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August 15, 2014

Comments

HonestAccounting

Tomi,

How about figures specifically excluding China? Are those available anywhere?
That would make a very, very data set for analysis. They table would look very different.
For example, Motorola doesn't sell in China (the single largest market) and are in the top 5 in that instance.

AppleTurfer

Fun fun. Apple runs it's own game. Apple has lost mobile just like it lost the PC war. Lost it all the way to the bank both times. Nobody who thought Apple was doing the wrong thing before will change their minds. I do wonder, though, since those predictions of doom haven't come true for the last 5 years (we'll ignore the first 2 years of the iPhone which was nothing but growth in market share)...when will they ever be true?

Apple's loss in market share has not been analogous to Nokia/BB. Apple isn't losing ground. Apple's sales continue to increase. Apple's margins remain healthy and more than twice what anybody else can command. What has happened is that the low end of the market that used to buy feature phones and never were Apple customers are now buying Android phones and still aren't Apple customers. There has been precisely ZERO erosion of Apple's share of it's target market.

On the contrary, the only serious competitor is Samsung and THEY are the ones beginning to hurt. Samsung's loss in share is indeed coming from business Samsung used to have. Samsung actually had a decline in SALES, not just market share.

I disagree that Apple will finally be putting out a spec comparison phone for the first time. Apple still won't have NFC, still won't have replaceable battery, still won't have usb, still won't have a memory card, and you can be sure the megapixels on the camera will still be less. Apple's phones have always performed the best at the computer/web/internet functions (not the phone function). It will boggle the mind what Apple will do with a larger battery that the larger screen phone will afford them. This will be the first time that Apple's performance will not just be better...but significantly so.

Apple doesn't sell what all the other manufacturers sell. So they don't differentiate by the cpu or the ram or the megapixels or the screen size. Apple differentiates by the software, design, ease of use, seamless integration of the ecosystem including hardware, music, tv, movies, books, apps, accessories.

So we'll have another blockbuster iPhone that will be too expensive for much of the market. It won't matter. Apple has a market that they continue to expand. Not as fast as the low end expands. But that doesn't matter to Apple.

This blog has marketshare as the prime measure of success. So be it. Apple will do nothing to move the needle this coming year. This quarter is the worst of the year with 11%. Next quarter will be the better and the Christmas quarter will be the best. Apple will set sales records for Apple but lose marketshare on an annualized basis. Apple will set profit records like no company ever before.

Long before Apple will be hurting, they will move down to the mid-to-high end of the market to take away what profit remains for Samsung while it becomes a war of attrition among the also rans to see who can stay in business with the slimmest of margins. But that's not this year. This year is more of the same. Apple producing premium products that have no problem finding buyers. No need for Apple to address a lower price point this coming year. Maybe next year.

RottenApple

@AppleTurfer:

"Apple's loss in market share has not been analogous to Nokia/BB. Apple isn't losing ground. Apple's sales continue to increase. Apple's margins remain healthy and more than twice what anybody else can command. "


I remember another company that was in the same position: Healthy profit, good market share, towering above its rivals.

That company was called Nokia and it was Q4 2010 - and only one quarter later it all came down.
I'm not predicting that Apple will go the same route: They sure won't - but Nokia's story is a sure sign that these indicators tell absolutely NOTHING about a company's long term viability.

Even Apple can make a crippling mistake down the road - and it can be something seemingly innocent and supposedly insignificant. But please don't repeat this nonsense of Apple continuing to thrive because they did well in the past. That's not how big business works.

AppleTurfer

Could Apple be disrupted the way Apple disrupted Nokia? Of course. By a new paradigm for phones that will also disrupt everybody else. Will ever cheaper Android phones disrupt Apple? No. We have had YEARS of much cheaper Android phones already.

You know who IS losing sales to cheaper Android phones? High end Android phones. Samsung, HTC, Sony, Lenovo...their ability to sell a premium phone with nice margins is being demolished by good enough, but much cheaper Android phones.

The people who thought the iPhone was over priced four years ago....have no reason t change their minds. Just like most laptop buyers do not spend more than $1000. However, of those who do value a light, fast, well made laptop and are willing to pay for them....Apple dominates, And so with phones. The iPhone 6 models will carry on and extend the market for those who buy into the value proposition of a premium phone and seamless ecosystem.

