The U.S. Smartphone Market Still Offers Upside for Apple, Inc.

While Apple's U.S. market may no longer qualify as a growth market, it's still very important for Apple investors.

Mar 11, 2014 at 11:00AM

In the U.S., Apple's (NASDAQ:AAPL) iPhone business is still gaining market share, according to recent data from comScore. And given the robustness of Apple's recent gains in its home market, it looks like this trend should continue. This is excellent news for investors. Success in the U.S. is especially important since it's the company's largest market.

Apple's U.S. dominance
Apple's three-month average smartphone market share ending December 2013 among other manufacturers in the U.S. increased to 41.8%, up from 40.6% in the period ending in September 2013. The gain is even more impressive when you zoom out about a year. In the period ending January 2013, Apple's share of the U.S. smartphone market was 37.8%, 400 basis points below the period ending December 2013.

Iphone Apple's September launch of its iPhone 5s and 5c helped bolster sales during comScore's most recent period.

Samsung has also made gains. The company's share of smartphone subscribers in the U.S. increased from 24.9% in the period ending September 2013 to 26.1% in the period ending in January, slightly outpacing Apple's sequential gain. Of the other smartphone manufacturers tracked by comScore, there were none with market share gains.

The most interesting trend in comScore's report, however, is not manufacturer market share -- it's platform market share. Despite Google's approach to offering Android free to manufacturers, Android's lead over iOS narrowed to 10.1% in the January quarter from a 14.5% lead a year ago. The story continued sequentially: Apple's platform share of smartphone subscribers rose 120 basis points while Android's fell 30 basis points. Apple was the only platform with sequential market share gains in comScore's new report.

Apple's U.S. opportunity
It's a great time for Apple to be succeeding in the U.S. smartphone market.

First, the U.S. is a massive market for the company. Though it's not specific to the U.S., Apple's Americas operating segment accounts for about 35% of the company's revenue, easily trumping its second-largest operating segment, Europe, at 23%.

Second, there is still plenty of opportunity in the U.S. market. Beyond the massive replacement market of 156 million current smartphone owners (who upgrade about every two years), Asymco's Horace Dediu estimates the U.S. smartphone market has only reached 65% penetration, so there's still incremental opportunity.

The U.S. smartphone market is not fully saturated at 65% penetration. For instance, comScore's January 2013 report pegged U.S. smartphone owners at 129.4 million, significantly lower than the 156 million identified in the period ending in December 2013.

While Apple probably won't be seeing double-digit year-over-year growth in smartphone sales in its Americas segment going forward, even single-digit growth could have a meaningful impact on Apple's bottom line. So, Apple's continuing popularity as a smartphone choice in the U.S. is good news for Apple investors.

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Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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