Apple December Quarter: Surprisingly Tame Results. Market share for year is flat or maybe slightly down

So we're into the earning season in the Smartphone Bloodbath, Year 3, Digital Jamboee. Apple released its numbers and the calendar Q4 as we measure here on this blog according to regular calendars, not fiscal quarters of individual companies, or in the Oct-Dec Quarter, Apple managed to sell only 47.8 million iPhones. Yes, compared to Q3 that is a huge jump as can be expected for any first full quarter of sales of the new iPhone model. The jump is 78%. But Q3 was meek for Apple, and now this Christmas Quarter is definitely underwhelming. I was obviously wrong in my expectation in the mid to high 50s.

What does 47.8 million get Apple in Q4. It gives a market share of about 21%. Those who are playing along at home, will see that the math suddenly doesn't work out - yes, with this far smaller Quarterly sales by the second largest smartphone maker, I have now reduced my target for total global Q4 smartphone sales, from 240 million to 230 million. (and my annual number target is also now down to 710 million). But Apple is, as we already knew long ago, safely set as the second largest smarpthone maker in Q4 and for the full year 2012, the gaps to number 1 (Samsung) and number 3 (Huawei) are far too big to be caught up in just 3 months.

Apple Q4 sold 47.8 million iPhones, up 78% from Q3. Apple's smartphone market share (prelim) is about 21% for Q4, up from 15% in Q3. Apple did this with huge profits so its all good in that sense. The only 'disappointment' here is against expectations. In Q4 of the year before, 2011, Apple's Q4 market share was 23%. So we are now seeing the plateauing (or perhaps even slight decline) in Apple's peak market success with its 'one iPhone model released only per year' strategy. Its about time to expand the product line and start to offer new models at differing points of the year too. Obviously for Apple to gain market share, it needs a lower-cost iPhone as I've been arguing on this blog now for more than two years.

For the full year, Apple ends 2012 selling 135.8 million iPhones, up 46% from 2011. Apple's full year market share in smartphones is about 19%, which is the same as in 2011. Currently using the 710 million annual smartphone sales number as my target, Apple's market share would be 19.1% which is exactly same as in 2011. The smaller the total market number is, obviously, the bigger Apple's market share would become. But where is the 'decline' threshold? Its at 713 million. If our panel of industry experts arrives at a global smartphone market size of 712 million or less, then Apple will have flat market share, but if they find 713 million or more, then the iPhone's market share will have fallen by at least one tenth of one percent, ie to 19.0%. And the other way, for Apple to salvage 'growth' in market share for year 2012, they need the total global smartphone market to be 709 million or less (at 709 million, Apple's market shar would be 19.2% and they could claim a growth in market share).

What more? We don't count iPads nor iPod Touch devices in the smartphone market share and Bloodbath, so don't bother to write about that. We know, we know that for developers they are often part of the same ecosystem but in terms of measuring market share, we stick to the standard definitions here on this blog. Smartphones only, not 'Asha' featurephones by Nokia and not media players or tablet PCs. If it fits in your pocket - and it can receive a signal to alarm you for incoming calls or messages - then its a phone, else its some other digital gadget.

I'll be doing the full market report when all the numbers are in, in early February. And before that we still have Samsung to report, and we hope to get data on several other players. I will keep you posted. But yeah, good quarter, Apple, great growth, profitable highly desirable iPhones once again, but that market share is now dangerously at 'peak iPhone' stage, about time to bring those cheaper iPhone Nano models alongside the flagship device. 

For those who need more info on the handset market, remember my TomiAhonen Phone Book 2012, 180 pages of stats, facts and charts, more data about smartphones and dumbphones and their operating systems, features, installed bases, market shares, regional markets, prices etc than you could shake a stick at... 

Comments

[Reinhard Haberfellner]

YOU are disappointing me here , Tomi , not Apple. Record sales, record turnover, record profit and you call that tame ? If that comes from a Wall street analyst , its ok , cause they only have $ in their eyes and brains. But you have been known for a wider view.
Of course iPod sales go down if all smarter phones are iPods more or less . But if thats covered with record sales in the other category , fine for me. How did iPod sales perform compared to other music players only ? That would be interesting and to judge here.
How long does it take for you and several others to understand that Apple NEVER had highest marketshare in volume as target , never wanted to sell MOST of phones , Pods, personal computers or whatever.
Business excellence for me is not to be market leader in terms of volumes , shareholder value or exceeding last quarters figures. Its much more of a fine balance to grow in the right manner , make better products in all senses and not only screen size or processor speed . And it adds more to development of usage ( highest data traffic is on 4S and 5 as you may recall recent studies ), growth of Applications and Services and " a better life" every day . I know thats not a category for Analysts , but for us , the people ;-)

[Huber]

@Reinhard:

First of all, I am sceptical about this data traffic measurements. When I surf the web with both my Android tablet and phone, I have set the user agent to 'Windows Desktop' using the Dolphin Browse (I could also set the USer Agent to iPhone or iPad if I wanted to).

So Does my traffic show up as Android traffic at all, then? Or does it show up as Desktop traffic in such statistics? If the latter is the case, I'd consider such statistics wothless.

Secondly, Apple has lowered its forecast for 2013, so I wouldn't say all is well in iOS-country.

But the main point is that Apple is about to lose its coolness-factor. The iPhone5 does not impress me at all.

I have never been an Apple fan, since iOS is too restricted for me functionality-wise.

But two years ago, when I had the original Samsung Galaxy Tab running Android 2.2, I always had to admit that iOS is the 'cooler' OS - it was butter-smooth and looked well, albeit feature-restricted.

