Apple's iPhone captures 81 percent of premium $600 smartphones in Russia
Russia's smartphone shipments grew 6 percent in the first quarter of 2017, but premium smartphones (over $600) in the country grew by 143 percent over the previous year, and Apple captured 81 percent of those sales.
A report by Minakshi Sharma for Counterpoint Research detailed the difference between market share and value by noting that while iPhones accounted for 12 percent of units (second place to Samsung's 31 percent share), the two companies' combined 43 percent unit share captured 66 percent of the smartphone market by value.
Counterpoint's Niel Shaw clarified to AppleInsider that 60 percent of the +$400 phone market belongs to Apple, while the iPhone maker owns 81 percent of the market for phones that sell at iPhone prices in the +$600 segment. Samsung took just 14 percent of Russia's rapidly growing premium tier sales, but made up just over half of low end phones between $100 and $150.
The difficulty of competing against lower priced domestic phones and Chinese imports has resulted in Samsung working to sell basic Tizen phones in Russia as a cheaper alternative to Android.
Another Chinese player, Huawei, accounted for 9 percent share. Tele2, a domestic Russian brand, grew to account for 4 percent of sales.
Apple's lock on the premium phone segment Russia is also reflected in other markets. Last November, a report noted that Apple already achieved a 66 percent majority of premium phones in that country, after experiencing a 50 percent growth in sales during fiscal 2016.
A report by Minakshi Sharma for Counterpoint Research detailed the difference between market share and value by noting that while iPhones accounted for 12 percent of units (second place to Samsung's 31 percent share), the two companies' combined 43 percent unit share captured 66 percent of the smartphone market by value.
Counterpoint's Niel Shaw clarified to AppleInsider that 60 percent of the +$400 phone market belongs to Apple, while the iPhone maker owns 81 percent of the market for phones that sell at iPhone prices in the +$600 segment. Samsung took just 14 percent of Russia's rapidly growing premium tier sales, but made up just over half of low end phones between $100 and $150.
The difficulty of competing against lower priced domestic phones and Chinese imports has resulted in Samsung working to sell basic Tizen phones in Russia as a cheaper alternative to Android.
Big shifts in unit share, less in premium domination
Last February, the firm reported that China's Lenovo and ZTE had rapidly passed up iPhones in unit sales with triple digit growth, pushing Apple into fourth place. However, a year later Apple is back in second place in Russia, while Lenovo and ZTE shipments fell harder and faster than Apple had (Lenovo's 11 percent unit share had fallen all the chart below 4 percent, while ZTE similarly fell from 10 percent share to just 4 percent.
Another Chinese player, Huawei, accounted for 9 percent share. Tele2, a domestic Russian brand, grew to account for 4 percent of sales.
Apple's lock on the premium phone segment Russia is also reflected in other markets. Last November, a report noted that Apple already achieved a 66 percent majority of premium phones in that country, after experiencing a 50 percent growth in sales during fiscal 2016.
Comments
Seems to me there needs to be a healthy balance between market share and profits. This idea that you can only have one or the other is silly.
The people who can afford a $600+ phone are also likely to be the same people who will buy applications from your developers instead of insisting that they get everything for free. They are the same sort of people who will be adaptable and move with the times, which is why they can afford a $600+
Market share is important, but it's nowhere near as important as the quality of your customer base, otherwise Samsung's massive market share advantage would be reflected in their making more money than Apple, which they don't seem to do.
The next thing you're going to say is 'Well, unless they start making phones for everybody then all this will come to an end.'
Okay, but when?
Give me a date; doesn't have to be exact; anywhere in a six-month ball-park will do.
Like I said there needs to be balance. Sell 100 phones @ $50 profit per phone earns you more than selling 10 phones @ $100 per phone profit. And you're just talking about hardware. What about other ancillary services that go along with hardware. If the iPhone SE helped to increase the iOS install base that's more people who might be buying apps, paying for iCloud storage or Apple Music. There's a reason Apple released a new 9.7" iPad at $329.
Different companies have different strengths and abilities in a given market, and this will determine which segment in that market they are best to address. Apple has, from day 1 of the company, targeted the high-end / premium within a given market. They have approached this by trying to provide a differentiated experience with an integrated approach of hardware and software (and later broader ecosystem). There were some ups & downs, but Apple has clearly proven that they can effectively dominate this top portion of the market, having done so with personal computing, music players, smart phones, tablets, and now wearables.
Along the way, they have also shown that the premium end not only provides good profits from h/w & s/w sales, but also that these customers tend to spend more per user on the broader ecosystem. So, they are the better customers here as well.
Clearly, not everyone desires, or wants to pay, the prices Apple want to charge. And there are no end of companies taking their strengths & abilities to fight for sales in the other segments. This is the market at work. There is nothing at all wrong with a company that knows it can't compete at the high end and wants to become an efficient low cost producer for the lower or mid segments. Good on them. They won't make the same margins, but they may do OK, and that is enough for their business. Not glamorous, but someone will fill the need.
Those that advise Apple to abandon their premium focus for the sole purpose of growing share "because services" have a difficult time with numbers:
- Profit from iPhones as currently selling are vastly higher than profits from services per user. Services are the extra gravy.
- Apple does not have an advertising based business - services are based on purchases - so going down market doesn't get the same quality of user who will spend as much on those services.