Apple's sales are up, and profits are up. Apple's share of the mobile phone market also continues to rise (slowly). The only metric that is falling is the percentage of smartphones and that's an artifact of hyper growth in the market Apple doesn't even try to participate in and wouldn't drive much profit were Apple to enter it

adi purbakala

@Piot

Apple not again sale iPhone 3,3GS, 5 in USA. But apple did still sale it in other country such as Malaysia, Philippines, Vietnam, India.

Huber

@Apple Turfer:

You are delusional if you think that Apple is immune to changes in the smartphone market.

You pretend that Apple serves a different market, and this just is not true. It is just one market where Apple, Samsung, LG, Sony etc. are competing.

Let's see how the iPhone 6 will fare - as far as I know, it will still have only 1GB of memory (and 64bit LOL), sub-1080p resolution and all iOS-shortcomings like no widgets, weird multitasking and be a walled garden.

Lots of Apple-fanatics will of course upgrade, so I expect Apple's market share will grow at year's end, but in Q2 2015 it could fall below 10%.

At the Same time, all these "low end" Android phones will have SGS4 - like specs, so your beloved iphones will look even more dated and overpriced than now.

When you count in-app purchases, Google's App revenue already outperforms Apple's, and this gap will only widen if Apple ignores the cheaper price points. What this means for developer support should be obvious.

So no, Apple is not yet in dire straits, but it is in danger of getting there.

Once the general population recognizes that Apple's halo effect went down the toilet, those Android phones will only look better to them, and then Apple can say hello to the cliff.

This is no inevitable outcome, but if Apple continues to ignore that smartphones are becoming commodities, history will repeat itself: in the 90ies exactly this happened to Apple's computer business, so they almost went bankrupt.

Will Google help them then to survive, like MS did in 1995? Or do they still have some Steve Jobs, who finds new markets and new opportunities? I would not count on this...


AppleTurfer

Do I think Apple is immune to changes in the market? No. Just what changes are you proposing is about to happen to Apple and Apple alone?

Cheaper Android phones are not a change in the market. Poor people in the third world are not a change in the market. Low end smart phones replacing feature phones are NOT a change in APPLE's market.

Being the minority player is not a change in Apple's market. Being outnumbered by more than 4 to 1 is NOT a change in Apple's market. Competitors with better hardware specs is NOT a change in Apple's market.

Apple is still the market maker. Just look at smart watches. Meer rumors that Apple is working on such a product spurred Samsung and the like to rush in and try to compete. Why? Who wears a watch anymore? Dismal sales have proved the point that there really is no market and yet Motorola and others have joined the fray because they are sure that Apple is going to MAKE the market. And I'm so happy these folks have jumped out into the lead with their "design prowess" and will watch as Apple does something amazing that every smartwatch will look like 6-12 months LATER.

Now, who was copying Nokia and BB after the release of the iPhone? If Apple's marketshare slide is supposed to be "just like Nokia and BB" -- why isn't everyone abandoning the copying of Apple as no customers want what Apple is selling as evidenced by the slide in marketshare. If Apple is simply wringing out the last vestiges of profit from a dying platform....who is setting the new trend, the new paradigm? Xiaomi? Please. They copy Apple more than Samsung does. Their CEO even dresses like Steve Job's iconic black tunic and blue jeans.

Apple will sell 200 million iphones this year. Apple sold something on the order of 150 million last year. That's with a 15% share of the market and it's more smartphones in a year than Nokia EVER sold, not even when they ruled the market.

The money for partners is STILL on the iPhone platform. Google paid it's developers half what Apple paid in the last 12 months with TWICE the market share (remember Google's Android is smaller than "Android").

We have a duopoly, a stable duopoly. The iPhone is the Mac on steroids. The Mac is a smaller niche. The Mac ecosystem of software and support is dwarfed, DWARFED by Windows. Yet the Mac has been in business for 25 years selling a product that is much more expensive and does LESS than a Windows machine (due to having less software, ignoring that Macs can run Windows apps these days).

The iPad alone is now triple Mac unit sales. The iPhone/iPad/iPod Touch, Apple Tv, iPod, iTunes, App Store form a massive/cohesive/profitable ecosystem that puts Apple on THE most stable footing of any tech company including Samsung, HP, or Microsoft.

The iPhone has more than twice the marketshare than the Mac and that's including the reality that the low end smartphone skews the market far more than cheap computers. The iPhone has the number one ecosystem of Apps. Yu could quibble, but it wouldn't matter. There is nothing like the disparity of support between Windows and Mac with Android compared to the iPhone and there never will be.

