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« Some Smartphone Snippets: Nokia Q4, HP is Back, Tizen Delayed Again (Updates with Nokia Lumia ASP etc) | Main | Google Sells Motorola Unit to Lenovo - I told you this would happen... »

January 27, 2014



Hi Tomi

how do you think Apple deal with China Mobile affect its overall market share?



Tomi, when the market has gotten so massive, 10% can be a "mass market" player. BMW is a mass market player even though they'll never sell as many units as Ford or GM. Apple was never going to dominate smartphones like they did iPods, but that's because the markets are different.

As for the 5c not being cheap enough, actually, if you listen to the analyst call, you'll hear from Tim Cook that they underestimated demand for the 5s while overestmating demand for the 5c at their existing prices. They will never sell the 5c for the prices you suggest, since that isn't their business model. But they probably lost some iPhone 5s sales from not having the right product mix (that seems to have happened in North America in particular). So it's entirely possible that trying to take your advice and go "lower end" actually is what led Apple to miss the analyst's shipment estimates.


@Tomi, you also forget that Apple has some cards to play at the high end. If they release a 5" phone or even a 5.5" phone as is the rumor, then they'll get back some of what they are losing to the S4 or Note, though note that the S4 sales were a lot worse than expected, and cratered a lot more quickly than the S3.

Even though you violated your own rule by talking about Samsung's profits, I don't buy their explanation about "one-time bonuses" explaining away their miss. The unit shipment growth is at the bottom, but even Samsung seems to be shying away from it, preferring mid-market growth. Anyway, Samsung's 10-year deal with Google pretty much ends speculation about Tizen. They are all in with Android. They realize that despite their market share, they are fairly powerless to alter their relationship with Google.

As for apps, note that despite the sales disparity, app revenues are pretty close to parity between the two platforms, so there's nothing delusional about Apple's representations to its app developers. The paid app market is very much a 50/50 game, and likely to remain close to that.


Google's cross-license deal with Samsung seems decidedly lopsided in Google's favor, and mostly defensive in light of the adverse court decisions in some influential markets. Nothing in the cross-licensing deal prevents Google from licensing whatever they want to whomever they want. In fact, Samsung gets no ownership rights at all. Just the right to use.

Let's stipulate that Tomi's right that Apple will settle into a single-digit to 10% luxury market share position, dominated by large shares in wealthy countries like Japan and the US. I think the players to watch are the Chinese companies like Xiaomi and Huawei, along with Lenovo. The Chinese companies to date have mostly used forked versions of Android. Google might make a play for them, particularly if they attempt to attack Samsung's positions higher up the food chain. So, it's not unrealistic to see a scenario with Samsung at a much-reduced 30-40% share, Apple around 10%, and two or three Chinese manufacturers with much of the rest.

So Vatar

Strategy Analytics pegs Samsung smartphone sales at (only) 86 Mio for Q4-13. Based on that they have about 30% market share. Apple's 51 Mio would be 17.6%. This means that Strategy Analytics sees total smartphones sold Q4 at 290 Mio. units, which is a way lower number than the one Tomy uses.

Nokia's 8.2 Mio is not even 3% market share. Is anyone else selling Windows Phones in any significant numbers? I do not think so. WP and Nokia are therefore irrelevant, no other way to describe it.

As Tomi I am also waiting for better consolidated numbers, but the trend is clear: Android wins with its sheer momentum, Apple wins because it can maintain high profits despite of losing market share. The rest (including WP) is irrelevant.


If Apple's concerned about market share, they'll ignore Tomi's advice and deprecate the 5c, and possibly drop it entirely when the iPhone 6 comes out. Here's a nugget from the analyst call: Tim Cook: "It took us some time in order to build the mix that customers were demanding. As a result, we lost some units for part of the quarter in North America."

IOW, "We had too many iPhone 5Cs and not enough iPhone 5S in the US, and lost some sales in October and November until we finally caught up with demand." Could they have lost 4 million iPhone 5s sales? It's probably a stretch, but certainly 1-2 million could have opted for another non-Apple device or decided to wait for the iPhone 6.

