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« Smartphone Stats: Full Year 2017 Top 10, OS Installed Base and Everything Else You Ever Wanted | Main | The Helsinki Hostage Summit, Putin’s Puppet Trump, and my Working Theory of How the White House was Sold (and joke songs at end) »

May 23, 2018

Comments

Per "wertigon" Ekström

@Jim:

Latest iPhone that truly grew iPhone market share in any meaningful manner was the iPhone 6. So yes, in terms of market share the iPhone hasn't had a significant hit phone for several years.

Now, selling around the ballpark of 70M-100M units for a single phone every year at record breaking profits *is* impressive. But the writing is already on the wall. The world has chosen Android and nothing you or I do will change that. By current strategies iPhone must release an iPhone 6 hit phone every single year, and it has yet to reach the same height in units as it did during that year.

This year seems to be a slight market share growth, but next year will again lead to decline. Apple will not recover with current focus on profits and a couple of models every year. Android is simply innovating too fast for iPhone to catch up at this stage. iPhone will slowly wither away as Android overtakes it, one feature at a time.

Now is this fair? Nope. But the world doesn't care what is fair, it cares what works. And the iPhone strategy is simply not sustainable. End of story.

Jim Glue

That's 200-230M annual unit sales and 600M or so installed base. ASP 3 times the competition and has gone UP since the 6. Meanwhile Android, the obvious winner, doesn't have a single manufacturer that's doing well. After all these years, the Chinese have STILL not taken Europe or the US by storm. Xiaomi publicly admits they don't even try to make money selling their Android phones. Lenovo/Motorola and HTC have been losing money selling Android for years now. Sony loses money more often than they make it.

And poor Samsung - every bad thing that was supposed to be happening to Apple is actually happening to Samsung. Samsung is getting hammered in the two fastest growing and largest markets in the world (well, India WILL be the second largest eventually). Samsung's unassailable position as #1 is clearly no longer "unassailable".

Huawei's US launch was scrubbed. BBK is doing nothing of note outside of it's home country and a few third world countries.

Meanwhile, as the Chinese scrabble to play king of the no-profit-poor-country hill...Apple owns the enterprise. Blackberry owning the enterprise used to be a big deal and a sign of health and pride....but Apple is selling far more into the enterprise than Blackberry ever did, and that's the SMALLER part of Apple's business...dwarfed by Apple's consumer customers. And it's supposed to be bad for Apple that "Android" owns everywhere Apple doesn't even TRY? (And only where Apple doesn't try).

The iPhone 6 wasn't the huge success either. Not in the long term "Android vs iOS" battle. Yes, Apple had 40% unit sales gains and gained share. But, as we found out the following year....the majority of those sales were merely pulled forward from the 6s. So the market share gained with the 6 was given back with the 6s....actual significant decline in unit sales let alone market share. But the 7 and 8/X brought slow growth (unit sales) back.

What did we learn? Samsung (really, Dell) was right about the desirability of larger screen sizes. We also learned that having those large screen sizes years before the iPhone did NOT lead to a defection of iOS users to Android. They merely waited for a large screen iPhone.

Winter

@Jim Glue
"Meanwhile Android, the obvious winner, doesn't have a single manufacturer that's doing well."

But Android is doing well. This is the same discussion as about Microsoft and Windows. Making computers is a hair-thin margin business. Still, no one would say that Microsoft, or Windows, is doing badly.

Google is raking in money, just as Apple is. Those who make the hardware are doing much less well. And it does not matter whether the hardware is iPhone or some Android phone.

Per "wertigon" Ekström

@Jim:

Doesn't matter if Samsung is doing worse than Apple. Because let's face it, where would they go to as an alternative?

This story would be a whole lot different if Apple used Android. You can be a niche player in a larger ecosystem just fine.

But Apple is not a niche player in a larger ecosystem. They are a niche ecosystem in a larger market. That is different.

Now, Apple is not in any immediate danger, they will slowly bleed out over a period of years, perhaps decades. But their boat is slowly taking in more water, the ship is leaking, and the leak slowly increases. There will come a time when enough water will make the pumps hold - but for now, no problem.

