The way that Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF) approach different markets around the world offers insight into their smartphone strategies. Samsung favors an "all of the above" approach by producing less costly units for developing markets like India and its high-end Galaxy offerings for developed markets like the United States. While Apple also performs well in developing markets, China has been a particular bright spot for Cupertino, it's done so by focusing on the same high-end units that it sells in developed countries.
Both approaches have proven to be successful. Apple commands the highest market share in the largest developed smartphone market, the United States, while Samsung retains the title of world's leading smartphone manufacturer. But while Apple CEO Tim Cook has been upfront with his desire to grow market share by converting Android users, new reports suggest he may have taken his eye off the ball in the United States.
Samsung may be stealing U.S. market share
According to market intelligence firm Parks Associates, Samsung is closing the gap. "Apple remains the dominant smartphone manufacturer in the U.S., but Samsung is catching up," said Mobile Product Research Director Harry Wang in a Parks Associates press release. "Apple controls 40% of the smartphone market while Samsung has 31%, and LG is the next closest with rival with 10%." While the press release doesn't go into detail, losing U.S. market share is not what Apple investors want to hear.
While investors shouldn't be too worried about just one survey, comScore's recent December U.S. smartphone subscriber market share survey reported similar results. comScore, reports Apple lost 0.7 percentage points of total U.S. smartphone market share with subscribers in the last three months, while Samsung gained 0.8 percentage points. See the graph below for comScore's quarter-on-quarter comparison:
|comScore's Data||Sept. '15||Sept. '15||Dec. '15||Dec. '15||Unit QoQ Growth|
|Total Smartphone Subs||100%||192.4||100%||197.4||2.6%|
Apple did grow its U.S. iPhone user base during the quarter, according to comScore. Unfortunately, Apple did not grow its U.S. user base more than the overall smartphone market, so its market share decreased. During the fourth calendar quarter, total U.S. smartphone subscribers increased by 2.6%, Samsung increased its subscribers 5.6%, and Apple saw a 1% bump.
While the easiest thesis is that Samsung is stealing market share as consumers are shifting from Apple to its high-end Galaxy models, I think that's the lazy takeaway. While Samsung's been coy about Galaxy sales figures, in the broader commentary of earnings calls, the company has been somewhat dour about its mobile division.
Instead, I think a large percentage of new smartphone users are late adopters who simply upgraded to smartphones due to lack of "dumb" (read: cell phone-only) options. These consumers are technically smartphone users in the respect they have a smartphone, but in form, they are still cell-phone users as they consider their new devices simply a phone. And for these users, paying high prices for Apple's iPhone makes no sense.
If this thesis is true, Apple will have to rely on refresh cycles to move new units in the U.S. In the end, it seems Apple's real competition in the U.S. isn't Samsung; it's antipathy, and a mature market.