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« Lets Discuss the iPhone 6 Models - Apple now in 'me-too' mode only following the leaders | Main | Notes from the Smartphone Wars - Panasonic, Blackberry, Jolla, Xiaomi, Tizen »

September 22, 2014

Comments

KPOM

Apple's share of the total phone market has actually been slowly rising the last few years. At this point, when you can get $50 "smartphones" running old versions of Android it doesn't make sense to distinguish between "smartphones" and "feature phones." Anyway, Supposedly in 1 day, 4 million people in China pre-reserved the iPhone 6 and 6 Plus, which is twice last year's first day total, and the phone isn't even officially available for pre-order there yet.

China is essentially a Germany+Benelux attached to a dirt poor backwater. Apple's market is the 100 million or so middle class and above, and not the 1.2 billion others. So it will always have a smaller unit share in China than Samsung or locals like Xiaomi. The question will be how well it can do in that market. Xiaomi quite blatantly copies Apple's designs (much more so than Samsung ever did). But it seems to have attracted a following in the high end. I don't see Xiaomi being an immediate threat to Apple outside China, but in time they could. But if they evolve into a strong competitor, they'll also be drawing from Samsung's target market, as well.

RottenApple

@AppleTurfer:

"If Apple sold 20% fewer phones this year than last -- Apple would still make more money than Samsung and the rest of the companies combined. There would still be more money made in it's ecosystem than Android's. There would still be more commerce transacted on iPhones than Androids."

Apple making more money - yes,of course. But that's completely irrelevant for the mobile market. Nobody who needs to plan their mobile business strategy can benefit from that money.
More money being made in Apple's ecosystem - now that's a different matter. All recent trends clearly show that Android is strongly gaining ground here, even having already overtaken Apple in some segments. This may be true in the US, but we have a whole world to look at.

AppleTurfer

@RottenApple - you are right that Apple's profits don't factor into most people's plans. Apple's customers spending habits surely do. That's why Apple has such an outsized influence in mobile. Apple still leads in the money earned by it's partners (app developers, advertisers, music, movies, etc.).

Carriers depend on Apple to draw and retain the most profitable customers. Even those who don't subsidize iPhones turn right around and provide financing and leasing plans.

The iPhone's direct competitors (Galaxy S, Galaxy Note, HTC One, Sony Xperia) are not eating Apple's share. HTC One and Sony are hemorrhaging money. Samsung has had 2 quarters of decline and is expected to have a 3rd. This in an environment against the 5c/5s which had uncompetitive screen sizes. Apple may be late to the big screen party, but they have certainly eliminated the most compelling reason to not choose Apple. Samsung et. al. only have more of the same. We can already see that Apple is going to grab more of the high end.

The difference is growing between the average iPhone user and the average Android user in terms of value to the ecosystem (Carriers, app developers, advertisers, etc.) Those who are willing to spend $650-$1000 on a phone are simply much more likely to buy other things than someone who is spending $50-$200 on a phone (the sector with the most growth by far).

abdul muis

@AppleTurfer & @Piot

Today I got a time to do Google to find some of @Baron95 comment.

http://communities-dominate.blogs.com/brands/2014/02/mwc-related-news-day-1-samsung-galaxy-s5-and-other-news-and-non-news.html?cid=6a00e0097e337c883301a3fcc57474970b#comment-6a00e0097e337c883301a3fcc57474970b

@baron95 said
"Samsung will be in a huge squeeze. Between large screen iPhones and cheap Androids there is very little oxygen."

DEFINE HUGE SQUEEZE!!!!!
Apple Gaining 1% more market share gain THAN the YEAR BEFORE???
That's NOT HUGE SQUEEZE.... THAT'S BARELY SQUEEZING.
remember... HUGE is not just big, but really really big.
Whereas 1% more market share gain than the last year is just barely squeezing.

REMEMBER!!!
apple now have A BIG SCREEN.
apple WILL Squeeze Samsung HUGELY.

PS: C'mon, be serious, if you guys really want to tell me HOW GREAT iphone is, and HOW GREAT big screen iPhone is, at least BE OPTIMISTIC. Otherwise, how can I think Apple is great.

abdul muis

@AppleTurfer & @Piot again

Oh boy, this is fun
http://communities-dominate.blogs.com/brands/2014/08/smartphone-top-10-for-q2-of-2014-same-ole-same-ole.html?cid=6a00e0097e337c883301a511fbd913970c#comment-6a00e0097e337c883301a511fbd913970c

"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."

This time, I got a quote FROM @APPLETURFER. You guys always try to quote Tomi's and point his past mistake. This time your turn. Before I DARE YOU to give the prediction, you BLUFF that Apple will sell 200 million iPhone this year with 15% of the market.

abdul muis

@AppleTurfer

Just to be clear. Your PAST comment that APPLE WILL SELL 200 million iphone this year, means for Q3 & Q4 apple will have to sell 120 million iPhone, or around 80 million in Q4.

