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July 23, 2014

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RLiu

Agree with J Fischer. I can understand why Tomi worships at the altar of market share, but there are plenty of cogent analyses on the web that articulate why that may not matter. And ultimately, if it does play out similarly to the PC market, then it truly spells a low-end back-water for the Android ecosystem, as any world-class app will go to iOS first, and maybe only. I also think the re-sell/gray market of used iOS devices in developing country markets is not counted in the market share numbers, and this is a mistake.

Also, if Android users are primarily dumb-phone users who happen to get a "smartphone", because that is what the carrier is now pushing, I don't see how that drives a smartphone ecosystem. So maybe iOS has 12% of overall smartphone market share, but 80% of actual "smartphone ecosystem" usage. That sounds like Apple winning both the profit AND the market share war.

Gonzalo

I said several time, in the race to the bottom ( market share ) there are losers and pyrrhic winners.

Tomi's own numbers say that in 35 years the whole PC industry as around 1.2 billion computers, enough for many many companies to thrive, and boy they did.

Apple will hit a billion users ( high end ) eventually, HUGE and they will achieve it by growing, as the numbers showed Apple keeps growing contrary to Samsung that will bleed blood tears against Huawei, Lenovo, xiaomi and the new kid on the block.

Tomi's logic does not work in this case, IF apple would be selling LESS devices quarter after quarter then we could assume such thing, but he hates apple so much that his analysis is wrong because he just compares market share without using proper logic.

Your problem is that you do not have a company to compare to apple as they only sell in the above 600$ category but you insist in doing so.

Tomi, Apple is a different animal, do the following, analyze market share and usage in the above 600$ smartphone ( pocket pc) market and let's see the results, BUT just in the market Apple plays, lets see trends, growth, market share etc .. the partnership with IBM will make it even better for Apple and worse for guess who...

Timo M.

If the decline in iPhone market share does not scare Apple fans, what does? What could be worse? Please tell!

I did some thinking on this and perhaps I found the answer. Apple fans are not afraid because they do not know what happens in mobile when market share goes the way of the dodo. They are from Mac background. Mac does fine with <10 % share because it is in the PC market and that is the market they historically have followed. Apple has been in the mobile (smartphones after the 1st one) business for just few years. PC is more like one market with one product. Mobile is all-encompassing. It is the comprehensive life-hugging business platform of the future and it lives or dies with market share.

If Apple fails in mobile they will perish. They are a phone company today and no new, exclusive, good, appealing, hot *content* will come to Apple unless they secure market share and content with it. Please rememeber that here content also means context where the never before heard content has appeal.

Mobile is not like luxury bags or cars. Those have one function plus a second one: to look exclusive and carry some stuff. Mobile instead is everything. I know because I have seen it and lived it. Apple risks losing the first platform appeal for all things unless they are sufficiently broadly represented in mobile. Symbian went the way of the dodo. It happens overnight and it happens with market share. It is like your perfectly good BMW no longer can carry passengers. Crazy stuff but true.

But I am not pessimistic about Apple. They have a solid ground to build on. The WWDC keynote was great, soon we shall have new devices with new capabilities. Nothing is lost. Apple is not like Nokia after Elop speech killing the future and moving to a non-existent platform. Cook is no fool. We shall see in about one year or so.

Tochi Nwa

It shocks me that people will dare question Tomi's prognostications and projections on mobile industry given his stellar track record. Tomi has remained prescient on the major incidents the mobile industry has witnessed over the past decade. Heck, this was the man who on the unveiling of the iPhone, predicted that phones will come to be categorised on the BeforeIphone / AfterIphone (BC/AD) format.

Apple fans must be inebriated on the most toxic form of cool aid to not see the obvious.

Rock on Tomi. Your track record speaks for itself.

Pekka Perkeles

I wonder, where's iPhone Mini?

Timo M.

@AndThisWillBeToo

Then again I don't believe everything Tomi says :-) Seriously Nokia was doing tremendously well with Symbian considering that it was a doomed platform. I was a Symbian user through the ordeal and even though it still sold like hot biscuits the looming death was apparent because apps no longer appeared for it.