My guess is that they'll release two iPhone 6 devices with different sized screens as rumored. They'll both have the A8 processor, just like both new iPads this year had the A7. So we might have the "iPhone 6 Air" at $650, "iPhone 6 mini" and the carryover iPhone 5s. Whether/where the 5c fits in depends on their pricing strategy. If the iPhone 6 mini is $650, they'll price the 5s at $550 and keep the 5c at $450. However, they might price the 6 mini at $600, 5s at $500, if they decide to eschew market share retention and embrace being a luxury player. They could also adopt that pricing scheme and include the 5c in the mix at $400 if they wnant to preserve market share. I'm using US prices for ease of reference (I know even unsubsidized prices are higher in China). Or they might just drop the 5c and price the 6 mini at $550 and 5s at $450, but I doubt it since they do care about what Tomi doesn't want to talk about.

So Vatar

There is no question that Apple is not too concerned about market share. Apple has shown that cornering a desirable segment of a market can generate more than enough cash.

Market share considerations are not that relevant as long as certain feed back loops are still working, like do they have enough users so that developers bring their most interesting technologies to the platform first, is there enough cash generated so that enough investments can be done to stay on top of technology, is there enough cash to pay for sufficient marketing, etc, etc.

Apple at 10% market share will most likely still make sufficient money to maintain these feedback loops. Somewhere below that it will be hard even for Apple to defend their position.

Contrast that with Windows Phone. Most phones sold are low margin or no margin phones Even if Windows Phone will reach more than 10% market share (which I have a hard time to believe that this will ever happen) it will not be enough to generate sufficient cash.


"that long-standing myth that Apple can be a mass market platform should slowly die"

LOL - that is the laugh of the day for sure.

So Apple has record shipments of both the iPhone and iPad. Over 50M iPhones shipped for the first time ever, and over 25M iPads shipped for the first time ever. And Apple is dead as a mass market platform?


Apple has only 4% of the PC market, yet, unit sales of the Mac grew 19% YoY, on an overall PC market decline. It is likely that Apple's share of the PC market went up by 25% or so, from 4% to 5%.

If Apple can be a mass market platform on the PC market, with only 4% share for Mac OS, having no shortage of developer support, clearly it can be a mass market platform in mobile computing with iOS having a 25% market share and even if you insist on only counting phones having a 15% market share.

2/3 of Apple's sales are now outside of the US. Fastest growing iPhone regions were Latin America 76% growth and Central/Easter Europe with 115% growth.

ASP for iPhone of $637. Cook mentioned on the call that they underestimated iPhone 5S demand, and are attempting to correct - so users continue to seek the highest price, latest iPhone.

Again, record unit shipments of both iPhone, iPad, Mac. Highest quarterly sales of any technology company in history.

Yep. Sounds like their days are numbered all right. :)


How many carriers who vowed never to cave to the iPhone, or resisted, are now offering the iPhone with subsidies and minimum volume commitments - aka caved?

DoCoMo - Now 73% of phones sold on DoCoMo are iPhones.

China Mobile - Cook just reported record activations in China - CM predicts it will expand from 16 to 300 cities selling the iPhone by year end.

Reliance in India.

Vimpelcom, Megfon in Russia just announced today

And, the biggest event of all, the large screen iPhones arriving in September to crash Samsung's large screen party.

Calendar 1Q/2014 will be tough for Apple - they still have unfilled demand for 5S and too many 5Cs in channel. But from cal Q2 and on, should me a massive crescendo for Apple.

And Windows, of course.

Tomi, remember Kantar, your once favorite source? They just reported that Windows is #2 ecosystem in Latin America and Italy, Has 10.3% share in Europe Top 5 Economies, and nearly double US share from 2.6 to 4.3% in the last quarter.

Care to comment on Windows? :)


@KPOM Not only did Samsung settle with Google, they also had to fork over $3/4 billion to settle with Ericsson, and of course have a $1B+ judgement against them for Apple.

Samsung is going totally defensive. They have no more cards (like giant screens) to play. They will be attacked by Apple from the top when Apple launches the big screen iPhone and has more distribution channels, and from the bottom by Chinese Android OEMs branching out.

Nasty, Nasty, place for Samsung to be. Though, they are a formidable competitor and will do well for the near future.


Also Apple just booked $4.3B in iTunes/AppStore net revenues (just the part that Apple keeps, not including the part that they pay to app developers and music labels). That means overall iCloud/iTunes gross revenues are likely over $15B.