Whereas, my hope/aim (30% more unit sold) that apple should sell 210 million iphone from Q3 2014 to Q2 2015 is LOWER NUMBER than your prediction since the Q1 2015 & Q2 2015 supposed to be higher number than Q1 2014 & Q2 2014.

So, actually I'm just quoting you in the past. I want to know if you really think what you said it's true, and can bet your name on it.

AppleTurfer

Baron was right that Samsung was going to get squeezed and he called it before Samsung started putting out the bad quarters (2 in a row about to be three)

As for my own, I bow down to Tomi's numbers prowess. But Apple growing 1% is a HUGE deal. That's 1% of the entire mobile market including feature phones and smartphones. Still growing years after Tomi called peak Apple

AppleTurfer

Speaking of Samsung -- they have been paying $1billion a year to Msft (msft is suing them for not paying interest as Samsung is withholding payments since Nokia purchase). So much for the 12 billion Google spent buying Motorola for patent protection...then losing hundreds of millions a year on operations, then selling off to Lenovo for billions cheaper.

Meanwhile, back at the company who "just might" be facing a cliff -- Apple has somewhere between 4-6 million preOrders in China and has already passed the 20 million iPhone 6s sold.

I'm sure we'll here some concrete numbers coming form Apple at their Oct. 16th event.

KPOM

I'm sure Tomi will say this is a sign of Samsung's strength, but note that they seem to be acting like a company running scared right now.

http://finance.yahoo.com/news/samsung-build-15-billion-chip-034022320.html

As I've said before, Xiaomi is a bigger risk to Samsung than to Apple. Also, while Samsung is one of the best at manufacturing chips, it is not very good at designing them. AnandTech has some good articles about the design of Apple's A7 and A8 architectures and how advanced they are compared to the rest of the industry using ARM. Meanwhile, Samsung has struggled with its own Eynos octa-core ARM big.LITTLE designs and doesn't even use its own designs in the Galaxy phones they sell in North America and Japan, instead relying on Qualcomm. Apple's dual-core chips running at 1.4GHz get performance comparable to QualComm's quad-core chips running at 2.4GHz while using less power. Meanwhile, Samsung's Eynos chips underperform Qualcomm's, and use more power.

So Apple potentially does have a hedge in that they could eventually challenge Qualcomm. I doubt they would ever do that, though. More likely they want to keep their chip designs to themselves.

KPOM

@Baron, Tomi likes to cherry pick his predictions to make himself look more accurate. He isn't linking to his past posts where he claimed BlackBarry had it right because it was better for SMS, and as we all know, SMS is where all the action is. :) I also predicted on a comment a year ago that Samsung was vulnerable because it hadn't cracked Apple's stranglehold on profits even though it was leaving money on the table by not selling a large screened phone. Unless the market suddenly embraces notification screens along the side of the phone (Note Edge) or an actual flexible screen (S6? S7?) they'll be squeezed for a while. The market is at a saturation point, but oddly it is Apple who has the cost advantage since they design their own chips and don't need to rely on Qualcomm. Exynos has been a disaster for Samsung. It runs slower than Qualcomm's designs and uses more power, and costs more to build. A7 and A8 run as fast or faster than Qualcomm despite having half the cores and running almost a GHz slower. It also uses less power and costs less to manufacture. That saves about $15 per phone by some of the estimates, I've seen online.

RottenApple

Well, it's hardly a surprise that it gets harder to sell the same product to people who already own it!


Recent smartphones - and that includes Apple! - have few reasons to make an upgrade compelling. Apple just had one last card to play with larger screens.

So I wonder what they have to offer next year because:

- the screen size card has already been played
- CPU performance is levelling out with the iPhone 6 barely faster than its predecessor
- GPU performance is also nearing the top, again the iPhnoe 6 cannot really show any significant improvement

All that considered it's really no surprise that the high end of the market is drying up, especially since mid range models are closing the gap.
But do not ever think that Apple is immune from that! If the iPhone 7 shows as little reason as the Galaxy S5 to upgrade, Apple may be in for a similar surprise.
They would have already with the iPhone 5S if they hadn't managed to tap two new markets (i.e. DoCoMo and China Mobile) at roughly the same time which quite nicely managed to hide this inconvenient fact from their business charts.

adi purbakala

@rotten

Next year apple have iDVB-H standard not compatible with DVB-H/DVB-T. It will be revolution because has apple ecosystem.

