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IDC critical of Apple for not selling profitless, sub $200 iPhones in market share report

post #1 of 73
Thread Starter 
Market research firm IDC has reported new figures seeking to explain why Apple, the most profitable smartphone vendor on the planet, is "underperforming the overall market" by not emulating the profitless manufacturing of low end phones by its competitors, most of whom are losing money.



IDC collectively referred to iOS and Android as accounting for 93.8 percent of all smartphone shipments in 2013, describing the two platforms as pursuing opposite strategies without referencing the fact that Apple earns the majority of the world's handset profits.

"Android relied on its long list of OEM partners, a broad and deep collection of devices, and price points that appealed to nearly every market segment," wrote IDC's Research Manager Ramon Llamas, without providing any context on how that strategy resulted in lost profits for the majority of manufacturers who use Android, including Google's own Motorola subsidiary.

"Apple's iOS, on the other hand," Llamas continued, "relied on nearly the opposite approach: a limited selection of Apple-only devices, whose prices trended higher than most. Despite these differences, both platforms found a warm reception to their respective user experiences and selection of mobile applications."

IDC failed to note that software development for Android failed to keep pace with iOS, both among consumers and in the enterprise, where Apple's iOS now accounts for 73 percent of corporate mobile deployments.

Instead of focusing on platform health and profitability, IDC recommended that hardware vendors look only at its research that "shows that consumer buying is rapidly shifting toward products with significantly lower price points," which is exactly what IDC recommended PC makers pursue prior to the largest retraction in the computer market ever.

That shift in PCs was best weathered by Apple and its premium Mac business, while low end makers of netbooks and cheap PCs have performed poorly, with Dell even evaluating plans to leave the consumer PC market entirely.

Go Cheap!



IDC's Ryan Reith noted that "In 2013 we saw the sub-$200 smartphone market grow to 42.6% of global volume, or 430 million units," but the firm did not break down how much of each platform was made up of these low end, ultra cheap devices.

Given that Apple doesn't sell any sub-$200 phones, it becomes obvious that the vast majority of these low end devices were fleshing out Android's 78.1 percent unit share of the "smartphone market" and accounting for the majority of its growth.

That growth comes at the expense of ASPs and margins. IDC now reports that Android's Average Selling Price has plummeted to $276, in stark contrast to Apple's iPhones which still command $650.

In November, IDC's numbers indicated that two thirds of "smartphones" associated with Android were actually low end devices selling for an average of $215, as Samsung reported to investors that its high end models "stayed at [a] similar level" while "mass market models" led its shipment growth.



Reith also commented that Samsung's efforts to put its Galaxy brand on both low end devices and higher end models like the Note 3 and S4 "has been an important factor in how Samsung has sustained its market lead."

However, Samsung is well known to have spent an incredible $14 billion on marketing and promotion in 2013, a figure that is the real reason why carriers and retailers are selling Samsung devices rather than the similarly priced products of other Android makers. Samsung is under increasing pressure from its investors to dial back its marketing budget, particularly as its results have fallen short of the expectations tied to that spending.
post #2 of 73
These reports practically write themselves.
post #3 of 73
Apple will make up their sorry lack of profit soon, by digging into the gold mine of netbooks.
post #4 of 73
Those IDC guys sure are really smart. .

ROFLMAO
Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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post #5 of 73
Quote:
Originally Posted by nagromme View Post

Apple will make up their sorry lack of profit soon, by digging into the gold mine of netbooks.


I clearly remember those same idiot analyst criticizing Apple for not getting into the netbook fad.  They seem to magical forgotten about what happened to that segment.

I guess the only thing they're good at is repeating the same mistakes in the hopes one day, statistics and probability will prove let them be right at least once.  

Morons.

post #6 of 73
What a great business idea — sell products at no or negative profit — for the competition.

On a related note, IDC no longer needs to explain why they are doing research instead of manufacturing products.

What idiocy.
post #7 of 73
Quote:
Originally Posted by tmay View Post

The Jokes These reports practically write themselves.

Fixed that for you...
"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #8 of 73
post #9 of 73

Funny to think that people are paid to produce this kind of... "analysis" :D

post #10 of 73
Quote:
Originally Posted by AppleInsider View Post

That growth comes at the expense of ASPs and margins. IDC now reports that Android's Average Selling Price has plummeted to $276, in stark contrast to Apple's iPhones which still command $650.

