The iPhone Is Alive and Well (At Least in the United States)http://www.fool.com/investing/general/2013/07/20/the-iphone-is-alive-and-well-at-least-in-the-unite.aspx Adam Levine-Weinberg
July 20, 2013
Much of Apple's (NASDAQ: AAPL) remarkable slide from more than $700 last fall to lows below $400 this spring can be explained by worries that the highly profitable iPhone is running out of growth opportunities. So far, the iPhone has achieved limited traction in developing countries, where incomes are lower and smartphone subsidies are minimal or non-existent. People in the developing world are opting for cheaper smartphones, most of which run Google's (NASDAQ: GOOG) Android OS.
Meanwhile, Apple bears have cautioned that Apple has already saturated the market for high-end smartphones in the U.S. and other wealthy countries. However, while roughly 60% of U.S. cell phone users already have a smartphone, that still leaves room for growth. Moreover, Apple is continuing to gain share from rival platforms in the U.S. In short, the iPhone is alive and well in the U.S., with plenty of room for further growth.
iPhone gaining share
Moreover, Apple's share of the U.S. smartphone market was up significantly compared with the three months ending in May 2012. In that prior-year period, Apple held just 31.9% of the market, compared with 50.9% for Android. Thus, while Android is still gaining share in the U.S., Apple has been the clear winner over the past year, gaining 7 percentage points of share, mostly at BlackBerry's (NASDAQ: BBRY) expense. BlackBerry's share has dropped from 11.4% in May 2012 to just 4.8% in the most recent batch of data.
Apple's U.S. smartphone market share growth demonstrates the success of its carrier expansion. Apple just added No. 4 carrier T-Mobile as a partner a few months ago, but it has also added Verizon (NYSE: VZ) and Sprint Nextel (NYSE: S) relatively recently (in February 2011 and October 2011, respectively). Given the prevalence of two-year smartphone contracts in the U.S., Apple is still reaping the benefits of this carrier partner expansion.
For example, Verizon recently reported that it sold more than 3.8 million iPhones in Q2, which represented an approximately 44% unit growth rate. More than half of the smartphones sold by Verizon last quarter were iPhones, even though the iPhone 5 launched more than six months before the quarter began.
The market still grows