Editorial: Sorry Android bloggers, but Samsung's Galaxy S7 didn't outsell Apple's iPhone 6s
Android fan blogs, led by The Verge, shouted to their audiences this week that Samsung's flagship Galaxy S7 managed to surpass sales of Apple's iPhone 6s, based on a Kantar survey of U.S. buyers. The story illuminates some interesting contradictions and exposes other misleading narratives about the smartphone market.
Some facts are not controversial. Samsung consistently ships greater numbers of phones than Apple. However, the reason why Apple is so much more profitable and influential than Samsung relates to the quality of the phones Apple sells, not the total unit numbers.
That's reflected in Apple's Average Selling Prices for iPhones, which have hovered above $650 as Android phones flirt with $200. While many Chinese phone makers almost exclusively make cheap phones (and therefore earn very little, if anything), Samsung offers flagship models that cost as much or more than iPhones. The problem is that Samsung can't manage to sell these premium phones in iPhone-like quantities.
Back in 2014, Samsung reached a peak number of flagship Galaxy S4 sales that coincided with record profits from its phone making IM division. However, when Apple launched iPhone 6 it eviscerated Samsung's high end sales. While the company's total phone shipments remained about the same, its premium models saw unit sales declines of around 50 percent, resulting in a devastating blow to its profitability.
This year, Samsung's premium Galaxy S7 sales have indeed performed better, relative to the last two years of slump. However, the company's performance is nowhere near Apple's and only in line with the Galaxy S4--a phone that was outsold by iPhone 5.
Samsung has historically launched its Galaxy S flagship in April, missing out on both the Western holiday quarter and China's Lunar New Year; both are peak quarters for Apple's highly cyclical iPhone sales. This isn't on accident or because the company is stupid; Samsung knows it can't directly compete against an Apple launch so it purposely avoids doing so.
This year, Samsung launched its Galaxy S7 earlier than usual on March 11. This enabled Samsung to get a month-long jump on two flagship launches of its rivals: LG and HTC. Samsung didn't report official sales numbers, but is estimated to have shipped around 10 million S7 and S7 Edge models in the remaining three weeks of the March quarter, out of the 82 million smartphones IDC estimates that Samsung shipped in total.
By way of comparison, at the weekend launch of iPhone 6s last Sept 25, Apple announced sales of over 13 million units across 3 days. In total, Apple sold 75 million iPhones in the launch quarter, the most it has ever sold.
None of these were "carrier friendly, good enough" models. They were all premium priced iPhones with an ASP of $650. During that same winter quarter, Samsung still shipped millions more total phones than Apple, but it earned much less. In the March quarter, Samsung IM earned $3.38 billion vs Apple's $13.987 billion.
Also notable is the fact that Samsung similarly scrambled to launch its larger flagship, the Galaxy Note 5, earlier than usual, too. Previously launched in October, it was instead moved up to August last year in an effort to get a jump on Apple's iPhone 6s Plus. That doesn't seem to have mattered, because Apple still exceeded its previous peak in launch weekend and total quarterly sales.
Despite achieving a record fiscal Q1 over the winter, Apple's earnings and guidance for Q2 raised concerns of slowing growth. Apple blamed a global economic downturn, and in particular noted the affect of unfavorable currency exchange rates. A strong U.S. dollar was effectively raising Apple's prices for almost everyone outside the U.S., and particularly in China. Incidentally, that's a problem Samsung doesn't face because it reports earnings in Korean Won.
However, rather than accepting Apple's figures, a variety of analysts and bloggers invented a New Realty where there's no longer any growth potential for premium smartphones, particularly in mature markets like the U.S., where many were repeating verbatim that "everyone who wants an iPhone already has an iPhone."
After a solid three months of preaching the gospel of Peak Phone, many of these same people have done a 180 and are now claiming that Samsung is showing Apple how to sell growing numbers of premium phones.
They're pointing to a global year-over-year quarterly decline in iPhone sales by Apple compared to an increase in Galaxy S7 sales by Samsung--a launch quarter with an estimated 25 percent growth over the S6 (according to data from Counterpoint Research.)