The decimal must be misplaced. I can't imagine anyone paying more than $2.76 for an Android phone despite the relative dazzle of the door stops / paperweights.
post #11 of 73
Quote:
IDC critical of Apple for not selling profitless, sub $200 iPhones in market share report

 

What a load of baloney.  Though I like the spirit of the first paragraph of the story! 

FWIW, Apple doesn't even sell an iPod Touch ("phone-less iPhone") for under $220.  Selling a sub-$200 Apple-branded smartphone would further gut the profit from the declining iPod Touch market.
 

Quote:

...consumer buying is rapidly shifting toward products with significantly lower price points," which is exactly what IDC recommended PC makers pursue prior to the largest retraction in the computer market ever.

 

Hilarious writing, AI.  Thanks.  :)

post #12 of 73
Apple doesn%u2019t do cheap, they do value, and value isn%u2019t cheap.
post #13 of 73
IDC's ANAL-yst is advising Apple to lower its profit margins and sell junk phones.

This is what they also advised PC Makers to do. And look at what happened to them.

DUH.

Idiotic.

As Steve Jobs said, Apple does not know how to do junk.
post #14 of 73
I have a question about this paragraph.

IDC failed to note that software development for Android failed to keep pace with iOS, both among consumers and in the enterprise, where Apple's iOS now accounts for 73 percent of corporate mobile deployments.

He says "both among consumers and the enterprise" but then gives the enterprise figures only. And the the wrong figures ( corporate mobile deployments not "software development").

I agree that Apple shouldn't go sub $200 but - at the risk of inflaming one off his sock puppets - I never like the way this guy manipulates figures and beats you over the head with far too much rhetoric.
I wanted dsadsa bit it was taken.
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I wanted dsadsa bit it was taken.
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post #15 of 73
IDC. You guys kill me. hahahahahahahahahahahahahahahaha
post #16 of 73

I can see an upside to Apple giving away cheap phones to kids the way Samsung does.

 

If the people in my communications circle could get something like a somewhat less robust and full-featured 5c for $300, they might buy that instead of a Samsung Note. That would expand the group of people with whom I can enjoy ecosystem-specific features like FaceTime, Messages and Airdrop, which in turn would make me more likely to drop $900 for an iPhone.

 

One of the benefits Apple claims is its ecosystem. That's really only a benefit if they have a large market share. If they stick with the current Mercedes model, one really only enjoys the benefit of ecosystem if one travels in more affluent circles! :)

post #17 of 73
Yeah, I am also scratching my head at the IDC. Apple is about quality not quantity. Android can help fill in the cheap segment and yes there is the iPhone 4S that is free to 2 year subs. Glad to know Apple is not listening to the Apple is Doomed crowd. If Apple did then Apple WOULD be doomed!
post #18 of 73

IDC, this link is for you.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #19 of 73

Good ol' IDC - the Milo Minderbinders of the market research industry.

 

http://en.wikipedia.org/wiki/Milo_Minderbinder

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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post #20 of 73
Quote:
Originally Posted by asdasd View Post

You can tell a DED article from the title. The opinionising starts there.

I have a question about this paragraph.

IDC failed to note that software development for Android failed to keep pace with iOS, both among consumers and in the enterprise, where Apple's iOS now accounts for 73 percent of corporate mobile deployments.

He says "both among consumers and the enterprise" but then gives the enterprise figures only. And the the wrong figures ( corporate mobile deployments not "software development").

I agree that Apple shouldn't go sub $200 but - at the risk of inflaming one off his sock puppets - I never like the way this guy manipulates figures and beats you over the head with far too much rhetoric.

Manipulates figures? Are you talking about IDC?

IDC's bread and butter is the shipment market share game. It couldn't care less about profit. That's why they are "researchers" and not doers.
post #21 of 73

The last line of that linked article sums up the key point that all of these analysts continually fail to grasp... "Lesson of the story: Market share does not translate into profit."
post #22 of 73

My earlier sarcastic post didn't show up.  I imagined what would happen if BMW tried to market a car to compete with the Honda Fit, called the 4 cylinder AM/FM radio 10-cupholder BMW Fit©.