But right now I'm using an SGS2 with an AOSP-Android 4.2 and an Asus TF Prime (Android 4.1, overclocked with Data2SD).

The iPhone5 does not look cooler anymore, my SGS2 runs as butter-smooth, if not even smoother, the UI looks better (OK, this is subjective) and has loads of features the iPhone is missing.

And the iPad4 has a higher resolution screen than my old TF Prime of course, but apart from this iOS looks outdated in comparison.

Of course I don't want an Android monopoly, so I hope Apple comes up with something competitive. But they should do this quickly, otherwise they will fall behind.

[cycnus]

Tomi,

1. Why would you lower Q4 total number from 240 to 230? The 10 million lost of sales from apple, could end up in Android.
2. Right now Apple not only need cheaper iphone (yes, they need to be cheaper, competition ruin market price), but the MOST important thing is Apple need to have several 'SIZE'. One size does not fit all.
3. I try to follow you on twitter, after a while, i think you need to try Google+. The 140 character of Twitter make me sick.

[Reinhard Haberfellner]

@ Huber If you just see iPhone 5 in pictures and blogs I agree with you , but I was really surprised when I got my hands on the 5 first time , its so much better than my 4S . And if we hear about next generation needing 20% of display power only , that sounds to me as something very interesting coming . iPad mini will get "retina " display within short , and from ecosystem still is much more interesting as other tablets . Lets see in mid term who is right about Apples future , I prefer a good complete evolution over "low cost units" and short time sensations.

[Huber]

@Reinhard: No, I held the iPhone5 in my hand and played around with it, too. I was quite underwhelmed, I'd still prefer even my good old SGS2.

[ej victor]

Tomi how do you feel the iMessage news is playing with carriers - 2 billion text messages taken away from carrier each day. Additionally do you think that the Verizon numbers showing how badly the iPhone has affected it's profitability will make other carriers push harder fro Apple alternatives?

[sve]

The smartphones-only focus of this blog will run into difficulties when pretty soon every mobile device with a cpu will be able to make a 3G/4G connection. Will the discussion widen to include all mobile devices or narrow to include just handheld screensize-defined devices?

[khim]

Apple is repeating the same mistake it did the first time around (with Mac): they think they can keep their margins and win. No, they can not.

@Baron95: That is tremendous pricing power, which shows that Apple is the only smartphone OEM that has true pricing power and does not resort to discounts to move units.

No, that means that Android is not yet "good enough". When Android will be "good enough" Apple's iPhone empire will suddenly collapse. It happened with Windows95 on PC market, I'm not sure when it'll happen in smartphone market, but I'll not be surprised if it'll be this year with Android 5.0 or next year with Android 6.0.

@Baron95: There is absolutely NO INDICATION that Apple's ecosystems is suffering (e.g. lack of music tracks on iTunes or lack of apps in the App Store) due to flat or even decreasing market share. When that happens, than it may be time to consider a cheaper iPhone.

When that's happen Apple will need the ability to jump to some other market because iPhone sales will either go sharply down or profits from iPhone sales will go sharply down. Without some new "revolutionary" gadget (iTV? iCar? whatever) the only thing Apple will need will be tombstone.

[wertigon]

The problem with Apple, the way I see it, is that their entire strategy and business model is the same as always - Take away the complicated, make a few high-quality number of phones, and add profit margins up the wazoo.

Seen from a consumer perspective, this model has merit. I'd be quite happy to pay a premium for the easy alternative. My time is valuable. Apple makes the promise of saving me time, but only if I'm willing to pay for it. They make the promise of taking care of everything - truly *everything* - related to my phone, and I don't have to worry about anything.

The advantages to this model are nice, but it comes with a few drawbacks such as vendor lock in, high prices and vendor inflexibility. See, Apple can't "make it simple" without sacrificing flexibility. They can only do one 100% quality-proofed iPhone a year. Making two would mean two 90% quality-proofed iPhones a year, and Apples business model does not allow them to make things with less quality. It's 100% or nothing.

That's why their customers love them. But that's also what makes them so vulnerable. Android gets 3-4 90% quality-proofed phones each year, and most people find that for their needs, that's good enough. Over time, more and more will choose Android over iPhone, pushing Apple to the place they were in the nineties with their Mac. And then they have to get the next big thing - Their new iPod, if you will.

I sure hope before that happens, that a third ecosystem (preferrably Tizen or other Meego-derivative) establishes itself - else Android will be as hated as Windows is today.

[chamonix transfers]

The set up is hot tubs and more fast, easy, and affordable. Many people love relaxing and rejuvenating hot tubs and more feeling of a hot tub might surprise you, but you'll certainly feel better after a session in one.

[Garcinia Cambogia 1300 Tm]

Hi, i read your blog occasionally and i own a similar one and i was just curious if you get a lot of spam responses? If so how do you stop it, any plugin or anything you can advise? I get so much lately it's driving me insane so any support is very much appreciated.

[Eugene Party Bus]

I savor, cause I found just what I used to be taking a look for. You have ended my four day lengthy hunt! God Bless you man. Have a nice day. Bye

[Stylish Evening Dresses Are The Most Apt Attire]

Hi! This is kind of off topic but I need some guidance from an established blog. Is it very hard to set up your own blog? I'm not very techincal but I can figure things out pretty fast. I'm thinking about making my own but I'm not sure where to start. Do you have any tips or suggestions? Cheers

[Loker Akuntan Jakarta]

I visit daily a few blogs and blogs to read posts, however this weblog gives feature based writing.

[sablon manual di jakarta]

Thanks for sharing your thoughts on business. Regards