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Apple Fails to Take Advantage of Samsung’s Note 7 Recall

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Chinese rivals grow market share

Apple’s (AAPL) sales and market share in 3Q16 fell and remained constant, respectively, despite a vacuum created in the premium smartphone segment following the recall of Samsung’s (SSNLF) Galaxy Note 7. It turns out Chinese smartphone vendors took advantage of the vacuum at the expense of Apple.

According to a Gartner report on smartphone sales in 3Q16, Chinese companies Huawei, BBK, and Oppo were the only ones among the world’s top five smartphone manufacturers to grow their market shares in 3Q16. These three Chinese smartphone vendors combined accounted for 21% of all smartphones sold worldwide.

Apple’s smartphone sales fell 6.6% in the quarter, and its market share stood at 11.5%. Samsung managed to hold on to the largest smartphone market share at 19.2% despite a 14.2% fall in its sales.

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Exploding Note 7

Samsung pulled Galaxy Note 7 smartphones from the market after it emerged that the devices were exploding. The company has stopped the sale of its Note 7, but it’s hoping to recoup its losses with the Galaxy S8, which it’s preparing to launch.

Apple, on the other hand, is working on a significantly redesigned iPhone for next year, when it will mark a decade in the smartphone business. Among other changes, Apple is expected to remove the physical home button in next year’s iPhone. The company is also expected to start using OLED (organic light-emitting diode) screens.

In search of new growth

Apple is under pressure to differentiate its smartphone as competition intensifies in the premium smartphone segment. In addition to working to develop a new iPhone that will take the world by storm, Apple is also looking for growth opportunities in markets such as streaming music and smart wearable technology, where it’s in competition with Amazon (AMZN), Pandora (P), Microsoft (MSFT), and Fitbit (FIT), among others.

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