Tester

@PWE:

"Latest iPhone that truly grew iPhone market share in any meaningful manner was the iPhone 6. So yes, in terms of market share the iPhone hasn't had a significant hit phone for several years.
...
By current strategies iPhone must release an iPhone 6 hit phone every single year, and it has yet to reach the same height in units as it did during that year."

Good point. Which begs the question: How would Apple have fared without the iPhone X? Unlike the iPhone 6, this one has just managed to keep Apple's market share the same as it was last year. It should be clear that this well of magical market growth has dried up by now - and the smartphone form factor really does not allow that many innovations anymore.
So ultimately it is too early to decide if Apple's numbers signify something good or bad. For that we will need a bit of time with no radical redesign that may cause some users to upgrade without need.

Tester

@PWE:

"Now, Apple is not in any immediate danger, they will slowly bleed out over a period of years, perhaps decades. But their boat is slowly taking in more water, the ship is leaking, and the leak slowly increases. There will come a time when enough water will make the pumps hold - but for now, no problem."

The nasty thing about these developments is that you hardly notice them when they happen but normally only when the damage is done.

On Mac we already can see it. Apple slowly but steadily dropped performant graphics hardware from their roster. Most modern Macs run on Intel's integrated solutions which are simply not good enough anymore for high performance graphics applications like VR. So now we will see a steady erosion of high quality software in that market segment and a few years down the line Macs may just lose one of their core user groups that formerly defined the platform.

John A

It seems like its over for Andy Rubins Essential Phone. It will not be a second generation of it. I guess it show how hard it is to break in to the smartphone business. What will be the next brand that will be gone?

ProductionsPig

@John A...

Htc-Falling off the smartphone cliff ala Motorola, Palm, Blackberry.

Jim Glue

Hi PWE,

Apple's decline hasn't even started yet. It's still growing. All of it's product lines (save the iPod) are still growing. The install base is still growing. Apple continues to have pricing power - not diminished in ANY way.

Apple's market share "rate of decline" has greatly decreased. Why? Nothing to do with Apple, but Android's growth rate has all but come to a stop. Android isn't taking ANY of Apple's customers (or fewer than it loses to iOS)...and there are no more Blackberry and Windows Mobile customers to scoop up. And the feature phone business is stubbornly hanging in there. Nothing at all about Apple.

What we have are two mostly independent ecosystems. Even Apple's iPhone 6 year turned out to have been NOTHING about Android. It had everything with Apple finally getting around to introducing a larger screen phone. And who did that phone sell to? Apple's customer base. How do we know? Because of the reduction in sales of the 6s and the resumption of growth with the 7. Small growth.

Meanwhile, with the iPhone X and services Apple proves that it can grow revenue and profits independently of significant unit sales growth. Nobody else can do that.

Also meanwhile, the Chinese are destroying the value of the Android manufacturing business. All that was predicted for Apple is happening to Samsung. But the Chinese aren't earning Samsung's profits. They are removing profit from the manufacturing ecosystem and doing so AT A LOSS.

"But Android is ok". Sure it is. For now. But if nobody is making money, the innovation pace WILL slow down. Consider the fate of the Android watch. The reason nothing has been happening for the last couple years is that Qualcom hasn't put out a new watch chip. Nobody else has either. What incentive is there when so few sales were happening?

What happens when the Chinese stop throwing money into pit in order to buy up market share and run the Japanese and Koreans out of the phone manufacturing business? Will they still fund the development of CUTTING EDGE Qualcomm chips "just because"?

So, yes, Android is certain to exist. But there is a credible threat to Android phones NOT being able to keep up with iPhones in technology.

Winter

@Jim Glue
" For now. But if nobody is making money, the innovation pace WILL slow down."

Google is making lots of money. And it is Google that drives the innovation in Android. Just as it is Apple that drives the innovation in iPhone, with the companies that make the hardware living on very thin margins in both cases.