 

At the same time, how low IS Apple's phone market share going to go?  

 

Apple doesn't want to have only 7% of the market or something, right?

 

Apple has a hard challenge.  They're a luxury brand.  Aspirational.  High end.  Cutting edge.  And yet the competition is growing way faster.

 

Maybe Apple should split its brand. Like Toyota and Lexus.  Honda and Acura in the US.  

 

As a loyal shareholder, I wish that Android would plateau so the story is not always about Apple's ceaseless loss of marketshare.

post #23 of 73
This is a stupid report - it is Apples decision to make and sell products at the price-point that they deem necessary . So why doesn't Rolls Royce and
Ferrari not sell $30,000 automobile one May also contend. Answer is that they do not gave to do so. I think the internet us making the press stupider as they keep printing worthless stories that years ago would never make it into print.
post #24 of 73

All of the "advice" Apple gets has a short-term stock market gain as the goal.

post #25 of 73

Originally Posted by AppleInsider View Post

Market research firm IDC has reported new figures seeking to explain why Apple, the most profitable smartphone vendor on the planet, is "underperforming the overall market" by not emulating the profitless manufacturing of low end phones by its competitors, most of whom are losing money. [...]

IDC collectively referred to iOS and Android as accounting for 93.8 percent of all smartphone shipments in 2013 ...


... Apple's iOS now accounts for 73 percent of corporate mobile deployments. ...

... sub-$200 smartphone market grow to 42.6% of global volume, or 430 million units ...


... Android's 78.1 percent unit share of the "smartphone market" ...

... Android's Average Selling Price has plummeted to $276, in stark contrast to Apple's iPhones which still command $650. ...

... Android were actually low end devices selling for an average of $215 ...
 
... Samsung is well known to have spent an incredible $14 billion on marketing and promotion in 2013 ...
 
 
 
Lots of numbers.  But the most important number, for Apple and its shareholders, is this one:
 

87.4%

 

As in: 

 

Apple's iPhone earned 87.4% of global handset profits in December quarter

 

And yes, that figure includes *all* mobile phone handset profits. Including whatever profits there might be in the sub-$200 market.

 

AI story:

 

http://appleinsider.com/articles/14/02/12/apples-iphone-earned-874-of-global-handset-profits-in-december-quarter

 

Original source:

 

http://news.investors.com/technology-click/021114-689654-2014-mobile-phone-market-to-see-little-or-no-growth.htm

Sent from my iPhone Simulator

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Sent from my iPhone Simulator

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post #26 of 73
Quote:
Originally Posted by Macky the Macky View Post


Fixed that for you...


Speaking of Jokes, here's another.

 

Two farmers bought a truckload of watermelons, paying five dollars apiece for them. Then they drove to the market and sold all their watermelons for four dollars each. After counting their money at the end of the day, they realized that they’d ended up with less money than they’d started with.

“See!” said the one farmer to the other. “I told you we shoulda got a bigger truck.”

 

Unfortunately, I can not take credit for this one, but the source is here. Very good opinion piece to read , btw.

post #27 of 73

This guy is starting with the assumption that Apple's goal is to sell more phones than all of Android.  If that were the case, then he's right - they need to compete in every segment of the market, including the very low end.  But obviously that isn't Apple's goal, nor should it be.  Apple has a premium brand to protect.  A sub $200 phone would ruin that.  Apple is doing just fine, raking in more money than any other phone maker.  This guy needs to keep his dumb opinions to himself.  

post #28 of 73

Why don't we all pass this article along to the mass press - NBC, CNN, Fox, etc. and call out IDC for what amounts to a bogus article knocking Apple for something they should NOT be doing, making anything and selling it at a loss for the almighty market share number...

 

Shills like IDC and Gartner are simply promoting the companies who are writing them checks, trying to make Apple (who doesn't pay them) look bad.  And I would bet that they have some connections to traders and firms on Wall Street, knowing full well that their "analysis" is likely to have an effect on Apple stock that they can take advantage of.

 

So many crooked people out there doing really bad things, making tons of money.

post #29 of 73
Seems to me that IDC doesn't get it. Apple isn't in the market to rule the market by selling the most phones. They are trying to create what they feel is the best phone. Same with tablet, computer, media center etc.

