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How Will Apple’s iPhone Perform in Fiscal 1Q17?

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Smartphone shipments to grow

The iPhone, Apple’s (AAPL) flagship product, accounts for approximately 58% of the company’s total revenue. Any impact on revenue in this segment could significantly impact overall revenue.

Research company IDC (International Data Corporation) estimates that global smartphone shipment growth slowed to less than 1% in 2016, compared with ~10% in 2015, 27.8% in 2014, and 47% in 2012. Global smartphone shipments are expected to reach 1.5 billion in 2016 and 1.8 billion in 2020.

IDC has attributed this slow growth to a slowdown in mature markets and China (FXI). It expects “large markets like the United States, Western Europe, and China to see low single digit growth rates in 2016 while Japan and Canada are expected to contract by 6.4% and 6.9%, respectively.”

Apple accounts for 14% of the smartphone market. IDC expects shipments to fall 11% YoY (year-over-year) in calendar 2016, which will be the first YoY (year-over-year) decline for the iPhone since it was launched in 2007.

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Samsung leads the smartphone segment

Apple has been battling weak iPhone sales amid tough competition from Samsung (SSNLF) and Chinese brands Huawei, Xiaomi, BBK, and Oppo. Chinese brands gained global market share in 3Q16 at the expense of Apple and Samsung.

Samsung (SSNLF), based in Korea (EWY), continues to lead the smartphone market with a share of 20%, followed by Apple (AAPL) at 14%. China’s Huawei and Oppo are the other major players in the smartphone space.

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