However, context is relevant. Last year, Apple sold 61.2 million iPhones in Q2; this year sales reached "only" 51.2 million. Samsung's premium Galaxy S7--despite a big 25 percent year-over-year jump--still only reached 10 million.
Counterpoint attributed Samsung's Galaxy S7 "growth" to the previous failure of the S6. The firm noted that "Samsung lost the window of opportunity" last year in being unable to satisfy customer demand due to supply constraints in the models customers wanted.
Samsung's "growth" came, not from being more exciting than iPhones, but in being less incompetent in this year's Galaxy S launch. It also came from increased promotional bundling deals that Counterpoint noted "included VR headsets, buy-one-get-one deals, tablets and even televisions."
And rather than being real growth, Counterpoint's research director Neil Shah estimated that the Galaxy S7 was only "on par with the popular S4 model," which launched three years ago.
Apple's sales were down from its year-ago iPhone 6 sales peak, but up dramatically from 2014's iPhone 5. Samsung's flagship has been down for years, and has only returned to the frozen performance of its own iPhone 5 rival. When you compare percentages of growth in different numbers, you arrive at often meaningless statistics that can be very misleading.
Further, while Samsung reversed the downward trend in its flagship, its total sales of smartphones were actually slightly down. IDC observed in April that "Samsung remained the leader in the worldwide smartphone market despite a year-over-year decline of 0.6% in shipments."
So while Apple was immediately assumed to be permanently unable to grow after one quarter of failing to exceed its year ago peak sales related to iPhone 6, Samsung was given two years to return to its former peak from 2014, and celebrated for "growing" all that time, despite still having made no real progress from that former peak.
This week, Lauren Guenveur of Kantar noted in the firms' Worldpanel report that, "anyone still focusing on these two giant competitors, however, is missing the bigger picture."
Erasing the idea that iPhone buyers were flocking to Samsung, Guenveur noted that in the U.S., "the majority of sales came from customers repurchasing and upgrading within their preferred brand. Among those intending to change devices within the next year, 88% of current Apple users and 86% of current Samsung users intend to stay loyal."
Among defectors, however, the rate of buyers switching to Apple was 2.8 times higher: "just 5% of Samsung purchases came from those switching away from Apple, while 14% of Apple purchasers came from those switching away from Samsung."
Kantar Worldpanel data is not based on sales channel data. It's compiled from a surveys of participants. That makes it useful for noting broad trends.
But based on that report, Vlad Savov wrote for The Verge that "Samsung's Galaxy S7 is outselling Apple's iPhone 6S in the US," although noting that "granted, it's not a fair fight, owing to Samsung's S7 and S7 Edge being the newer handsets by half a year."
It's also "not really fair" to ignore 13 million iPhone 6s sold in its first three days, plus another 113 million iPhones sold across two quarters, and then look at a fraction of Samsung's sales (exuberant estimates say the company sold maybe 25 million premium phones across two quarters of 2016) and portray survey results as definitive in making sales comparisons.
The Verge report also ignored the rest of Kantar's data. That includes figures for China, "the world's largest smartphone market," which showed that Samsung has seen its once-leading share in urban markets collapse from 34 percent back in 2014 to 9 percent two years later. Samsung's top spot in that market is now occupied by Apple and Huawei.
Further, while Savov called Samsung's relatively high brand loyalty in the U.S. a "monumental achievement," he ignored the situation in China, where Kantar's said brand loyalty "remained low."
Among Huawei's buyers, Kantar reported that 24 percent switched from Samsung phones, and among iPhone buyers, 25 percent switched from Samsung, an even higher rate than in the U.S.
That aligns with data presented by Apple's chief executive Tim Cook, who has noted record numbers of Android switchers buying iPhones.