Tomi T Ahonen

John Fischer

I removed your comment. I remember you've been around here for a while but you may have forgotten this rule about my blog. We don't allow any discussion of corporate performance here as this is not a wall street stock-market analysis blog. Those issues are very important for investors but not at all of interest to my readers. My readers are interested in which platforms are thriving and which not, when they make decisions on where to deploy mobile development assets such as programmers. Meanwhile stock market 'debate' is something that is never resolved, as there will always be some investors who say 'buy' while others say 'sell' and most such 'debate' becomes soon a pointless short-term quarrel of no value to those who want to underestand the actual economics of the industry. So I explicitly forbid the stock market metrics type of discussion on this blog and remove all such postings except where I open the topic myself in the blog. Note, it IS relevant to know if a given player is profitable - that means its strategy is long-term viable. Any player who is unprofitable at a given quarter, gives a signal to the industry that its given strategy may be ended or changed soon.

So if you'd like to return with comments about the market share performance of the iPhone please feel free. I did already acknowledge that Apple makes still the biggest profits in the industry so beyond that point, other financial performance discussion is not valid for this blog.

Thanks!

Tomi Ahonen :-)

Tomi T Ahonen

Hi RLiu and Gonzlo

RLiu - the point about dumbphone users shifting to Android and not being part of the apps ecosystem is not consistent with findings from the world. The MAJORITY of revenue is coming from Apple's iOS ecosystem as iPhone owners are the most affluent mobile phone owners on the planet. Their small number generates a disproportionate share of total income. But ALL trends show the share of iOS is shrinking and several countries report Android has passed iOS already and the global cross-over point where Android total revenues will exceed iOS will happen well within a year from now, likely before this year is finished. You are caught looking at the recent past and not observing the trend moving away from that.

Gonzlo - you make a compelling argument. BUT, you don't look at the global numbers. Samsung's Galaxy runs close to Apple's iPhone in its total sales (not as big but close). Some Galaxies are not in that price range but the top end definitely is in the exact same market as the iPhone and are regularly compared in phone stores if you go observe consumer and sales rep performance. Then there is Sony who focuses now on the top end. Sony'x Xperia line is definitely targeting iPhone directly. So is Lenovo's LePhone top-end flagship as is HTC's and LG's flagships. Five years ago the iPhone had almost all of the top-end to itself (and its largest rival was Nokia's flagships on N-Series and E-Series). Today iPhone definitely has less than 50% of the top-end market. So your argument too made sense some years ago but by now the market has moved past that point.

Tomi Ahonen :-)

Tomi T Ahonen

Timo, Tochi and Pekka

Timo M - excellent excellent (first) comment. Totally totally agree. Apple is now a mobile handset vendor and its future is tied to performance in handsets. Thus Apple has become hostage to The Cliff theory of how handset makers die. As long as Apple wins, it is doing fine. As long as it does not do a major fumble, it will be ok. And all signs suggest that the current path is fine. But just like Nokia made a catastrophic mistake in naming the wrong CEO with Elop - and any corporation is subject to selecting the wrong CEO, look at Hewlett-Packard haha how many failures did they have in row, was it 5? - just one bad executive could mess it up, and Apple could go over The Cliff. And we can see now that its a one-way trip, once you go over, there is no comeback (well, we have to see if Blackberry does a miraculous return-from-the-dead but appartently the last Quarterly results were more accounting gimmicks than real performance returning back to profitability).

I totally agree Timo with the main premise of that comment and also agree with your ending comment that currently Apple is not in any visible danger of suddenly dying. But 'sudden' is the operational word. Imagine if one quarter Apple reported losses in its iPhone division with catastrophically fallen sales? What would the then-current CEO do? In 9 times out of 10, that CEO would fire tons of staff and then that spiral starts of delays when you need speed, of demoralized and confused marketing when you need focus and competence and experience and the damage as we saw now with Blackberry and Nokia, could just as well happen with Apple too. And you know, there is plenty of distrust and dislike of Apple in the mobile industry for all the arrogance in their negotiations with carriers - there could be a lot of pleasure taken also for Apple's new-found problems. But like Timo M said, currently no signs of Apple heading into any trouble at all with it mobile business.

