iPhone Drops to 15% Market Share as Smartphone Market Goes Flat

[PlainviewX]

That's not true.

What's not true? The fact that they were pushing HD video with 16gig as a standard or the fact that they're double the going rate when you double flash storage from 16-32-64?

 

[dk001]

I would really like to see market share for phones purchased by users that use them as a smartphone. For example, downloading at least two third-party apps might be an indicator; or setting up their work email might be an indicator. Exclude those phones that aren't used as a smartphone.

I think there is a large number of very inexpensive android phones out there that have pretty much replaced the feature phones, and those inexpensive smartphones are still being used like feature phones (calls and texting only). I think it is misleading to include those in the smartphone market share. Smartphones are about apps, and if a phone isn't being used for apps and the user has no intent to use it like that, it shouldn't be counted in the data developers look to when figuring out how to develop their apps.

Interesting point. I took a quick look at my household. All smartphones.

• iPhone 6S+ - work - used as a smartphone
• Nexus 6P - personal - used as a smartphone
• Galaxy 6 Edge - personal - used as a social media device
• Note 4 - personal - used as a smartphone
• HTC One M8 - personal - used as an entertainment device
• iPhone 5S - personal - used as a feature phone

I think the new "feature" phone is a smartphone. Cost is regional and economic. I also suspect that the definition of "feature" has evolved.

• Feature Type A - Social Media Central plus email
• Feature Type B - Games and email
• Feature Type C - SMS, MMS, and email
• Feature Type X - tbd...

Very interesting point.

 

[I7guy]

I think it's a combination (nothing exists in a vacuum)

The iPhone is a premium priced phone. it's a flagship that is priced at a level that implies flagship.

yet, when you boil the iPhone down to specs. it doesn't meet other phones flagships at the same price. Outside of the A9 CPU, most of everything else in the iPhone is of lower spec in some fashion than what you get from same priced flagships from other manufacturers.

If you're looking purely at the math and number
The entry level iPhone 6s is $650 and you get.
- 16GB storage
- 2GB RAM
- Approximately equivelant to a 768p LCD Display.
- 1715 MAh battery

Meanwhile, the flagship comparison to other devices, lets say, Samsung S7 also at $650
- 32GB storage
- 4GB RAM
- 1440p AMOLED display rated as best display in the phone business
- Best Camera in most shootout comparisons.
- Expandible SD Card storage
- Fully available / functioning NFC (available outside of payment software)


Now, use is more than just pure specs. You could argue that iOS has it's own Value (But you can argue that so does Android). You can argue that "fit and finish" too has value, but that gap is so close now, that many hvae said that the S7 is nicer built / designed and is subjective.

So at the end of the day. Apple is actually offering far less technology, at similar prices to the competition.My question is, if volume of iPhone sales drop and revenues decrease from this drop, how does Apple continue to maintain 40% profits? do they cut more out of the iPhone? do they raise prices? Or do they bite the bullet, let profit margins drop a bit, but start offering more to the consumers?

They offer in my opinion a better device, better support, better looking device and better ecosystem..that's what I expect to pay for..not a oled screen.

Btw in my family about 35 iPhones and two Samsung galaxies.

 

[trifid]

Look at the S7, it blows iPhone 6s out of the water in terms of low-light camara quality, OLED screen, waterproof, inductive charging, VR, 32GB standard, expandable, less bezel around the phone, curved screen etc.

iPhone 6s is not exciting, period, Apple has played it far too safe and the market is responding to this. Perhaps market saturation is a factor, but guys, iPhone 6s is a dinosaur compared to what Samsung is putting out at least in terms of hardware.

 

[iGeek2014]

I think it's a combination (nothing exists in a vacuum)

The iPhone is a premium priced phone. it's a flagship that is priced at a level that implies flagship.

yet, when you boil the iPhone down to specs. it doesn't meet other phones flagships at the same price. Outside of the A9 CPU, most of everything else in the iPhone is of lower spec in some fashion than what you get from same priced flagships from other manufacturers.