So...before you put the Nokia future upon Apple....consider the Mac. Apple has proven that they can keep a competitive edge to sustain a premium price for their products even in the face of much cheaper commoditization and small market share and do it for decades. And the iPhone is far far far stronger than the Mac ever was.

falito

a report of android fragmentation from opensignal shows a 0.4% of Nokia X installed base of a 1,336 Millions Androids in use according to this blog; give more than 5 million Nokia X & XL in use for that report-

http://opensignal.com/reports/2014/android-fragmentation/
you need to download the xls file to see each phone...

falito

i took this comment from http://www.theguardian.com/technology/2014/aug/22/android-fragmented-developers-opensignal

Surprisingly, the most-used Samsung device is still the Galaxy S3, released in 2012, followed by the Galaxy S4, from 2013. This may reflect heavier use of OpenSignal in non-European countries: the Nokia X phone, which uses the open-source version of Android but with Microsoft cloud services replacing Google’s, makes a prominent appearance in the statistics despite only having gone on sale in Asia.

AndThisWillBeToo

"more than 5 million Nokia X & XL in use"
Tomi? What did I say over a week back?
"7.7M Lumia sales need no less than 0.9M Nokia X shipments to achieve shared 10th position"?

Huber

@Apple Turfer:

<

No, this is actually happening right now to everyone: Prices are falling, this is the current trend, at least in Europe.

Sure, there will always be those with expensive contracts, you can get a new phone every year meanwhile.

But this is a shrinking market - you can get a phone flat rate + 500MB of LTE traffic + 100 free SMS per month for €10 when you don't use a subsidized phone.

And these sorts of contracts are enough for most people, they don't need the features of a €90 contract. Hence more and more customers save money this way.

Then the price of a phone is a completely different matter. The same people who got a free iPhone to their expensive contracts a few years ago now will compare prizes.

And believe me, suddenly this Sony, LG or Motorola phone for €300 looks much more attractive than this €800 iphone.

Hence in developed markets Apple needs to change its strategy. Heck, in most European countries Apple has low double digits market share, UK is the only exception with ~30%!

As I already stated, this exactly happened 20 years ago to Apple's computer business : They were very profitable, ignored falling market share and also ignored the commodization of the computer market.

They almost went bankrupt and were rescued only by MS in 1995!

The very same pattern I see today with the iPhone/iPad. And if Apple doesn't react this time, the same will happen again.


AppleTurfer

So, Huber. What say you of the sales of iPhone 6? I say they break all previous records...again...as each and every iPhone before. While still losing marketshare on an annualized basis. Are you predicting a sales unit decline? Drop in profits? Is this the iPhone (or set of iPhones) that fails to sell more than the prior year units?

Will you join the long line of those on this forum who have been predicting this EVERY year? This is the year? The large screen iPhone will sit on shelves until Apple puts them on a fire sale to move unwanted product?

No lines in front of Apple stores across the world as have treated the release of every iPhone?

Is this the year and the iPhone 6 the phone when FNALLY the world will come to their senses and realize that nobody really wants an iPhone?

Place your bets. We have only a short time to wait.

adi purbakala

@appleturfer

My bet is. While apple manage to break they all time record. And the sales is very high in they first quarter. It only winning a battle but losting a war. The large size iphone not bring new innovation, just try to catch android. After iphone fans buy it, in Q2 the sale drop. And the not.so.fans (iphone owner but not great fans) will jump to android large screen but affordable at high rate then before.

AppleTurfer

So, you are saying that when Apple didn't even HAVE a large screen phone and still increased sales and profits...when they finally release one, they will get only one quarter of benefit and then plummet? So the iPhone 6 will be released in this quarter but close to the end....but it will be a huge release.

The first full quarter is Christmas in the western world and will carry huge sales for Apple. Then what? Cuz the next quarter is the Chineese New Year with Apple available as CM continues it's 4G LTE rollout to even more cities. Apple has been getting near 50% of the LTE business in China. Tough prediction to say the iPhone is to suddenly start faltering at this point.

Finally you get to the par of the product cycle where Samsung releases it's latest Galaxy and Apple enters the lower sales part of its annual cycle. Of course, this past year we saw Samsung having a weak release and the iPhone sold very well beating expectations by a mile.