KPOM

@RottenApple, with the A8 Apple focused on improving efficiency, sort of like what Intel did from Sandy Bridge to Ivy Bridge to Haswell to Broadwell. That they extracted a 25% CPU improvement at the same time was pretty good (comparable to the jump from Sandy Bridge to Haswell). They can still extract more performance by doubling the RAM, doubling the number of cores, and boosting the clock speed. All of those would affect battery life, though, and so they shifted to a "tick-tock" strategy with the A8. I'd expect at least one, and maybe two of the three performance boosting moves with the A9, particularly if it moves to Samsung's 14nm or TSMC's 16nm process. But since Android L is a few months away and competing ARM v8 64-bit designs aren't even going to ship in volume until mid-2015, there really was no reason for Apple to double the CPU performance for the third year in a row.

Apple has another upgrade round next year when iPhone 5s owners trade up to the 6s. Smartphones are maturing, and there will be a challenge for the iPhone 7, but the point is that Samsung is going through that now, and Apple is still growing in profit share. That gives Apple at least 18 months and probably closer to 2 years to figure out the next move. Samsung's betting big on chip foundries. My guess is Apple's big bet will be software or cloud related (perhaps a bigger collaboration with IBM).

AppleTurfer

I for one don't think Apple is holding back features. Not in the since that Apple has them developed and ready to ship but just doesn't. What Apple is doing is making measured and holistic progress. They aren't running too far ahead down any one track, but carefully building up their complete product portfolio.

Take TouchId. Apple put TouchId out with a CLEAR target of payments. But Apple needed to perfect it's scanner, secure element and prove it's efficacy first. Not to mention seeding more than a hundred million TouchId phones into the market. All based on a minimum viable use case...unlocking the phone and making App store purchases.

This year, we get the NFC piece, Apple Pay, partnerships with the CC companies, partnerships with retailers. And Apple opens out TouchId API's for third party developers.

So yes, Apple "held back" the Apple Pay in the sense that Apple put together a timeline for the priority of development. But not in the sense that they had all the technology worked out, the manufacturing worked out, the partnerships lined up....and then just sat on it for a year.

There is clearly quality control issues Apple is running into that show they are BARELY making their own yearly deadlines. iOS 7 was buggy for months. iOS 8.0.1 update actually kept 40,000 people from being able to make calls (Apple pulled the update 2 hours after releasing it due to the bug). You have the Apple maps fiasco. Siri came out as "beta" (something Apple never does). These are all signs that Apple is actually struggling to get each release out the door with everything working...let alone just being so far ahead that they just sit on features already done and don't ship just to have upgrades next year.

Or take "cut and paste". Apple didn't put out the original iPhone lacking that basic feature just to give people a reason to upgrade. They simply needed all their energies to put out what they did and other things had to wait.

I think Apple intended to have sapphire screens for the iPhone 6 but couldn't get the yields/manufacturing ready in time.

I do think Apple knows where they are going to get their growth from. They secure multi-year commitments from the carriers. They are still in an environment where demand exceeds their ability to supply. So why PLAN for a market raising feature like large screens when you know you are going to land China Mobile and Docomo and get the desired growth from the increased distribution. Put OFF worrying about the larger screen because you won't need it this year.

But you WILL need more processing power and a solution to the scaling issue. The A7 in the 5s would not have been powerful enough to drive the larger screens with the scaling required to keep from upending the entire app ecosystem. So, knowing their own chip pipeline and when they would have the power....and knowing the marketing conditions of when they'd need to jump that large screens would surely give them....Apple made their plan of WHEN to go after that feature.

Android doesn't work like that. Samsung can just throw out a larger screen with ridiculously high resolution far beyond what the eye can distinguish just to have a "spec advantage" to market against. Samsung throws in a finger print scanner to answer Apple, but doesn't care if it's in a form people will actually use.

AppleTurfer

I'll say it...Baron you were right. I still think Samsung will right it's ship, but at a much lower profit level than it used to have. While Apple continues to grow in profit.

This notion that the premium segment is shrinking....only Samsung, HTC, Sony sales are shrinking. Apple's is not. Stop thinking "market share" when you count the market as $50-$1000 as one. There may be a top, there has to be, but Apple hasn't reached it yet.

Back to Samsung....they still made over $3billion in profit for the quarter. That's more than the rest of the Android community combined. We don't even know if HTC and Sony can continue in the business for another year. We also don't now how much, if any, those Chinese companies are making. They also can't sell those knock-off phones outside China and other countries that don't protect IP. The moment they try to sell them in Europe or the US they are going to get their pants sued off. Not just by Apple. Samsung has been paying Microsoft a billion dollars a year for the IP in Android.

Samsung remains the only company that makes any sizable money from Android. They have a global brand. They are selling more and making more than any other company in Android. Apple is an anomaly. Nobody can do what Apple does in PC's. Nobody can do what Apple does in music players. Nobody can do what Apple does in smartphones.

So, removing Apple from the discussion...and you have giant and profitable Samsung and a bunch of midgets either losing money (HTC, Sony) or stuck with a regional offering using stolen IP that will prevent global access (Xiaomi, Coolpad, etc.)

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