Apple tops worldwide smartphone vendor list in Q4 amid industry contraction, report says
Apple led the worldwide smartphone market in the fourth quarter of 2017, according to fresh statistics from Strategy Analytics, with strong demand for products like iPhone X and iPhone 8 bucking wider market headwinds.
According to the research firm, Apple captured 19.3 percent of global smartphone shipments in quarter four, displacing market leader Samsung from its usual perch at the top. The South Korean tech giant managed an 18.6 percent share for the same period.
While Apple and Samsung gained marketshare in the last quarter of 2017 by a respective 1.5 percent and 0.9 percent year-over-year, the overall industry drooped 9 percent on a "collapse" in the Chinese market, Strategy Analytics said.
During quarter four, worldwide shipments fell to 400.2 million units, down from 438.7 million in 2016. The firm characterizes the precipitous decline as the "biggest annual fall in smartphone history." At fault are slower than normal sales in China, which saw longer replacement rates, fewer operator subsidies and a scarcity of "wow" handset options.
Apple earlier today reported record-breaking quarterly earnings for its first fiscal quarter of 2018 with revenue of $88.3 billion. However, with 77.3 million units sold, iPhone saw its first annual decline for the holiday quarter since its launch in 2007.
The results mean Apple's iPhone sales mix trended toward premium priced models like its iPhone X flagship. Indeed, CEO Tim Cook in a conference call on Thursday said iPhone X was consistently Apple's top selling phone every week since it shipped in November.
It should also be noted that Apple's first fiscal quarter of 2016 was one week longer than its 2017 period.
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Apple has long opted out of competing in the low-end market with the likes of most Android makers, instead concentrating on mid- and top-tier products. Concessions were made when the company began to carry over the previous year's model, and offer the smaller and cheaper iPhone SE, but those efforts fall short of designing and producing a dedicated budget handset.
The company is looking to grow in burgeoning markets like India, though such expansions are expected to be more of the same -- selling older handset models at more affordable prices.
According to the research firm, Apple captured 19.3 percent of global smartphone shipments in quarter four, displacing market leader Samsung from its usual perch at the top. The South Korean tech giant managed an 18.6 percent share for the same period.
While Apple and Samsung gained marketshare in the last quarter of 2017 by a respective 1.5 percent and 0.9 percent year-over-year, the overall industry drooped 9 percent on a "collapse" in the Chinese market, Strategy Analytics said.
During quarter four, worldwide shipments fell to 400.2 million units, down from 438.7 million in 2016. The firm characterizes the precipitous decline as the "biggest annual fall in smartphone history." At fault are slower than normal sales in China, which saw longer replacement rates, fewer operator subsidies and a scarcity of "wow" handset options.
Apple earlier today reported record-breaking quarterly earnings for its first fiscal quarter of 2018 with revenue of $88.3 billion. However, with 77.3 million units sold, iPhone saw its first annual decline for the holiday quarter since its launch in 2007.
The results mean Apple's iPhone sales mix trended toward premium priced models like its iPhone X flagship. Indeed, CEO Tim Cook in a conference call on Thursday said iPhone X was consistently Apple's top selling phone every week since it shipped in November.
It should also be noted that Apple's first fiscal quarter of 2016 was one week longer than its 2017 period.
Commenting on the downturn in iPhone sell-through, Strategy Analytics executive director Neil Mawston said Apple needs participate in a race to the bottom if it wants to grow shipment volumes moving forward.
"If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," Mawston said.
Apple has long opted out of competing in the low-end market with the likes of most Android makers, instead concentrating on mid- and top-tier products. Concessions were made when the company began to carry over the previous year's model, and offer the smaller and cheaper iPhone SE, but those efforts fall short of designing and producing a dedicated budget handset.
The company is looking to grow in burgeoning markets like India, though such expansions are expected to be more of the same -- selling older handset models at more affordable prices.
Comments
LOL, For more than 40 years Apple has almost never pushed down market, why would they even remotely consider this. Is it that hard for people to realize that Apple willing, purposely, strategically places itself in the premium market, because that's the customers they want to have.
If the goal was to sell the most widgets Mawston would be correct. But, in business that isn’t the goal. In business the goal is to make the most PROFIT. In this Apple is, by far, #1.
That would make Mawston terribly wrong (I’ll bet if asked Mawston wouldn’t lower the price for his research).
Analysts are a unique breed. I’ve never seen any other profession which wears its inability to learn as a badge of honour.
Not coming to an iPhone near you.