That alone makes it a huge companion business to iPhone/iPad/Mac that no other OEM has.

1M apps, over 500K iPad-specific apps. That is a huge content mass-market. #1. Absolutely #1. Amazon is probably a distant #2, followed by Google.

Mao Franklin


With the rise of the other android manufacture such as the china and india, when it starting to stall samsung growth?


I don't think the "APPLE STILL HAVE SOMETHING ON THEIR SLEVE" theory is real, even though apple suddenly change it's policy from IT CAN BE OPERATED BY ONE HAND into 4.7" - 5" it won't help their sales. It's not the "Apple brand", but it's the android/samsung experience that apple is fighting. Apps doesn't really scale on small to large screen, the android developer create several layout version for their apps that were optimized for certain screen size / dpi (called FRAGMENT). If apple release phablet and it doesn't sell well, it would eat their brand image, and they will got a FAILURE stamp on their brand!!

Google-Samsung deal is a WIN-WIN deal. It doesn't help only google nor only samsung, but it gave both company the same strategic advantage. This is unlike microsoft deal with some company that would ONLY benefit microsoft at the end.

I don't know if you notice that TIM COOK is not a good leader at all. He's focusing too much on production cost, and CUT COST LEFT AND RIGHT. iphone 5c sensor problem is one of them, that mr. cook opted to buy from cheaper manufacture that bring problem. Apple HQ is another example, Jobs choose quality material, but Cook try to cut cost and change to some cheap material. I think tim cook understand with current competition from android manufacture, that they can't go on forever charging too much, but unfortunately he took the wrong approach by reducing the quality instead of reducing their profit by lowering price or introducing the cheaper variant.


Mac is NOT growing. the Q4 2013 Mac market share is shrinking along with PC market share. Google chromebook manage to get 5x more market share than Machintos. From ALMOST ZERO market share in 2012 to 5x more than machintos.

App developer in Apple SEEMS to have MORE revenue in apple, but in reality with in-app-purchase and advertisement, Android already bringing more revenue than apple by lots of margin. This is the reason that in 2013 several big apps (game) were released for android first, apple second, and this trend can't be reversed. By 2015 apple don't have any luxury on what you say anymore.

Mao Franklin

Apple is now a sideline in history, and will become footnote

Android Dominated Apple At CES

About 150,000 people attended the Consumer Electronics Show in Las Vegas this year, about 5,000 of whom were tech journalists.

Yet everywhere you went, people were using large-format Android phones instead of Apple’s iPhones, which are generally smaller.

There is an assumption that most tech bloggers are Apple fanboys and girls. Yet when I got in line to see the big Samsung keynote address on Day 1 of the show, the crew from one of Business Insider’s more annoying rival publications were all using Android.

I must have seen thousands of people (not just bloggers) using their phones at CES this year — and I felt alone as I tapped away on my little iPhone 5.

Of course, there is a huge bias in my anecdotal, straw-poll impression. Samsung dominated the show this year, and the company had flown in hundreds of its employees for the conference.


This is not a good sign for Apple.

CES attracts the earliest of early adopters, as well as execs who have to make decisions about which mobile platforms they need to get into bed with. Most of the business is transactional — exhibitors are there to sign up new customers. It’s also an intense business environment: CES is huge, and using a laptop or desktop there is often impossible. So the fact that many attendees appeared to be using Android devices — or at least non-iPhone devices — for mobile communications at CES ought to worry Apple.

The size difference between iPhone and Galaxy was also acute: My tiny iPhone looked like a dumbphone next to Samsung’s Galaxy and Note devices.

It turns out that using a large Android has a distinct business advantage: Business users need to write lots of emails and texts. Doing so on a large Android screen is easier than on Apple's small screens. Call it the revenge of BlackBerry: One of the reasons BlackBerry still has customers is that it's easier to type on a machine built for typing, like a BlackBerry with a keyboard. And while Apple changed forever what people want from their phones with its large touchscreen, the Apple screen is still not large enough to do a lot of typing.

(iPhone users: Just think of how many times you have accidentally made a "wrong" move on Candy Crush Saga because your "fat" fingers pushed a game piece the incorrect way. Those errors, like typos, don't happen on large-screen Androids as often.)


