Apple results for calendar quarter 2 (Apr-Jun) ie what we call here the Q2 results as we go by calendar quarters (Apple's fiscal quarter is different accounting) are out. And yes, Apple continues to make great profits. Congratulations on that, but this blog is not about financial performance, this is about market share. The iPhone is now bleeding market share as the product line is not competitive where the growth is (bottom end of the price range).
Results? 35.2 million iPhones sold, which is down 22% from Q1 when Apple sold 45 million iPhones. This is the doldrums period for iPhone sales when the old models still are sold and no new models are offered. As I've been suggesting from even before the model line was split to high-end 5S and low-end 5C (which is too expensive for a 'low end' product by the way, as I said at the time) - Apple now need to also split the new product announcements so, that one of the new products is announced in the Spring, the other in the Autumn, so that this bad sales cycle can be evened out more. But yes. Apple always has its 'big jump' quarter after the new model(s) are released and so that happens for Christmas sales. This past Christmas that was a disappointingly weak jump and ever since Apple's performance has been severely under the industry average (again, in terms of MARKET SHARE not in terms of PROFIT. Apple is consistently the most profitable company in handsets but as I've warned on this blog for years now, Apple is sacrificing short-term profit for long-term market share benefits and this will come to haunt them in time. A little bit less profit would have still kept Apple safely the most profitable company in high tech but yielded far stronger market share position for the long run).
So how is that market share? 35.2 million iPhones in Q2 of 2014 give Apple a preliminary market share of 12%. That is down from 16% in Q1 and a peak of 24% as recently as Q1 of 2012 just over two years ago. Yes, Apple has now lost half of the market share that it held at its peak quarter once. And its been all down hill. On an annual basis iPhone market share was 16% last year (down from a peak of 20%) and the current performance points to about 14% for full calendar year 2014, even with a traditionally strong Q4 sales of new iPhones for Christmas.
Yes, as the industry gradually shifts from dumbphones to smartphones (I expect the new sales transition to 100% smartphones to arrive around year 2019), Apple is clearly headed, very steadily towards the same type of market share with iPhones as it traditionally held with the Macintosh among PCs, ie single-digits. That is pretty inevitable for the end of this decade. Highly profitable yes, but a niche market only, as I've said right from the start. 12% currently, and for the full year 2014 expect about 14% for the iPhone down from 16% annual market share in 2013.
As the handset industry is now on the end-journey to finish off dumbphones, it also makes sense to count what is given phone maker share out of all phones. This becomes the more accurate picture than just looking at the smartphones 'sector' which is now the majority of all phones sold. So out of all phones sold, iPhone has 8% market share now in Q2 of 2014. That is very close to what the Mac has held traditionally and what it has now in Q2 (6% of all PCs sold, desktops and laptops combined). Yes. the iPhone is a luxury gadget at the luxury end of the handset market, not unlike say Porsche or BMW in cars. And please all who need to understand this industry, Apple can never be the mass market play. If you develop only for the iPhone you are excluding 92% of the planet's mobile phone owners.... That is not good strategy for any 'mass market' brand or service. The iPhone and iOS is a 'secondary' market after the mass market offerings such as SMS, MMS, Mobile internet, Java and now as it passes the 50% new sales of all phones level (not just smartphones), also for the first time in 2014: Android.
(Who has been giving this same speech here for 7 years since the first iPhone appeared, haha... yes, thank you. Told-you-so)
PS large-screen iPhones positioned at the top-end of the market will not boost Apple back to 20% market share, Apple needs low-end iPhones at LOWER price points than iPhone 5C (and I of course am talking of non-subsidised prices, ie without contract price, for American readers...)