That so many consumers buy into Apple's notion of 'the best' is a testament to their judgement of what to include and not, even at a higher price.

But Apple has never chased the top share position and never will. Even having held it with the iPad as the first of its kind in the current market they aren't designing etc to recover their 'lost' position as the market is flooded by other options.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #30 of 73
Apple spends $18 Billion on R&D and $1 Billion on Marketing, while Samsung spends $14 Billion on marketing alone.

Google spends $15 billion on Motorola and 2 years later gives it away.

Yea, Mr. Market wants Apple to emulate those traits, so it can justify the "Apple Is Doomed" flag.
post #31 of 73
Quote:
Originally Posted by Kibitzer View Post
 

Good ol' IDC - the Milo Minderbinders of the market research industry.

 

http://en.wikipedia.org/wiki/Milo_Minderbinder

Three stars to you for the Catch-22 reference.

post #32 of 73
Whoa Doggie! These guys have been drinking the cheap wine again. Wonder what their accountants would think of this business strategy?
post #33 of 73
Who cares IDC -- people who want cheap iPhones can go on ebay or Craigslist and buy a used one...
post #34 of 73
Do those "intelligent people" at IDC want to attract attention to themselves ?
Are they looking to justify their existence ? (to get some kind of subsidy maybe)
If so then they could do it in a slightly more adult way.
Are they also critical of Rolls Royce for not manufacturing a Beatle ?
post #35 of 73

Someone needs to come up with a standard for what constitutes a smartphone, then use that standard to determine how many of each level of phone are being sold. When any kind of food product is harvested, each piece goes through a selection process that determines whether it's grade A (usually sold whole for consumers) then all they way down to whatever the lowest grade is (product only good for animal feed--not saying much for what we feed our animals). Apple only sells grade A while Android phones are everything from grade A- to the feed level, in other words, not fit for humans. How many garbage phones does Android come on? Probably 50% of the amount they sell. We've all bought garbage hardware of one kind or the other but most of us understand you get what you pay for and I'd challenge that the majority of Android-based phones are use once and throw away types. I challenge IDC to come up with a proper chart separating these "smartphones" into proper bins and see how many true smartphones (grade A) are actually sold running Android. I bet Apple sells just as many of these phones as Android while Android sells 99% of the non grade A phones (phones I'd never buy).

post #36 of 73
IDC needs to manufacture a phone to show everyone how to make and sell cheap phones. Let them lead the way, cheap skates.
post #37 of 73

I don't think selling at cost would be a good idea for Apple.  But I wish they would consider mid-range or even low cost with 25%-35% margins. Apple could easily sell a mid-range $350-$400 phone. For example, when the iPhone 6 gets out, why not sell the 5c in the $350 - $400 range instead of the usual $450 price point for a 2 years old phone?

post #38 of 73
Quote:
Originally Posted by asdasd View Post

You can tell a DED article from the title. The opinionising starts there.

I have a question about this paragraph.

IDC failed to note that software development for Android failed to keep pace with iOS, both among consumers and in the enterprise, where Apple's iOS now accounts for 73 percent of corporate mobile deployments.

He says "both among consumers and the enterprise" but then gives the enterprise figures only. And the the wrong figures ( corporate mobile deployments not "software development").

I agree that Apple shouldn't go sub $200 but - at the risk of inflaming one off his sock puppets - I never like the way this guy manipulates figures and beats you over the head with far too much rhetoric.

I think Apple Insider typically gives a way less pro-Apple approach to their articles than most other Apple news sites, which are more scathing/opinionated. This article is a little gushy but it's not as bad as you're making it sound.

 

In your example, they don't need to mention every consumer reason in favor of iOS software development (for example: 500,000 iPad dedicated apps compared to 1,000 Android Tablet ones - per Tim Cook, there's also an article from Times that mentions that their Android dev team is twice the size of their iOS team... making the same product) and having 73% corporate deployments essentially guarantees that you are developing more 1st party enterprise software than Android.... I don't see how you can even assume otherwise.

post #39 of 73
Can someone help me understand what IDC's idiotic recommendation is a benefit to Apple? Because I don't get it. So, you have a huge market share but you're not making money. I wonder how much market share would contribute to the valuation of a company if they're losing money?
post #40 of 73
Besides IDC is no longer relevant anyway.
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