part of the income. Ads and marketing deliver additional income.

Btw, 30% and more of the income of the iPhone "ecosystem" is hoarded by Apple (hard= and software). The picture of a giant parasitic mold sapping the iPhone "ecosystem" comes to mind.



"From the use it seems to be an euphemism for "paying consumer".

Actually, I follow a similar definition as the one you propose. The issue being discussed was specifically that "the latter customers do not participate much at all in the ecosystem sales". From this -- admittedly restricted -- perspective, one is missing the facts that the ecosystem is bigger and more varied, and customers do massively partake in economic transactions -- except these are not the ones everybody thinks at first.

The second point is that an ecosystem is not just B2C commercial transactions, as you rightly point out.


One has to remove the "don't need a smartphone" aspects of ecosystem in order to gauge the impact of ecosystems on smartphone sales. SMS, MMS are giant ecosystems. Every phone has or not (well, almost).

Those needs, valid and wonderful though the are, that can be met by a $50 Android phone are not the market being served by the super phones/computer in your pocket. The iPhone, Galaxy S4, HTC One and the like are not just "more expensive versions of the $50 android phone with a bit better camera, larger screen, and nicer case". They are an entirely different class of product. They are computers in your pocket.

A sale of a feature phone does not come at the expense of the iPhone/Galaxy Sx. Feature phones are competing with the low end of Android. Low end Android phone sales are not taking away sales of the Galaxy Sx.

The behaviors of the clients are significantly different between the super phones and the low end Android feature phone step-ups.

How is this relevant? Before the iPhone there were smartphones (Nokia, BB, Windows Phone) and there were feature phones. Easily identifiable - related (both are mobile phones) - but distinct.

It is still so. The phones are related (both are mobile phones, both run a type of Android) - but distinct (quite significant difference in how the phones are used).

Take a look at Apple's percentage of the "mobile phone" market. Has it peaked? Not a bit. Apple's share of the total phone market is still growing. Apple's ability to attract and retain the most profitable and desirable customers is still in demand by the world's carriers. In that SEGMENT of the market, the super phone, the iPhone is dominant.



That may be, but the lower end customers still need to be served - and it's a faulty assumption that those are valueless. They are only valueless if you put corporate greed at the front of your business model - like Apple does.

All that superphone talk is nonsense anyway. In what way do the high end phones offer genuine added value? Seriously, the gap between entry level and high end phones is closing, not widening. Today's entry level smartphones are miles ahead of the first iPhones and they also can be safely considered 'pocket computers'. If you can get almost the same processing power and features for far less money (no, we're not there yet but that's where the market will head to) I wouldn't hold my bets for Apple.

BTW, iPhone may be dominant in the US - but it's far from that in many other markets - even if you just count the so-called 'superphone' segment


Chose any label you want. Tomi has used super phone in the past. No one ever said that the low end shouldn't be served. This shouldn't be about liking one company over another, but UNDERSTANDING the market.

How is it that Docomo and China Mobile reversed course on the iPhone? One needs to UNDERSTAND that all Android phones are not alike. A Galaxy S4 is a direct competitor to the iPhone and plays the same role for a carrier the iPhone does. The $50 Android phone does not. The vast growth in Android is coming at the low end that does not compete with the Galaxy S4, HTC One or iPhone.

The Galaxy segment (if you prefer) is the one that's selling the high profit data plans for the telcos. These are the plans that lock customers in for 2 or more years. The iPhone is doing a better job than Android in securing these customers. That's why now EVERY major telecom company has signed on with Apple. There are no more significant holdouts (that I know of).

It's a distinct market. The Samsung Galaxy S4 has far more in common with the iPhone from Apple than the low end Android phones Samsung sells. Those phones have more in common with the Nokia Asha line than they do the iPhone. In terms of the role they play with carriers and with the ecosystems.

The low end Android phones are better paired with the feature phones as a market to discuss.

The iPhone dominants the US and ALL markets in it's segment. Japan is a good case study. Now that Docomo caved the iPhone has 34% more than any other phone achieved before.

In Spain...not so much. Spain is not much of a market for the high end smart phones. Nor is Banladesh et. al.

Roy Liu

Tomi, Apple showing once again that it's the software, not a spec war:

iPhone 5S vs. Nokia Lumia 1020 Camera Shootout
Laptop Magazine:

The iPhone 5s conclusively beat the Nokia Lumia 1020 in our photo face-off, taking seven out of 10 rounds–and tying one. Even after updating the Lumia 1020′s camera software, which reduced issues with the blue color cast on many images, colors were still more accurate on the iPhone. Apple’s device also excelled when delivering detail and contrast.

The advantage that the Lumia 1020 has is that you can recompose your shot after you take it because of the phone’s very high 41-MP resolution. Overall, though, the iPhone 5s snapped better-looking images in a wider range of conditions.


@Winter Apple is dominating the ad revenue on mobile as well. Consider Facebook mobile ads where we see 17x the performance for ads on iOS than android, it actually costs more to advertise on Android than is earned.

All of Africa and India and Asia (outside of China/Japan) combined do not equal the economic vale of the US.

Android in China is by Chinese companies for Chinese companies. This is non-Google Android. A separate ecosystem.

Europe is a mixed bag.

Japan is like the US. The iPhone is dominant.

There is no "global Android" ecosystem. Android is fragmented in many ways.

You cannot meaningfully compare the iPhone market to the entire Android market.

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