For the longest time, Apple (AAPL +2.08%) and Samsung have each dominated the smartphone market in their own respective ways.
Apple would trail Samsung in terms of unit volumes, but would typically garner 70% or more of the industry's operating profits (most recently estimated at 93% last quarter). Meanwhile, Samsung typically tops the list in terms of unit volumes, since it plays in almost every market and sells devices all over the pricing spectrum. That scale allows Samsung to enjoy its own fair share of operating profits, while almost every other smartphone OEM in the world fails to turn a meaningful profit.
That's all just changed.
Number 1 in more ways than one
Market researcher Gartner has just released its estimates for the smartphone market in the fourth quarter, and its figures show that Apple has now overtaken Samsung as the market leader in terms of unit volumes. The Mac maker squeezed ahead of its South Korean rival by less than 2 million smartphones.
Here are the top 5 players.
|
Company |
Q4 2014 Units |
Q4 2014 Market Share |
|---|---|---|
|
Apple |
74.8 million |
20.4% |
|
Samsung |
73 million |
19.9% |
|
Lenovo* |
24.3 million |
6.6% |
|
Huawei |
21 million |
5.7% |
|
Xiaomi |
18.6 million |
5.1% |
Source: Gartner. *Includes Motorola sales
Apple is now on top of the smartphone market, in terms of both unit volumes and profitability. The broader market continues to grow, reaching 1.2 billion units in 2014. That's up 28% from the 970 million units sold in 2013. Smartphone penetration is also on the rise, now accounting for two-thirds of all global handset sales.
Samsung's smartphone business has been struggling for the past year, with operating profits in its important mobile division plunging by 64% last quarter. Hence, Apple's share of the industry profit continues to rise (as mentioned above). Samsung's unit share fell by nearly 10 percentage points in the fourth quarter, and Apple is winning over premium users with the new iPhone 6 and 6 Plus.
Sell-in versus sell-through
It's worth noting that Gartner's figures are based on sell-through to end users. In contrast, companies (and Gartner rival IDC) report based on sell-in to distribution channels. That's why Gartner's estimates differ from the 74.5 million iPhones that Apple officially reported in January, and IDC just uses Apple's official numbers anyway.
Sell-through is important because it is a better indicator of actual consumer demand. Apple's channel inventory declined by 200,000 units in the December quarter because the company was struggling to keep up with blistering demand, and Apple wasn't able to reach supply/demand balance until January. Apple finished the quarter below its target range of channel inventory.
That actually means that Apple's reported results would have been even stronger if it could have kept up with demand, since normally there is some channel fill that takes place following product launches. Consumers were simply snapping up the iPhone 6 and 6 Plus faster than Apple could stock its distribution channels.
The tables are turning
For the full year, Samsung still beat out Apple by a large margin. The South Korean conglomerate sold 307.6 million smartphones throughout all of 2014, easily trouncing Apple's 191.4 million. But Apple and Samsung are heading in opposite directions. Samsung's global unit volumes were down 12% while Apple's rose 27%.
Additionally, Samsung just announced its new flagship Galaxy S6, which looks like the most impressive update in years as the company has ditched its cheap plastic ways in favor of higher quality materials and design.
Can Apple beat Samsung for the full year 2015?
