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

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.

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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  • Report this Comment On March 11, 2014, at 11:57 AM, Renee wrote:

    Ahh, the US: the only place where Apple is still doing well. Loyalty to a company because it's American is good and all, but shouldn't be at any cost!

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