All while Android has had plenty of much cheaper options that have done nothing to steal Apple's customer base

adi purbakala

Apple fall is certain. In europe and asia apple already fall because no inovation. In usa will follow soon. People get boring with apple now. Apple sell increase because iphone discount sell. Apple cant compete with cool anyomre. Apple did not own cool. Now apple compete with price. This is why in usa iphone 5S now $49 with 2yr contract rather than usual $199. Apple lost if $199. For $199 android is better

AppleTurfer

Ah, if only wishes were fishes. Apples quarterly sales were fantastic...units up year over year, as were profits. There "just before the new iPhone comes out" sales going on...true. But that's not new. Happens every year.

Well, we only have a few weeks to wait and see.

You might want to practice saying the following: I was wrong. Apple still found fools to over pay for their phones.

I mean it's not like I expect you to change your opinion. You clearly have no clue why people like and buy iPhones. It only remains to be seen if you at least have a modicum of integrity to admit that you spoke like a fan boy rather than someone who can reason

RottenApple

Finally an astroturfer who admits to being one in his nickname.

You still got it wrong.
Apple right now is in a situation that is crucial for the future. On the surface their numbers look great, their absolute sales are increasing, even though their market share is shrinking. In addition to that the mobile phone market is changing radically.

'Commoditization' is the important term here - things will get ever cheaper and this will add pressure to hardware manufacturers. Another thing is that as the hardware matures, there is no longer an incentive to upgrade to a new phone every two years. It will just work out as with personal computers: 15 years ago the lifespan was two years, 10 years ago it already was 3 years but now we are at the point where computers get replaced when they break and replacing just the defective part is not economical.

As we can see in the PC market these days, it is shrinking - and that's not because less PCs are used, it's because the 5 year old PC that would have been obsolete 10 years ago still works nicely.

So what does this mean to Apple? Well, at some time in the near future their sales will take a dip, that's completely inevitable. For any 'normal' company that wouldn't be an issue, but we are talking about APPLE here - remember? - 'the most valuable company in the world'? - the one that cannot make mistakes, the one that always gets it right?
Imagine the effect on the stock market if this invincible behemoth performs below those insanely lofty expectations - be it due to declining sales or shrinking profits from lowered prices: There'll be chaos ans widespread panic, and so far any company in mobile suffering from such problems got dragged down into the abyss.

Of course I don't predict that this will happen to Apple, all I want is point out the dangers that lie ahead. Just ignoring them as you do is not going to make a valid point.
Apple does not operate in its own business field, they are just one part of a bigger one. If that business field changes - as it does right now -, so do the rules by which it needs to be played. And so far I haven't seen the slightest sign that Apple has realized this.

Huber

@Apple Turfer:

I completely agree with RottenApple here.

My prediction: the iPhone 6 will break all sales records as most Apple fans will upgrade. After this, the market share will drop below 10% in Q2 2015.

If Apple doesn't react next year to the new trends in the market, then they will face problems on a scale not seen since the 90ies.

So no, Apple is not doomed yet, but I give them only 12-15 months to react. If they don't, well...

adi purbakala

@apple turfer

How apple have 50% lte in china. I think this lie and canot true.

AppleTurfer

http://www.zdnet.com/apple-samsung-lead-4g-handset-sales-in-china-7000028332/

Sino Market Research Ltd's first market report on Chinese 4G handsets shows Apple’s market share at 58.7 percent in the first two months of 2014. Korean technology giant Samsung took 26.4 percent during the period, making it second in the market.

Chinese brand Coolpad was in third place, with a market share of 9.4 percent, while K-Touch, Sony and Huawei trailed with a tepid combined 4.5 percent share according to a Sina news report on Friday.

The research note also indicates Apple’s market share declined 22.9 percent during the two months, while Samsung and Coolpad climbed 12.8 percent and 8.2 percent, respectively.

As Chinese regulators didn’t issue 4G licenses until December 2013, and as carriers China Unicom and China Telecom were late in commercializing 4G services, the research data basically reflects China Mobile's 4G handset sales, Sina news explained.

-------------------

Worldwide Apple has 42% of the LTE market. http://appleinsider.com/articles/14/06/09/apples-iphone-takes-42-percent-of-global-lte-handsets

New data from Counterpoint Research for Q1 2014 shows Apple has maintained more than 40 percent share of LTE shipments over the past year despite dramatic 91 percent year-over-year growth in LTE shipments, which now contribute more than a fourth of all smartphones shipped worldwide.

----------------

Apple has an annualized 14% or so of smart phones, sure. But Apple is the dominant force at the high end. Those $200 and cheaper Android phones that are exploding in sales are not 4G/LTE.

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