Jim Glue

Google only develops one piece of the Android smartphone. Google has been helpless in advancing their smartwatch platform as Qualcomm stopped advancing the chips.

But yes, Google's ad billions ensure that Android software development will continue. It APPEARS that Google will be following the Apple formula and getting more into hardware. How long that will take and how good they will be at it -- time will tell. That Google feels the need to do this rather than supporting their hardware partners aught to help you understand how vulnerable Google feels to the sorry state of the Android manufacturing business.

Keep in mind that the vast majority of Androids sold are really cheap phones. They aren't rocking cutting edge tech. Consider the different fate of the Samsung pencil, the Essential 360 Camera, and the iPhone 3D facial recognition system.

The Essential company invested a hundred million or so bringing out it's first phone with unique cutting edge technology. They did not sell enough phones to spread that cost around, and are now out of the phone business. NOBODY made any 3rd party peripherals that used the Essential phone connector because there weren't sales to justify the investment.

Samsung is selling enough Galaxy Notes to make it worth it to Samsung to develop the pencil AND build pencil support into Android and a few Samsung apps that take advantage of the Pencil. Is Pencil support built into Android? No. Is any other company shipping a pencil? No. Is anybody else modifying their software to take advantage of Samsung's pencil? No (well, I haven't heard of any). Will Samsung continue to develop new, innovative and expensive to develop technologies like the pencil if the Galaxy S/Note series continues to plummet in sales? Maybe - Samsung, like Google, makes money in other ways and can subsidize what they do. For a time.

Apple can build all of the technology behind the 3D face mapping camera. Apple can modify the operating system to take advantage of the 3D face mapping camera. Apple can develop 1st party apps that use the tech. Apple can be assured that MANY third party developers will write support for 3D face mapping cameras into their own apps.

Why? Because Apple knows for sure that some 100-150 Million iPhones with a 3D face mapping camera will be sold. Apple's ecosystem of partners knows this as well. Apple can charge enough for their technology to make it worthwhile to continue to pour billions into innovation.

Google with Android, can't. And the direction they are currently on is getting worse and worse.

Per "wertigon" Ekström

@Jim:

Android is to Mobile as Windows is to PCs, Linux to supercomputers, VHS is to casettes, SMTP is to email and Blu-ray is to current-gen optical media.

Meanwhile, iOS is to Mobile as Macs are to PCs, Windows is to supercomputers, Betamax is to casettes, FIDOMail is to email and HD-DVD is to current-gen optical media. A losing platform.

Furthermore, Android is not tied to one manufacturer or company (as evident with AOSP). Premium smartphones are nice, but not the bread and butter for most manufacturers.

It doesn't matter Android is not profitable. There are no other OSes available that are even close to as advanced to mobile phone makers - except perhaps Sailfish, whom does not have the market share or ecosystem to be a realistic alternative.

Compatibility is the key word here, and since Android offers (more or less) compatibility with 86% of all phones, and iOS with it's other 14% is off limits to everyone except Apple, Android is what will be developed upon, again and again - until such a time a premium phone better than the iPhone is released. It is inevitable.

Pasi

@PWE
”Apple is not in any immediate danger, they will slowly bleed out over a period of years, perhaps decades.”

“Perhaps decades”?
Pray tell, what companies have ever been successful for decades in any IT sector?
Microsoft with its monopoly position had been doing “fine” for less than 3 decades when they had to reinvent themselves or be put to oblivion.
It took even less time for IBM.

Wayneborean

And once again we see the Apple IOS phones vs Android phones argument break out. Oh, joy.

I’m glad Nokia has grown. It is possible that Nokia will become the only Android phone maker to be really profitable. Growth from nothing to over 1% of the market is really impressive, especially in a ‘down’ year.

Abdul Muis

@Jim

About Samsung decline.
Actually that's good for android. In the survival of the fittest, if Samsung can't adapt, they should decline/die. Otherwise the rate of innovation will be disrupted.

About the Chinese making no money
That's true. The Chinese don't want money. They want to donate their resource to us. So I think we should enjoy it while we can....

