Most device makers have (or are about to) released their new gadgets for the holiday season. Apple has refreshed almost their entire product line; only the iPods remained untouched. Various Android handset makers have released updates; Samsung, Motorola, HTC, and other lesser presences in the marketplace have put forth their newest an shiniest to lure your hard earned money from you.
With all of the new devices out there, there’s been some talk about what company/platform is ‘winning’. The concept alone is a bit nebulous; there are several ways that any competition can be evaluated. Lately, the smartphone market has been judged almost solely on market share. What is it, and does it matter?
Simply put market share is the percentage of all customers that own/have purchased a specific device. If 100 customers have purchased a type of product, and 20 have purchased yours, you have 20% market share. It’s a quick and easy way to see what products are selling, thereby allowing analysts to make snap judgements on sales and product market performance.
Apple’s primary competition comes from devices sporting the Android operating system. Most market share analyses focus on the smartphone’s operating system, not the manufacturer. Android has long had a dominant share of the worldwide market, and its lead has been growing. Does this indicate that Apple’s primary profit generating product is in dire peril? To answer, let’s look a bit deeper at this simplistic evaluation.
While Android as a whole has a commanding portion of the market, it’s an artificial construct for analysis. The only thing most Android devices share in common is their root operating system; each manufacturer that uses the freely available operating system will tailor it to their specific devices and desires. These manufacturers aren’t just competing with Apple’s iOS, they are competing with each other as well. HTC, Samsung, Motorola, and so on all vie for the same consumers; considering their sales figures as a single entity isn’t exactly a sensible way to evaluate just about any aspect of the market.
When evaluated on the basis of manufacturer instead of operating system, the picture changes a bit. Samsung is currently in possession of the largest market share by manufacturer, so surely they must be ‘beating’ Apple, aren’t they? Not so fast, my friend. Samsung is a very successful company, but let’s take an even closer look- Samsung follows a different corporate strategy, producing as many different devices as possible for all possible customers. They target everyone from the entry level, unsubsidized market to high end customers, and release many products that may not stay on the market long (think of it as a throw-it-against-the-wall-to-see-if-it-sticks strategy). Apple, on the other hand, doesn’t contest the entry level market, and courts the mid level market with older but still functional devices. They have positioned themselves as quality manufacturers, focusing on creating the best user experience, customer service, and device ecosystem. Neither is necessarily the ‘right’ or best strategy, and both organizations have been extremely successful.
While market share is an important aspect of analysis, there are others that aren’t given as much play, like profitability. The whole reason companies offer their products is to generate a profit. Apple is currently the reigning king of this facet of the smartphone market. Secondly, it’s still easy to overlook the fact that the smartphone market is still a growing sector- the devices have been readily available for less than ten years! As customers become part of this market, the percentages of market share change (and not necessarily for the reasons that you might think). As Apple doesn’t compete in the inexpensive, customers that will most likely choose an inexpensive device will have one choice- Android. The middle tier of the market is more hotly contested, with Apple just now offering a ‘new’ device in the 5c. Previously they kept the now last year’s model at a discounted price for those that didn’t (or couldn’t) spend the money for the most current iPhone.
So while market share percentages may have changed, Apple’s not concerned over the impressions of pundits. Their actual sales of devices have been trending up since the introduction of the iPhone, and the 5s/5c have continued that trend. Market share simply reflects a larger pie, not a shrinking piece of it, and parts of that pie Apple readily relinquishes as it lacks what Apple strategically focuses on- profit. The lower-end segments may produce more new sales, but the devices don’t produce much (if any) profit due to their lower prices, even with older and less expensive components and manufacturing.
So the next time you see an article written by a pundit claiming that Apple needs to expand their market share or face certain doom, bear in mind that they may be making that judgement off of incomplete or misleading information. The market leaders (Apple among them) are doing just
- Smartphone Subscriber Market Share – Apple And Samsung Keep Huge Lead (247wallst.com)
- Sorry, Google: Samsung has flat-out conquered Android (bgr.com)
- Memo to Wall Street: Apple Doesn’t Care About Market Share (fool.com)
- Apple will continue to ignore Android market share stats all the way to the bank (macdailynews.com)