Researchers suggest that Apple will have a hard time to grow its marketshare percentage in smartphone segment but it can remain dominant in the tablet segment for a longer time now. The market dynamics in the smartphone segment are going in the wrong way right now in a race to capture the largest share which might not sustain for a long time suggests Toni Sacconaghi wrote for Bernstein Research. Apple, once dominant in the smartphone market as well now hardly owns around 17% of the smartphone market where as its rival Android is present on 70% of the smartphones. But dose that speak the right number to be measured for? In a race to beat Apple all the Android OEMs are beating themselves up by reducing the smartphone prices drastically and earning lesser and lesser profits. Apple currents takes a share of 65% in the overall profits earned in the smartphone market with a mere share of 17%.
Analysts might be disappointed with the volumes Apple is selling against the competition but over the last few years Apple slowly became dominant in the premium segment of smartphones where no other company is still able to beat it or even make any profits close to what Apple has been doing. Sure, if Apple were to run behind market share as well it could have lowered the price of iPhone 3GS/iPhone 4/iPhone 4S in emerging markets and sell that at a very less profit and could have easily sold millions of devices like hot cakes but that would not ensure Apple to earn the staggering $54 billion profit it made last year, in fact, selling huge number of devices at lesser profit might have pushed back its profits by a large extent as well! Apple might not be owning the marketshare but is well set to remain dominant in the smartphone market..
But things seems to be a bit more different in the tablet segment for Apple. The distribution of iPhone is much tied up to the network operators globally which will push back Apple from selling their iPhones with ease even after all the efforts but things are different in the case of iPad where Apple holds all the power to distribute them. Apart from that, when the iPad was launched it was considered to be much cheaper compared to the competition for the value it offers. Android OEMs, especially Google and Amazon are trying to employ the same model that they employed for smartphone by selling the tablets at cost price and then trying to make some money out of the content sold on their tablets but the idea seemed to have clicked a bit in the US alone but failed globally. Android is still failing to generated proper revenue from content being sold which is hampering development of apps and revenue as well for tablets.
As long as Apple has its strong base of apps and revenue generating customers it is lot more difficult for competing OSes to beat Apple in tablet space and gain revenue in the smartphone space as well.
Source: Barrons (originally reported on AppleInsider)