If you're looking purely at the math and number
The entry level iPhone 6s is $650 and you get.
- 16GB storage
- 2GB RAM
- Approximately equivelant to a 768p LCD Display.
- 1715 MAh battery

Meanwhile, the flagship comparison to other devices, lets say, Samsung S7 also at $650
- 32GB storage
- 4GB RAM
- 1440p AMOLED display rated as best display in the phone business
- Best Camera in most shootout comparisons.
- Expandible SD Card storage
- Fully available / functioning NFC (available outside of payment software)


Now, use is more than just pure specs. You could argue that iOS has it's own Value (But you can argue that so does Android). You can argue that "fit and finish" too has value, but that gap is so close now, that many hvae said that the S7 is nicer built / designed and is subjective.

So at the end of the day. Apple is actually offering far less technology, at similar prices to the competition.My question is, if volume of iPhone sales drop and revenues decrease from this drop, how does Apple continue to maintain 40% profits? do they cut more out of the iPhone? do they raise prices? Or do they bite the bullet, let profit margins drop a bit, but start offering more to the consumers?

And therein lies one of the problems.

Apple need to pull something totally unexpected out of the bag with iPhone 7.

Specifications aren't everything but you only have to look at the rave reviews for the Galaxy S7-but some of the phones coming from Chinese manufacturers-at much lower prices too.

 

[oneMadRssn]

What's the basis for your anecdote? A smartphone is a smartphone is a smartphone. It's use has nothing to do with it's capability. Not every person with an iPhone or Galaxy is using smart features. Some use their phone like feature phones.

Yes, that's exactly what I said. The issue is lots of develops look at marketshare figured when choosing which platform to develop for, and when determining what capabilities the most phones out in the world have. However, in terms of free and publicly available information, there isn't much good data on this, and marketshare is used a substitute. A poor one though. Hence I was asking to see slightly modified marketshare data that takes into account people's actual usage.

 

[dvdlovr24]

No it was not, the original iphone was $599 with no contract. Then 5-6 months later there was a price correction to $399, again no contracts. I know this because I bought an iphone for my nephew at $399 for a Christmas gift. I walked in to the Apple store paid $399 plus tax and walked out with a phone no 2 year contract. The 2 year deals started maybe a year later and iphone retail price shot up to $649. Of course now you could get them for $199 with a 2 year commitment.

You're partially correct. The original iPhone did require a contract with AT&T, but the phone wasn't subsidized so you could purchase the phone as many times as you wanted and it would start your contract over. The original iPhone wasn't activated in store. Instead you purchased it and took it home to activate it through iTunes. AT&T also shared part of the $30 per month data charge revenue with Apple. Apple agreed to give up that percentage of the revenue for the iPhone 3G in exchange for AT&T subsidizing the iPhone to $199.

 

[cdmoore74]

It's pretty entertaining hearing all the armchair analysts make their comments. I use Apple products today but 5 years from now I can't say with a straight face that I will own one. These electronic gadgets are basically fads; hot one moment but forgotten the next.
It's ultimately up to Apple to make the next big thing. Relying heavily on old product name plates is a recipe for disaster.

 

[LordVic]

They offer in my opinion a better device, better support, better looking device and better ecosystem..that's what I expect to pay for..not a oled screen.

All of those are subjective though.

You can't measure " A better device" because it'll be subjective based on personal experience, preferences and workflow. I found the iPhone 6 for me to be a far worse device than the S6.

I've also had absolute nightmare with Apple Support. Though again, subjective experience. My niece dropped her iPad, Apple support replaced it no questions asked. My power brick on my MBA cut out completely. Apple refused to cover it and made me pay for a new one.

Ecosystem? its not 2010 anymore. just about everything i Us on iOS is also on Android. I use both. And virtually everything is cross device compatible with no compelling reason to use iOS v Android (or vice versa). In fact, since android 5.0, Android has done certain interacts far better than Apple, making the ecosystem, IMHO for android finally ahead.

Better looking device? Subjective of course. Nothing wrong with the iPhone, but it looks "generic". there's nothing about the iPhones looks that screams premium quality device over the competition.