Samsung should be applauded for fixing its Galaxy S supply problems this year. But it doesn't need fake headlines pretending that it's performing better than Apple, especially given that in reality it hasn't grown its premium sales at all over the last two years, is making no real progress in significantly expanding its flat sales of smartphones in general, and has lost its leadership position in China entirely.
Samsung, the underdog who's always on top
Some facts are not controversial. Samsung consistently ships greater numbers of phones than Apple. However, the reason why Apple is so much more profitable and influential than Samsung relates to the quality of the phones Apple sells, not the total unit numbers.
That's reflected in Apple's Average Selling Prices for iPhones, which have hovered above $650 as Android phones flirt with $200. While many Chinese phone makers almost exclusively make cheap phones (and therefore earn very little, if anything), Samsung offers flagship models that cost as much or more than iPhones. The problem is that Samsung can't manage to sell these premium phones in iPhone-like quantities.
Back in 2014, Samsung reached a peak number of flagship Galaxy S4 sales that coincided with record profits from its phone making IM division. However, when Apple launched iPhone 6 it eviscerated Samsung's high end sales. While the company's total phone shipments remained about the same, its premium models saw unit sales declines of around 50 percent, resulting in a devastating blow to its profitability.
In Q3 2014 Samsung's Galaxy S products + Note products saw nearly 50% decline in sales both QoQ and YoY according to my mix estimates.
— Ben Bajarin (@BenBajarin)
This year, Samsung's premium Galaxy S7 sales have indeed performed better, relative to the last two years of slump. However, the company's performance is nowhere near Apple's and only in line with the Galaxy S4--a phone that was outsold by iPhone 5.
3 days of iPhone 6s outsold 3 weeks of Galaxy S7
Samsung has historically launched its Galaxy S flagship in April, missing out on both the Western holiday quarter and China's Lunar New Year; both are peak quarters for Apple's highly cyclical iPhone sales. This isn't on accident or because the company is stupid; Samsung knows it can't directly compete against an Apple launch so it purposely avoids doing so.
This year, Samsung launched its Galaxy S7 earlier than usual on March 11. This enabled Samsung to get a month-long jump on two flagship launches of its rivals: LG and HTC. Samsung didn't report official sales numbers, but is estimated to have shipped around 10 million S7 and S7 Edge models in the remaining three weeks of the March quarter, out of the 82 million smartphones IDC estimates that Samsung shipped in total.
By way of comparison, at the weekend launch of iPhone 6s last Sept 25, Apple announced sales of over 13 million units across 3 days. In total, Apple sold 75 million iPhones in the launch quarter, the most it has ever sold.
None of these were "carrier friendly, good enough" models. They were all premium priced iPhones with an ASP of $650. During that same winter quarter, Samsung still shipped millions more total phones than Apple, but it earned much less. In the March quarter, Samsung IM earned $3.38 billion vs Apple's $13.987 billion.
Also notable is the fact that Samsung similarly scrambled to launch its larger flagship, the Galaxy Note 5, earlier than usual, too. Previously launched in October, it was instead moved up to August last year in an effort to get a jump on Apple's iPhone 6s Plus. That doesn't seem to have mattered, because Apple still exceeded its previous peak in launch weekend and total quarterly sales.
Apple has a problem but it's not Samsung
Despite achieving a record fiscal Q1 over the winter, Apple's earnings and guidance for Q2 raised concerns of slowing growth. Apple blamed a global economic downturn, and in particular noted the affect of unfavorable currency exchange rates. A strong U.S. dollar was effectively raising Apple's prices for almost everyone outside the U.S., and particularly in China. Incidentally, that's a problem Samsung doesn't face because it reports earnings in Korean Won.
However, rather than accepting Apple's figures, a variety of analysts and bloggers invented a New Realty where there's no longer any growth potential for premium smartphones, particularly in mature markets like the U.S., where many were repeating verbatim that "everyone who wants an iPhone already has an iPhone."
After a solid three months of preaching the gospel of Peak Phone, many of these same people have done a 180 and are now claiming that Samsung is showing Apple how to sell growing numbers of premium phones.
