Apple’s iPhone continues to find loyal customers
Price is usually the biggest deciding factor for consumers when choosing a smartphone—except when it comes to Apple (AAPL). The loyalty for Apple’s iPhone has been the highest among smartphones. You can see this from the fact that the iPhone continues to be the top-selling brand at AT&T (T). Apple started selling iPhones way back in June 2007 in an exclusive arrangement with AT&T.
But Apple is no longer the top-selling smartphone player with the Verizon (VZ) and Sprint (S) networks, where Samsung (SSNLF) has held on to its top position. At the global level, although Samsung is still the top smartphone player, its market share has declined drastically from 33% in 2Q13 to 25% in 2Q14.
Smartphone pricing plays an important role in emerging markets
Price certainly plays an important role in emerging markets like China and India. This is why Samsung’s market share declined in both these markets in the second quarter. Local Chinese players like Xiaomi, Coolpad, and Lenovo have emerged as potent players in the Chinese smartphone market. Xiaomi has become the top smartphone player, overtaking Samsung in China, according to a report from Canalys.
In India, Samsung’s market share is being eaten away by local smartphone players like Micromax, Karbonn and Lava. Plus, Chinese players have entered the Indian smartphone market. This has made it even tougher for Samsung.
Google (GOOGL) plans to introduce the Android One smartphone OS specifically for emerging markets like India to capture the next billion people who don’t have smartphones. Intex also recently released a smartphone based on Firefox OS that will be priced at around $33. So price certainly has started to play an important role in the Indian smartphone market.
IDC predicts that average selling prices for all smartphones should decline. For example, as the chart above shows, iPhone pricing should decline from $657 in 2014 to $604 by 2018. Smartphones based on Android and Microsoft’s (MSFT) Windows Phone should continue to sell for the below-average-price of $300 and decline closer to $200 by 2018. This confirms a broader trend. Smartphone players are resorting to price cuts in order to gain market share—except Apple.