About Apple decline.... (@Tester answer)
I agree with @Tester. This year "gain" is because Apple have 3 new product instead of 2 new product. Apple change the strategy, thus the super cycle. As @Tester said Apple manage flat with this super cycle. This mean that Apple need another super cycle in 2018. The good news for Apple fans is Apple understand this, and rumors say that next iPhone is not puny 4.7" and 5.5", but comparable in size to the current trend. The bad news for Apple is Qualcomm up the ante, the $200 device from Xiaomi (Redmi Note 5), Asus (Asus Zenfone 5) & Nokia (Nokia X) is **BETTER** in speed/storage than the iPhone 7 plus and lots cheaper.

About Apple profit going up, not on decline...
Seeing those poor Chinese company can donate their money to us, shouldn't apple do the same??

About the future (@Tester answer)
Mostly I agree with @Tester said. (1) Apple is NOT in immediate danger as in bankrupt. **BUT** wrong strategy can make Apple brand become *LESS* premium, thus will impact the future sales of iPhone. (2) By the time Apple realize their not 'in' just like BB, it will be harder to gain back marketshare.

John A

For Apple I think they got a lot of options. Look at their tablets, they was able to make a relativly "cheap" iPad with pen support for schools and normal customers that are not interested in a iPad Pro and so on. If their marketshare in phones will shrink even more I suppose they can do a similar move in the smartphone market,a sort of low priced iPhone but with good specs.
(maybe we will see something in the upcoming Apple event in that direction?)

So I think they will do alright even in the long run. They will never be dominant as android but I think they are ok with a smaller marketshare around 15 %. In any event they got a huge pile of money to survive and change directions in strategy if necessary.


Samsung will probably be dominant in the android space especially in the US market in same way as before. But who knows how it will go in India and Europe? Xiaomi and other Chinese players going forward fast. So that will be a interesting area to follow.

Murphy

Hi Abdul,
I thought I would reply to this prescient post of yours... in the most current thread.

"I think tomi is bussy preparing the 'I told you' article for may 1st apple."
Posted by: Abdul Muis | April 27, 2018 at 06:16 PM

Its a crying shame that there isn't a DELETE option to remove one's most embarrassing posts.

Abdul Muis

@Jim.... ops I mean @Murphy

At least I don't have to pretend to be someone to post some comment.

ProductionsPig

https://orangepigproductions.wordpress.com/2018/05/19/zte-is-essentially-a-corpse-whom-will-be-the-vultures-picking-clean-its-assets-aka-potential-suitors-who-could-possibly-take-over-zte-inspired-by-the-t-dawg-tomi-ahonen/

By the Way here's my thoughts on the current ZTE Saga. Inspired by the guy himself.

BennyDover

”This year seems to be a slight market share growth, but next year will again lead to decline. Apple will not recover with current focus on profits and a couple of models every year. Android is simply innovating too fast for iPhone to catch up at this stage. iPhone will slowly wither away as Android overtakes it, one feature at a time.

Now is this fair? Nope. But the world doesn't care what is fair, it cares what works. And the iPhone strategy is simply not sustainable. End of story.”

Overal market falls. Apple manages to increase the units sold, increase the average selling price ie more revenue and more profit and you come to a conclusion that IPhone strategy is failing? You are insane. Apple can do all of this when market goes down. Imagine what they can do when the market goes up again. Apple is a power house and they have just started.

What comes to innovation. Android isn`t innovating anything it is the Apple who pushes the boundaries like the new 7 nm Apple A12 processor will crush the competion again like processors before it. iPhone X is a success and the new line of iPhones will yet again leave the competition behind. Apple is also winning the other market that is the second hand market. I have been suprised how vibrant market there is for used iPhones and how resiliant the prices are. Now there are shops that do not sell new phones just old iPhones. (You can get iPhone 6S 16GB for 249 euros with one years warranty. add 25 euros and you get an insurance if the phone is stolen or you brake it.)

So Apple increases it’s market share and more importantly it’s installed base. The strategy is working very well plus they make money while executing it The Plan.

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