Here is the new unique challenge that Apple will have to deal with. "Premium" segment in terms of volume (phones with >$600) is NOT going to increase in the coming years. This segment is stagnant with no more room for growth, because there are only so many people on this planet who can "afford" premium devices. Data from the last 2.5 years is a testament to this. For now, increasing ASP is taking care of growth. But is it sustainable long-term, say 5 years? Another 2 years - probably yes. Beyond that, how would Apple achieve growth?
Mid-range segment (phones between $300 to $600) is actually seeing "growth". In this context, what should Apple do? Ignore it (as many people mention in this forum), because it devalues the brand. Or join it, to take more "profit"? It is NOT as-if there is NO money to be made by selling mid-range phones ($300-$600). Apple already addressed it to a large extent by selling 2+ year old phones (iPhone 6s, SE and even 6 in many markets) in the last quarter. But that strategy does not seem to have resulted in significant growth, with overall unit sales being "flat" compared to previous year. So Apple needs to carefully evaluate options to fuel further growth for future. The decisions to be taken by Apple are NOT as easy as people make it out to be in this thread. I have no doubt that Apple has the right leadership team to take right decisions in this challenging environment.
Would that other manufacturers have such a strategy. You, like so many that comment here, are just aching for that race to the bottom, which seems to be the modus for many manufacturers to increase market share, and that always starts with cutting the average selling price back.
Did you happen to notice that Apple Services keeps growing? Would you think that there is a correlation? How about those wearable sales?
As Horace Dediu at asymco.com states, the average user spends $.50 per day on Apple products or services; something like $650 million revenue a day on average.
This is how Apple consistently makes tons of profits, leaving its competitors in the dust.
The curiosity factor in these results lies in thinking how unit sales would have turned out if Apple hadn't changed strategy and and left lower priced phones in the lineup.
I dare say that more than one top executive is breathing a sigh of relief.
When you say "still many others moving to the iPhone, ultimately growing the user base", do you mean that "Premium segment with >$600 has further potential for growth" in future? I.e. are there MANY smartphone users (to the tune of tens of million) who are currently spending >$600 on competing OEM phones and they are more likely move into Apple's ecosystem, fueling the future user-base growth? It is an important question to be answered. Apple is already holding about >80% share of the "premium segment" which is stagnant. There is very little, if any, scope for adding users in this segment.
If Apple does NOT grow user base, the effect of people holding on to their phones longer would be that iPhone sales would start going down compared to the same quarter year ago. And it has started happening already, with a very minor reduction in sales for the holiday quarter. While 1 million is a very small reduction in sales, it could become a "trend" for the coming quarters if Apple does not change strategy for future. There is only so much scope for increasing ASP of iPhones. Apple's user base "growth" cannot come from selling "Premium" phones (with >$600 pricetag) alone because that segment is stagnant. It can only happen through selling "mid-range" phones with pricetag between $300 - $600.
Your interpretation of "race to the bottom" is different from my interpretation of "race to the bottom". If there is NO profit to be made by selling $300-$600 phones, I would agree that it is a "race to the bottom" move. But that is NOT the case. There are profits to be made even in the mid-range segment. And this is a growing segment. As I mentioned earlier, the decisions to be taken by Apple are NOT as easy as you & others make it out to be.
China had double-digit growth, Japan had double-digit growth, indeed the company said all their market segments were up - Was it due to ASP increase or unit sales increase?
Edit:
Another question - How do you expect "middle class" to increase "unit sales" in future, while it has NOT helped increase the unit sales in the past 2.5 years?
Btw, I am from India and I don't see any respite for middle class even here!!! In fact, we are in a worser situation than you folks in USA. We have a PM who speaks like Obama and acts like Trump. Just imagine how that would be!!!
75% of US GDP is made up by the American consumer. What Apple understands is, 50% of US GDP is made up by the top 10% of consumers. That's who Apple is selling to. Those who can afford a $1,000+ laptop (Apple has 98% of that market) and a $1,000 iPhone X.
Yes, of course, there are a good portion of 'Aspirational' sales. Meaning, those people who perhaps are spending too much of their disposable income on Apple products. (I happen to be one them!)
Best.
If anything, Apple's decision to locally assemble/manufacture it's entry SE model, and possibly the iPhone 6s in India, looks to be exactly the type of remedy that you and muthuk are asking for.
I still have my doubts about you ever being an iPhone user, other that occasionally with your wife's iPhone 6, and based on your many posts to the effect of love of all things Huawei, I doubt you would every be satisfied with whatever Apple's growth strategy is. So, needless to say, I don't take your comments all that seriously on the issue of unit sales or marketshare.