SO, for you, the Value is there. There's nothing wrong with that and I am glad you have a device you are happy about.

But none of the things you've mentioned are tangibles with direct costs associated with them. they are value perceptions with no dollar value. Their costs are already included in the costs of the iPhone's R&D and business overhead, and don't actually add costs to the dollar value.

at the end of the day, I don't myself these intangibles offer enough to overcome that Apple has purposely skimped on the actual physical hardware inside the device purely for profit margin reason.

 

[Jakexb]

Not surprising, Samsung announced a new phone with more new features and changes compared to Apple.

People sure do like changes.

 

[friedkimchi]

Lower starting prices = More people buying it = Entry into Apple universe (Other Apple products)

Profits on hardware can only get you so far. Case in point, Amazon. Wall Street loves Amazon for their potential while Apple is slowly declining.

 

[RedOrchestra]

The market sure as heck does care; else how could Apple make 50b and 40b respectively in two quarters.

On a diminishing number of units.

The market is showing a price point choke on Apple phones - that will be Apple's concern going forward; Cook admitted the same, yesterday

"SE is attracting customers who wanted a more compact package, and also those who couldn't quite stretch to the previous entry price."

 

[mantan]

Jesus christ people. Can we stop with the marketshare nonsense? Apple clearly isn't aiming to be the leader in marketshare. Everything they do is to maximize the profit share of the smartphone business, which they are wildly successful at being pretty much the only money maker worth discussing.

I know everyone wants to be a Wall $treet big wig, but if your aim isn't marketshare, why the hell does everyone refer to it as if it's some type of ideal to aim for?

but if Apple's marketshare had grown, people around here would have been pounding their chest like THEY won something...

 

[NT1440]

but if Apple's marketshare had grown, people around here would have been pounding their chest like THEY won something...

And that is exactly why I can't stand business media and those who live and die by it. Artificial goalposts and team sport mentality on all sides.

 

[Karma*Police]

Apple's got its pricing all wrong. I would have entered the Apple ecosystem ten years earlier than I did. I simply couldn't afford to buy an Apple product earlier. Apple's retail prices are terribly overpriced, and in contrast, Apple's offshore workforce are terribly underpaid. How about some middle ground, Apple? Price lower and go for volume. Do we need to get to Huawei market share level before price changes are made?

No new iPhone in 4 inch at 6/6s launch - mistake.
Retail pricing too high - mistake.

That strategy has been tried many times and it hasn't worked out too well for those vendors because those volume leaders are eventually displaced by the next cheapest manufacturer.

Dell and Toshiba lost to Chinese manufacturers. Soon, Chinese manufacturers will lose to Vietnamese and Indian manufacturers. All while delivering almost no value to users other than to "borrow" innovations from the leader.

And if at some point they drive the leader out of business, then you have a very boring, innovation-less market like what happened to PCs before Steve Jobs came back and reinvigorated it with iMac, OS X, iTunes, GarageBand, etc. Eventually, the entire computing paradigm changed with iPhone.

 

[jayisblessed]

Apple's got its pricing all wrong. I would have entered the Apple ecosystem ten years earlier than I did. I simply couldn't afford to buy an Apple product earlier. Apple's retail prices are terribly overpriced, and in contrast, Apple's offshore workforce are terribly underpaid. How about some middle ground, Apple? Price lower and go for volume. Do we need to get to Huawei market share level before price changes are made?

No new iPhone in 4 inch at 6/6s launch - mistake.
Retail pricing too high - mistake.

The price is high, but THE MOST GENUINE REASON IS THAT PEOPLE ARE KINDA STRUGGLING UNDER TODAY'S MIXED ECONOMIC ENVIRONMENT.

 

[RedOrchestra]

And that is exactly why I can't stand business media and those who live and die by it.

Tech companies have always been stock plays - Apple is the poster child for playing the game and are the masters of hype - Cook uses the word amazing at least 50 times per event.

 

[dk001]

cell phone market is saturated, different pricing mechanisms by cell providers are making increasingly more expensive to own a new phone. looking forward to how Apple will face this serious concern going forward.

