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An equally important question is: What are each of the smartphone companies doing to capture market share? One way of looking at the tectonic shift is to review each manufacturer’s profit per smartphone from 2010 to 2011. By selectingGartner smartphone unit market share and Asymco smartphone profit market share, I have used data that is consistent from 2Q 2010 to 2Q 2011 so we can see if there’s a level playing field or if some smartphone makers are trading off price for market share.
Samsung is pushing the envelope of smartphone price elasticity, for the data shows that Samsung is sacrificing profit (price) for market share growth. From 2010 to 2011, Samsung achieved an astounding 3X growth in units sold. Although Apple has grown less than half as fast as Samsung, it is capturing nearly 6X the amount of profit that Samsung is capturing per smartphone. Apple is focused on other objectives: customer delight, profit growth and maximizing shareholder value. So which stock would you rather own? Nevertheless, consumers are voting with their pocketbooks for which smartphone they want to own. Choosing a smartphone is easy when so many Android options are free. Now that the iPhone 3GS is free, the market share wars will accelerate. Unless a consumer walks into the Apple Retail Store, shopping for a smartphone will be more like the television game show - “Let’s Make a Deal.” Apple continues to be successful without competing on price – its Blue Ocean Strategy. Apple maintains a one-product, one-price strategy. The only prices you will find for iPhones are those presented at its launch: Apple iPhone 4S @ $199.99 for 16GB (with 32GB @ $299.99 and 64GB @ $399.99), iPhone 4 @ $99.99 for 8GB and iPhone 3GS for free with a 2-year contract). Conversely, Samsung is swimming with the sharks in the Red Ocean of Android phones. A quick glance at AT&T’s online store shows 16 Android models from 8 different brands with 5 being free and all but one priced less than $100. More Android sharks are on their way at AT&T, Verizon, Sprint and TMobile. A consumer’s choice may be as easy as the AT&T representative answered me when I asked him which smartphone he likes the best (before I purchased my iPhone 4S): “I tried the LG Thrill which was good for the 3D, yet it no longer thrilled me when I had to hold it at a certain angle to get 3D. Then I tried the Samsung Captivate which no longer captivated me because battery life became an issue. So I’m getting the iPhone 4S.”
which was at least a year or more ahead Then. Q3 was a disappointing quarter for Apple iPhone sales. when Android phones improved and the gap closed.. Apple will likely have a monster Q4 on the back of the iPhone 4S. because consumers were waiting for the iPhone 5. Now. And. Samsung's smartphone sales include some Windows phones. Yes. .. What criteria will you use to choose your next smartphone? For the past couple of years. a single Android manufacturer. Apple fans pointed out that that the iOSplatform was was still much bigger than Android and therefore much better for developers Then. the argument was that Android phones sucked compared to the iPhone. But still. Samsung. yes. Apple fans have responded to the Android threat with an evolving series of arguments about why Android isn't a threat: Initially. Samsung's shipments were sales into the channel.Samsung and other Android makers will continue to buy market share with pricing and ad campaigns as we enter the #1 consumer electronics buying season of the year. hasblown past Apple in global handset sales.. when Android became the smartphone market-share leader. it’s possible that it will also lose . If Samsung wins the Smartphone Crown for 2011. shipping a 28 million units in Q3 while Apple only sold 17 million iPhones.in profit. not end-user sales. But now Android isn't just the operating system market share leader. Apple fans pointed out that Android phones were made by several different manufacturers and that Apple was still the biggest smartphone maker and that the App Store was still the best platform for developers And so on.. there were some mitigating factors.
Click for background. (Instead. in a race for global smartphone platform domination. And Android has become an increasingly viable and important platform for developers (and. and the more market share Android gains. eventually a clear leader emerges. the competition (In the 1980s and 1990s. As the history of the tech industry has demonstrated again and again. musicians. Although several different platforms can co-exist while a market is developing. But Apple's decision to move the launch of the latest iPhone back three months. and the more Apple's leverage over the iPhone ecosystem will diminish. As we've noted frequently.) But the better Android phones get. And the ongoing Android share gains. app developers. And that can only be bad news for Apple's ability to continue to command exploding profits from iPhones. Google is building a "moat" around its wildly profitable search business and making it easier for people to use Google search from their phones. while the leverage of the smaller platforms diminishes. the less (relative) leverage Apple will have over partners in the global parts-and-manufacturing supply chains. if past is prologue. the bigger other global handset manufacturers get relative to Apple. This may change when Google acquires Motorola and starts selling integrated handsets itself. should be wake-up calls. Samsung and Motorola phones have now come very close to the iPhone in terms of design and performance. so much so that even some former Apple fanatics are defecting to Android. the leader's power and "network effects" grow. the more Android's network effects will increase. And it has three key advantages that it didn't have then: Its products are priced the same as. and Android is still a fragmented platform. have helped Android close the gap. Apple's Macs were always "premium" priced) The "platform" aspect of smartphones is not as all-powerful as the platform aspect of PCs. And as it does. with several different versions that aren't cross-compatible.Android has now blasted past iOS in the smartphone platform market. media companies. this growing power will not lead to enormous profits for Google. Apple learned some key lessons after getting clobbered in the PC platform market in the 1990s. technology platform markets tend to standardize around a single dominant platform. and others who now must pay it big distribution fees because they have no other choice. reducing the advantages of a common platform All these advantages have helped Apple continue to thrive over the past couple of years. because so many apps are built into all phones and/or are cloud-based or otherwise platform agnostic. Samsung has now blasted past Apple in the global handset market.A scary chart for Apple fans. right now anyway. as well as Samsung's blowout quarter and the disappointing Q3 iPhone sales. because. No matter how you look at it. as well as its decision not release a revolutionary new phone until next year. or below. . is on its way to becoming the most important). Google is not selling Android. In the case of Android. this is a worrisome trend for Apple. Similarly.