They're pointing to a global year-over-year quarterly decline in iPhone sales by Apple compared to an increase in Galaxy S7 sales by Samsung--a launch quarter with an estimated 25 percent growth over the S6 (according to data from Counterpoint Research.)
However, context is relevant. Last year, Apple sold 61.2 million iPhones in Q2; this year sales reached "only" 51.2 million. Samsung's premium Galaxy S7--despite a big 25 percent year-over-year jump--still only reached 10 million.
Counterpoint attributed Samsung's Galaxy S7 "growth" to the previous failure of the S6
Counterpoint attributed Samsung's Galaxy S7 "growth" to the previous failure of the S6. The firm noted that "Samsung lost the window of opportunity" last year in being unable to satisfy customer demand due to supply constraints in the models customers wanted.
Samsung's "growth" came, not from being more exciting than iPhones, but in being less incompetent in this year's Galaxy S launch. It also came from increased promotional bundling deals that Counterpoint noted "included VR headsets, buy-one-get-one deals, tablets and even televisions."
And rather than being real growth, Counterpoint's research director Neil Shah estimated that the Galaxy S7 was only "on par with the popular S4 model," which launched three years ago.
Apple's sales were down from its year-ago iPhone 6 sales peak, but up dramatically from 2014's iPhone 5. Samsung's flagship has been down for years, and has only returned to the frozen performance of its own iPhone 5 rival. When you compare percentages of growth in different numbers, you arrive at often meaningless statistics that can be very misleading.
Further, while Samsung reversed the downward trend in its flagship, its total sales of smartphones were actually slightly down. IDC observed in April that "Samsung remained the leader in the worldwide smartphone market despite a year-over-year decline of 0.6% in shipments."
So while Apple was immediately assumed to be permanently unable to grow after one quarter of failing to exceed its year ago peak sales related to iPhone 6, Samsung was given two years to return to its former peak from 2014, and celebrated for "growing" all that time, despite still having made no real progress from that former peak.
"Apple versus Samsung is so over"
This week, Lauren Guenveur of Kantar noted in the firms' Worldpanel report that, "anyone still focusing on these two giant competitors, however, is missing the bigger picture."
Erasing the idea that iPhone buyers were flocking to Samsung, Guenveur noted that in the U.S., "the majority of sales came from customers repurchasing and upgrading within their preferred brand. Among those intending to change devices within the next year, 88% of current Apple users and 86% of current Samsung users intend to stay loyal."
Among defectors, however, the rate of buyers switching to Apple was 2.8 times higher: "just 5% of Samsung purchases came from those switching away from Apple, while 14% of Apple purchasers came from those switching away from Samsung."
"Just 5% of Samsung purchases came from those switching away from Apple, while 14% of Apple purchasers came from those switching away from Samsung"
Kantar Worldpanel data is not based on sales channel data. It's compiled from a surveys of participants. That makes it useful for noting broad trends.
But based on that report, Vlad Savov wrote for The Verge that "Samsung's Galaxy S7 is outselling Apple's iPhone 6S in the US," although noting that "granted, it's not a fair fight, owing to Samsung's S7 and S7 Edge being the newer handsets by half a year."
It's also "not really fair" to ignore 13 million iPhone 6s sold in its first three days, plus another 113 million iPhones sold across two quarters, and then look at a fraction of Samsung's sales (exuberant estimates say the company sold maybe 25 million premium phones across two quarters of 2016) and portray survey results as definitive in making sales comparisons.
Apple and Samsung globally
The Verge report also ignored the rest of Kantar's data. That includes figures for China, "the world's largest smartphone market," which showed that Samsung has seen its once-leading share in urban markets collapse from 34 percent back in 2014 to 9 percent two years later. Samsung's top spot in that market is now occupied by Apple and Huawei.
Further, while Savov called Samsung's relatively high brand loyalty in the U.S. a "monumental achievement," he ignored the situation in China, where Kantar's said brand loyalty "remained low."