Saturated? Not really. Evolving? Yes.
As the market ages, Unit Growth vs. Percentage Growth changes and the double digit percentage cannot be sustained. As "WOW" features become less common, folks start looking deeper at overall cost. It becomes harder and harder to mentally justify paying significantly more for one setup when another similar setup can be had for much less. Market evolution. Predominately why Apple needs another "Big Thing". There will always be the "Gotta Have iPhone/Galaxy/..." folks who view it as more than. For the rest, especially emerging, aged, or lower economic markets. You only have to look at Huwaei for an example.

 

[I7guy]

All of those are subjective though.

You can't measure " A better device" because it'll be subjective based on personal experience, preferences and workflow. I found the iPhone 6 for me to be a far worse device than the S6.

I've also had absolute nightmare with Apple Support. Though again, subjective experience. My niece dropped her iPad, Apple support replaced it no questions asked. My power brick on my MBA cut out completely. Apple refused to cover it and made me pay for a new one.

Ecosystem? its not 2010 anymore. just about everything i Us on iOS is also on Android. I use both. And virtually everything is cross device compatible with no compelling reason to use iOS v Android (or vice versa). In fact, since android 5.0, Android has done certain interacts far better than Apple, making the ecosystem, IMHO for android finally ahead.

Better looking device? Subjective of course. Nothing wrong with the iPhone, but it looks "generic". there's nothing about the iPhones looks that screams premium quality device over the competition.

SO, for you, the Value is there. There's nothing wrong with that and I am glad you have a device you are happy about.

But none of the things you've mentioned are tangibles with direct costs associated with them. they are value perceptions with no dollar value. Their costs are already included in the costs of the iPhone's R&D and business overhead, and don't actually add costs to the dollar value.

at the end of the day, I don't myself these intangibles offer enough to overcome that Apple has purposely skimped on the actual physical hardware inside the device purely for profit margin reason.

Fair enough. At the end of the my family has iPhones and that is what we choose to buy because subjectively we like them better (operation, support, looks, ecosystem) than the competition.
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On a diminishing number of units.

The market is showing a price point choke on Apple phones - that will be Apple's concern going forward; Cook admitted the same, yesterday

"SE is attracting customers who wanted a more compact package, and also those who couldn't quite stretch to the previous entry price."

Then the whole market is going down the tubes not just Apple. But Im sure the masters of hype and sub-par technology can hypnotize the masses again. /s

 

[Edd.Dantes]

Remember when it was called Apple Computers...? They used to make computers which were innovative in power (MacPro) and/or design (MacBook Air) - now...? Granted, iPhone and iPad were two hits but how long do they want to surf that wave?

Until they can release a "car"

 

[LordVic]

Fair enough. At the end of the my family has iPhones and that is what we choose to buy because subjectively we like them better (operation, support, looks, ecosystem) than the competition.

And there's absolutely Nothing wrong with that! (and nobody has the right to tell you otherwise)

 

[NT1440]

Tech companies have always been stock plays - Apple is the poster child for playing the game and are the masters of hype - Cook uses the word awesome at least 50 times per event.

That's true, but they are also the number one target for manipulation by rumor mongers, as that asshat from CNBC Jim Cramer got caught admitting to (not that he did it directly, but the casualness of the conversation only leads one to conclude that this kind of practice is so widespread that its spoken of so nonchalantly).

Jim Cramer Explains How The Stock Market Is Manipulated ...

 

[ISanych]

The iPhone 3G was $199 on launch. No one was suggesting that was an inferior product! It was an insanely popular product.

By that logic iPhone SE is $0 now - http://www.apple.com/shop/buy-iphone/iphone-se/16gb-silver-verizon - From $0

 

[R3k]

But who is making the most profit?

 

[bigchief]

I have an iPhone 6 64gig that I paid $750 + applecare + sales tax that works as good as the day I bought it. I like new gadgets but why would I go by an iPhone 6s that does practically the same thing. These phones cost way too much for most people to justify upgrading every year.