Now, on top of that, note that Android — because it is a Google platform — handles Google apps better. Gmail and Google Calendar are seamlessly integrated on Androids.

At CES I had a hectic schedule that required Ninja-level calendar skills. Yet I felt my iPhone was conspiring against me because I had the temerity to use Google's calendar app instead of Apple's. Repeatedly, my iPhone asked me to sign back in to Google Calendar with a code sent in a text message to prove who I was. Apple hates cookies (the web tracking software that remembers who you are). And the iPhone's iOS system doesn't support cookies. So Google apps that depend on cookies are constantly "forgetting" who you are on an iPhone, triggering those annoying texts.

But no worries, right? iPhone's camera is superior as everyone knows.

CES is a good test of cameras. It is huge, so it tests distance. It is indoors; so it tests low-light conditions. And it is full of people rushing around; so it tests shutter speed and retina sensitivity. I thought, because I was using an iPhone 5, that I had a superior phone camera.

And then I got to the Samsung booth, where I was able to take a few shots with the new Galaxy Note phablet. They were better in indoor, low-light conditions than my iPhone's pics.

Not a good sign, if you're Apple CEO Tim Cook.


Mao Franklin

U.S. Tablet Sales Led by iPad in 2013 as Chromebooks Overtake MacBooks

Among "commercial channel" sales to distributors for corporate, government, and business customers, the iPad held the biggest share of sales for any tablet in the U.S. during 2013, while sales of Google Chromebooks made up a bigger percentage of the laptop market compared to Mac notebooks, according to a new report from The NPD Group.

(image here:

The data in the report showed that the iPad accounted for 15.8% of personal computing device sales in the channel, which was greater than that of Android tablets at 8.7% and Windows tablets at 2.2%. However, the iPad's share of unit sales in the U.S. this year is down from the year-ago period, where it made up for 17.1% of sales. Sales of both Android tablets and Windows tablets grew by 4.5% and 1.4%, respectively.

Meanwhile, sales of Chromebooks in the United States grew to 9.6% in 2013, surpassing the 1.8% share of unit sales held by Apple notebooks. Windows notebooks still held on to 34.1% of the market, but was down 8.8% from the 42.9% share it held last year.

The news follows a broader report from October stating that Mac sales were down 7% year-over-year for the full September quarter, as the decline of traditional PC sales as a whole is likely due in part to the rising popularity of tablets.

Both the iPad and the MacBook line of notebooks saw refreshes this year, as Apple announced the iPad Air and iPad mini with Retina Display along with updated models of the 13-inch and 15-inch Retina MacBook Pro at its October event. New versions of the 11-inch and 13-inch MacBook Air were also announced at Apple's WWDC keynote this past June, and featured enhanced performance with significantly improved battery life.

Apple could also be gearing up to release new types of both products in 2014. Rumors of a larger-size iPad for release in 2014 have surfaced occasionally throughout the past few months, and a report in October from KGI Securities analyst Ming-Chi Kuo stated that Apple may be planning to release a 12-inch MacBook with an all-new design in the middle of 2014.


Tomi's alarmist tone make one wonder what he was expecting. If Apple had hit the consensus of 55-57 million units that still would have represented a significant drop in "smartphone market share" as the smartphone market grows down. Apple will not make a $300 smartphone or a $150 smartphone, and there is no use saying they should do so just to preserve or expand market share. That is not their business model, and they never said it was. Even Samsung is focusing on higher ends of the market. It no more sense to refer to the "smartphone market" any more than it does to compare a high-end steakhouse chain to McDonalds even if McDonalds also operates a chain of high-end steakhouses. There are at least 3 smartphone markets (low-end, mid-range, and premium), and possibly more. Yes, worry that the premium smartphone market is slowing, as evidenced by the slowing growth of both Apple and Samsung in that market. But in that market, Apple has about a 55% share to Samsung's 40%, with others fighting over the scraps. In the other markets, Apple has a 0% share, but there are different competitors and different risks to Samsung. The premium and to a lesser extent mid-range markets drive app and content revenue. The low-end market not so much. They are three different markets served by a different mix of companies.

So Vatar

Just to be clear, I do not see Apple in any immediate trouble. Their profit is impressive, the amount of cash reserves they have is unprecedented.