(And the last point on the next comment, come on Timo M, you know I was here on this blog saying Symbian was on its way out, it was obsolescent and had to be replaced - by MeeGo (and Meltemi). BUT inspite of being obsolescent, Symbian-based smartphones by Nokia outsold and outgrew the iPhone from 2009 to 2010, so while it was not young and fresh and vibrant, it still had fight left in it. The 808 Pureview as the last Symbian device still won essentially every award in its premium phone category (cameraphone of the year) in essentially every market. Running yes, Symbian. I never said Nokia was supposed to continue on Symbian. I was on this blog MONTHS before any rumors of a new Nokia CEO, explaining why it was necessary for Nokia to end Symbian and migrate users and developers to MeeGo.

Tochi - thank you! Some people do read the blog and remember. Nobody in forecasting is perfect, but I do have a very good track record here, and on essentially all major matters that impacted our industry in the past decade - from iPhone's introduction to Palm's last stand to HP selling Palm WebOS (and regretting it so much HP is having to come back to smartphones now) to Nokia's Windows misadventure to Google's Motorola acuqisition (that it would be sold) etc, I've been right.

Pekka - I the low-cost iPhone model range is the 5C versus the 5S. And Apple did that split in its product line poorly. As I explained already then on the blog when it happened, the 5C was not cheap enough, it didn't help Apple regain lost market share and its not differentited enough from the flagship 5S. But now as rumors suggest larger-screen flagship, hopefully the product line becomes more distinct. But go read my original argument for the Apple iPhone Mini, the 5C is all that including even the colors haha...

Tomi Ahonen :-)

Piot

"35.2 million iPhones sold, which is down 22% from Q1 when Apple sold 45 million iPhones"

Sorry Tomi, but that is not correct. Apple sold 43.7 M iPhones in Q1 this year. So down.... 19.5%
Probably just an oversite on your part.

KPOM

Tomi worships at the altar of market share, all right, but his analogy of Apple/Samsung to BMW/Toyota is probably incorrect. A fairer comparison is BMW/GM. GM was the largest manufacturer by share for decades. BMW nearly got itself into trouble when it bought Rover and attempted to gain market share. But then it wisely jettisoned the company. Then in 2009, one of those two companies went bankrupt. Hint. It wasn't the niche company.

KPOM

iPhone 5C was never going to be a "cheap" phone. Tomi Ahonen completely misunderstands Apple if he expected them to go that route. Apple could offer iPods as a cheap accessory because it was always more of a "gravy" product that even Steve Jobs knew was a flash in the pan. At best, the 5C could have been a $450 phone to replace both the iPhone 5 and iPhone 4S in developed markets. That said, that's what it very well may be in 2 months when the iPhone 6 line debuts. I suspect the 5S will stick around as the mid-range (rather than be transformed into the "5SC") since FoxConn has achieved production efficiencies with the casing that didn't exist last year.

abdul muis

@Tomi

Apple sold iphone 4 at a very low price to gain marketshare in India, Indonesia, Vietnam, Philipine. It's sold at around US$200-240.

So, apple strategy was to sell their absolute (and problably their refurbish* iphone) as a cheap iphone. That's the reason they don't priced iphone 5C very low.

*in apple web site it said that all the iphone that they got from trade in will be re-sell again as refurbish phone.

abdul muis

@Tomi (again)...

here is the link about the iphone 4. In the web the price is around $380. but after a while, the street price has go down by a lot. Since 3-4 months ago, this iphone 4 is priced around US$200-240.

http://ibnlive.in.com/news/apple-iphone-4-8gb-reintroduced-in-india-at-rs-22900/446599-11.html

AndThisWillBeToo

That indicates that Apple can't maintain their market share even when they have low-cost iPhone.

abdul muis

@Tomi (again2)

Sorry, for posting it in 3 post.... I just got this link
http://www.oke.com/4-apple
http://www.globalteleshop.com/manufacturer.php?id_manufacturer=7

OKE & Globalteleshop is 2 (out of 4) big phone reseller in Indonesia. They roughly sold around 40% of phone that sold in Indonesia. They priced iphone 4 @ US$300 (CASH - not subsidize price). The smaller shop will have cheaper price. But this 2 might be good for you to understand that APPLE HAVE CHEAP PRODUCT. They use their absolute product for the bargain price.