Among Huawei's buyers, Kantar reported that 24 percent switched from Samsung phones, and among iPhone buyers, 25 percent switched from Samsung, an even higher rate than in the U.S.
That aligns with data presented by Apple's chief executive Tim Cook, who has noted record numbers of Android switchers buying iPhones.
Samsung should be applauded for fixing its Galaxy S supply problems this year. But it doesn't need fake headlines pretending that it's performing better than Apple, especially given that in reality it hasn't grown its premium sales at all over the last two years, is making no real progress in significantly expanding its flat sales of smartphones in general, and has lost its leadership position in China entirely.
Comments
WOW me Samsung, don't copy and say yours is better ( when in reality it's not ) and dont feed websites and bloggers and tell them you are profitable and outselling Apple when again reality your not. If you can do that then you might have my attention.
/s
defends the knockoffs.
SMH
Even with free TVs Sammy is struggling to keep up
wity their idol.
Let's hope android figures out how to copy 3D Touch by 2017.
Who opened the door for all the morons?
this guy reminds me of the idiots that think iPhone was conceived, developed and released in 2007 in a matter of days.
Claiming screen size is innovation. SMH. A bigger iPhone isn't innovation.
That's like saying a bigger TV is "innovative." If only iterate that easy.
I almost feel sorry for these guys.
So please step up your game. This is getting boring.
Thats funny.
I read quite a few articles on the web ( including Sammys own website ) and there is no mention of a watch being made in 1999. Now maybe a regular watch but no smart watch. They didn't develop one and started shipping them until 2013/14, after the fact and keynote of apples unveil. They just rushed their product out before Apple did and claimed 1st. Apple made news with iPhone 2007, iPad 2010, iCloud 2009, Apple Watch 2014 etc..etc..
The point I was trying to make is yes Samsung copies Apple, and I guess Apple copies Samsung as far as screen size goes, because everyone whined and wanted a bigger screen size so Yes Apple caved and gave them a bigger screen size, well then just a few years later people again whined that they missed the 4" screen size so Apple yet again caved and gave them a smaller screen size. And now everyone wants a waterproof iPhone. Samsung already has a somewhat water resistant phone but not water resistant enough according to consumer reports. And now Apple must have one. So to sum this up.. Samsung copies Apple, and Apple copies Samsung. Again this goes back to innovation bigger screen sizes isn't innovation as stated in the blog above ( please forgive me I forgot who typed the rebuttal blog above ). It's how you innovate. How's is their music, cloud, pay doing?
Considering how upset people get with his articles, and how many trolls sign up just to complain, I'd say he's at the top of his game.
In this day an age, this should just not be happening.
Everyone use case is different. For me, android is a security nightmare. That is enough to make me not even want to consider buying any android phone for anything other than making phone calls.
But this article is all about rationality and facts. Those who search for facts can make money as well!
The way: Buy APPL and hold. And don't read financial blogs lol.
According to Kantar the Android market share in Q1 2016 grew with 7% to 78% in the top 5 countries in Europe. 2.6% of that 7% were people who were switching from iOS. Taking that the market share of iOS was around 20% in these countries, this means that in Europe there is a net transfer from 1 out of 8 iPhone users to Android in a year time. From an Apple perspective this is terrible.
It does not mean that Apple is doomed, it just means that Apple cannot sit and wait, Apple needs to constantly beat the market in with better products.
By focusing on the iPhone vs Samsung S7, DED ignores a very important trend. The smartphone in the $200 - $350 price range has improved much faster than the top models, closing the gap. A lot of people who bought in the past a top model (Apple and Samsung) are now buying this midrange models (Moto G+, Samsung A3, Huawei P9 lite, Nexus 5X,...), who offer a much better price/performance ratio than the top models.
In criticising The Verge for it's story about S7 sales in 2016, he says: "
Exactly how are supposed Samsung sales in 2014 relevant to an argument about S7 sales in the US in 2016?
The content of the article doesn't even get close to supporting it's title. It smacks of war time propaganda. DED is Apple's Lord Haw Haw.