However, apparently the expectations were so high that lower iPhone sales and lower guidance spooked the market and Apple shares sold off 8% after hours. Maybe this sell off won't be confirmed tomorrow in regular market, we will see.

There are some developments that will be challenging for Apple in the future. Here in the U.S. for the first time there is some movement away from overpriced dataplans which allow highly subsidized phones. We need to see if this becomes a trend, because consumers, carriers and manufacturers are currently addicted to the subsidies. Once more consumers figure out that they can get the essentially identical service for less money by using alternatives to Verizon and AT&T the subsidy model in the U.S. is in jeopardy. AT&T recently said something that points in that direction. I see more of my coworkers and friends make the switch from AT&T to t-mobile or even one step further to one of the resellers like Airvoice etc. Unlocked phones - like the Nexus 5 - are suddenly much more desirable for $350 than an iPhone for $650. Especially when real world performance is practically similar.

Still, the U.S. is an Apple strong hold, and maybe other regions are too. In Europe overall the subsidy model is different and does not hide the real cost of handsets as much as they do in the US, so the iPhone share is lower than in the US.

China will be interesting, as a high percentage of consumers are not be able to afford an iPhone at current prices. Still as the number of consumers is so high even a smaller market share means Millions of sold iPhones.

If the U.S. molded subsidy model goes away, the real prize of a smart phone will become more transparent to the consumer. And many will get the more cost effective alternative, leaving Apple the luxury goods niche. Can be very profitable, but is highly limited market share wise.

Or Apple starts to get their cash reserves to work and comes up with a new and different strategy. Don't underestimate the resources they have to their disposal.

Robert Berto

Kantar also said that Apple going down in Europe by wide margin.


In smartphones Apple's marketshare is going to be flat or lower in to the future. Reason is simple, most of the people who are going to buy high price phone are already bought smartphone. Smartphone market size is growing fast, because people who are buying mid or low price phones are swiching from featurephones to smartphones. Most of these people do not even consider a new iPhone. If the will buy iPhone, it will be used one.

iPhones are in use much longer time than others. iPhone 4 bought in 2010 stilla has the latest software and thus is still a very modern phone. All the other smartphones from 2010 have dated software and are already or are going soo to be in a garbage bin.

iPhone 5c was a big mistake. It is not a premium phone like 5s or 4s are. It feels cheap. Apple do not make plastic macs, it shoud not make plastic iPhones.


Apple has always targeted high-end and most likely will continue to do this also in the future. Thus is it expected that marker share will decline but at some stage mature to a certain level such as 10%. Are they the biggest? No. Do they still have enough volume to be a "mass player": Yes.

We also should not forget that the 10% are high income persons in world wide scale and thus they will spend more money than average to the whole ecosystem: apps, could services and apple hardware.

On long term I would be more worried about Samsung. Googles latest iterations of Android are getting better and better so the need for custom UI is getting lower. 2.x and 3.x needed forking due to poor usability, but 4.x is somehow a game changer. Do we really need custom UI that just slows down the device? When android reached over 90% market share and usability is acceptable, could android become the next PC industry? Can Samsung defend itself with their ecosystem?



Nokia's numbers for Q4 are below expectations.
Samsung's numbers for Q4 are below expectations.
Apple's numbers for Q4 are below expectations.

Can't it be that all this is an indicator that the smartphone craze is reaching its peak?
It's too early to declare panic, for sure, but ignoring the signs and resting on one's huge profits like some of Apple's proponents suggest, can lead onto the road to death.


"Do we really need custom UI that just slows down the device? When android reached over 90% market share and usability is acceptable"

Indeed. I think that's where the next battle will be fought.
But Samsung is already aware of that, remember last year's plain vanilla editions of some phones.
So far all they did was do a test run but you can bet that if any trend materializes, Samsung will follow it.


"iPhones are in use much longer time than others. iPhone 4 bought in 2010 stilla has the latest software and thus is still a very modern phone."

Correct for now. But let's not forget that in 2010 Apple still had a clear technological lead in the market. Back then Android was a relatively poor competitor, only serving those who couldn't afford Apple. The iPhone 4 was miles away from any competition. That's no longer the case today so this particular trait will even out over the next years.

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