Piot

@AndThisWillBeToo

Do you know what iPhone's share of the Indian smartphone market is?

Didn't think so!

Tomi T Ahonen

Hi all.. just a few quick comments.

Selling an old model phone at a discount (iPhone 4) is not the same as having a split product line of new devices that are competitive and priced at different price points. Apple has had that 'we will sell the old model cheap' strategy from 2008. What I advocated on this blog when Apple's market share growth had stalled (and since turned into decline) was to split the product line into a flagship model and cheaper 'mass market' model. This is EXACTLY what Apple did with 5C and 5S. But Apple priced the 5C too highly - as not just said by me, so said many analysts at the time and Apple's performance suggests that is true - the price differential between 5C and 5S was not large enough (5C not cheap enough) to create the boost in market share that this strategy requires. So. Selling last year's model now for less, is not the same strategy. That Apple had done since 2008 and it does not give them growth anymore. 5C was the split in the product line and while it was not a 'cheap' phone, it was cheaper than the flagship - like BMW 5 series is cheaper than 7 series. What Apple needs now to do, is lower the price of 5C (and its successors) to be more like BMW 7 series and BMW 3 Series. While the next 6S or whatever the new flagship will be, will give Apple chance to go 'upscale' on its price, that cannot get more market share as there aren't 'more' customers at the top end. So the only way for Apple is to also gradually lower the prices of the bottom end ie 5C (or 6C if that arrives this year).

While we are there, Apple needs to split the launch dates of either model so one is launched in Spring and other in Autumn, so it gives Apple a far more steady growth curve rather than this see-saw pattern of big jump for Christmas and decline into the summer of the next year.

On India iPhone market share, we have just seen IDC give India market shares for top 5 smartphone brands in Q1 and the lowest had 4% (Nokia). The iPhone was not in the top 5 so the best iPhone can have in India is 'less than 4%' because if it had been essentially tied with Nokia, IDC would have reported that. So 3% is the best you can hope for, in India, with all the brilliant strategies of selling old phones cheaply etc, haha...

Ok, carry on debating, I'll go back to vacation haha..

Tomi Ahonen :-)

RottenApple

@LeeBase:

"BS - the 5C is the SAME strategy that has been successfully used by Apple since 2008. It IS last year's phone, only with a new plastic case in vibrant colors. It is priced like last year's phone has ALWAYS been priced. It is NOT Apple "finally doing what Tomi has suggested" - it is Apple doing what Apple has done since 2008 with the added twist of colorful plastic shells."

Yeah, sure. There's just one problem: Nobody wants to buy an iPhone for an Apple price that's just a cheap piece of junky plastic. If you want to sell an entry level phone, it needs to be priced accordingly. No surprise that it failed. It completely missed its audience. For those who would have been interested it was too expensive, for those who would have been willing to pay the price it was too cheap in appearence.

RottenApple

@Leebase:

"Samsung's top end phone is WORSE plastic and MORE expensive."

Says you, the Apple astroturfer. I didn't complain about it being plastic but about it being 'junky' plastic, i.e. it's just a hideous piece of hardware, having no advantage of a plastic cover over a metal case but at the same time all the disadvantage of the average metal case (most importantly, it cannot be opened.)

Pekka

iPhone 5c is in a wrong position in Apples lineup. It should be the cheapest iPhone. iPhone 4s feels more expensive than 5c. Lineup will be ok, after iPhone 6 is out and 4s is discontinued. The 5c has cheap case and it will open possibility to lower entry level price without losing margins. Electrical parts are going to be cheaper month after month (I think that most expensive part of the 4s is the case). Maybe we see 299€ as entry level price 2015 or so.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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