Apple, Inc. Dominates Where It Counts -- and the iPhone 6 Will Take Apple Even Further

In most global studies of smartphone market share these days, it's always the same story: Google's Android gains on Apple's (AAPL -1.22%) iOS. Or Samsung's smartphones gain market share on Apple's iPhones. But in more narrowly measured high-end markets, the winner is clearly still Apple. And the iPhone 6 may take Apple's dominance to a whole new level.

Apple's iPhone in the U.S.
Apple accounted for 41.9% of the installed base of smartphone users measured by the three-month average of March through May, according to a just-released report from comScore. Apple's share is up from 41.3% in the three-month period ending in February.

This is good news for Apple investors. The U.S. is Apple's most lucrative market, contributing more to earnings than any other country. While Apple doesn't break the U.S. out into its own segment, its Americas revenue accounted for 31% of Apple's total revenue. That's well ahead of Europe and China, which contribute 22% and 20%, respectively.

While Apple's paltry 2% year-over-year revenue growth in its Americas segment in the company's most-recent quarter suggests the geographic segment may be peaking, the segment will soon likely receive a boost from a larger-than-usual iPhone upgrade cycle in the U.S. BTIG analyst Walter Piecyk, who has a $112 price target on Apple stock, expects that 65% of AT&T's (NYSE: T) subscriber base will be due for an iPhone upgrade this fall, when the iPhone 6 line is expected. Typically, only about 30% of the carrier's subscribers are eligible for an upgrade, he says.

Rendering of the alleged iPhone 6. Image source: Martin Hajek , used with permission.

Of course, the Apple iPhone market-share story isn't so optimistic in every country. In the important Chinese market, or the world's largest smartphone market, Android accounted for 61.9% of shipments in the three months ending in May, according to Kantar Worldpanel. That's up 9.9% from 52% in the year-ago period.

No signs of weakness at the high-end
Despite the fast ascent of Samsung's high-end Galaxy line of smartphones, however, Apple's dominance at the high-end across global markets appears to be mostly unfettered.

Even in China, where Android-powered Samsung phones are rampant, Apple dominates the $500 plus smartphone segment. Twenty-seven percent of all smartphones in China cost $500 or more, and 80% of these phones are iPhones, according to Chinese app analytics firm Umeng. 

In Japan, Apple's dominance is not only unquestioned, but it is growing. Apple iPhones accounted for 51.7% of smartphone shipments in the three months ending in May, up from 49.6% in the year-ago quarter, according to Kantar.

Apple is downright hot stuff in Japan. Kantar strategic insight director Dominic Sunnebo explains:

Japan's love affair with Apple shows no sign of fading. Even though the iPhone has now been available on Japan's largest carrier, NTT DoCoMo, for a number of months Apple still accounts for more than 40% of sales on the network. The success of the iPhone is also filtering through to the iPad, with almost a quarter of Japanese iPhone owners also owning an iPad. With smartphone penetration in Japan lagging well behind Europe and the US, Japan will remain a key growth market for Apple.

Given Apple stock's conservative valuation, all Apple shareholders likely need to be rewarded over the long haul is for the tech giant to continue being a key player at the high-end of the market, while also finding occasional moderate growth opportunities.

Indeed, this appears to be the simple thesis for Evercore analyst Rob Cihra, who recently raised his price target (via AppleInsider) for Apple stock to $115 -- up 22% from Thursday's closing price of $94. "We see Apple creating its own growth through uniquely innovative hardware+software with integrated services vs. a sea of otherwise commodity devices," he explained in a recent note to investors.

In the immediate term, analysts have big expectations for the iPhone 6. The phone is rumored to come in two larger sizes, 4.7 inches and a phablet-like 5.5-inches. These measurements are up from the 5s screen size of 4 inches. Pent-up demand for a larger iPhone could take Apple's dominance at the high-end of the smartphone market to whole new levels. The phone is expected to be introduced as early as the first or second week of September.