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October 20, 2014

Apple Takes Bigger Bite Out of Growing Smartphone Market

For a while, there seemed to be something of a clear dichotomy between North America and much of the rest of the world. Apple was the name to beat in North America's confines, but the rest of the world favored Android to such a degree that Apple was barely even an also-ran. However, a recent report from TrendForce suggests that that dichotomy may be changing somewhat, as not only are the global smartphone ship numbers on the rise, but so too are the numbers of Apple users around the world as Apple's market share climbs to match.

The TrendForce study noted two key points: one, the shipments of smartphones throughout the world was up 9.1 percent, reaching a total of 310 million for the peak-season third quarter. This development was made possible largely by the launch of the new iPhone 6 and iPhone 6 Plus, which in turn fueled the second key point, that Apple's market share was up fully five percent in a year-to-year comparison.

Apple's gains appear to have come at the cost of several other brands, as Chinese brands like Huawei and Lenovo both saw only mild gains in the quarter, and Samsung's sales actually declined in the face of the Apple brands' new arrival. Apple devices have performed quite well, and in a development that may prove counter-intuitive to some, the smaller 4.7 inch model was actually more popular with males since it more readily fit in a pants pocket. Females, meanwhile, trended toward the larger 5.5 inch model. Though the iPhone 6 did see some negative reviews, according to TrendForce assistant vice president Avril Wu, sales were largely unaffected, and the overall supply is actually quite “tight.”

The problem for Samsung, as Wu described, is that its biggest market, China, is starting to lose traction at both ends. The lower-end market is going increasingly to Chinese brands—which in turn are offering better overall value and a level of performance that's on par with many of Samsung's best releases—while the higher-end market is looking more toward Apple devices. Still, however, Samsung accounted for nearly one third—30 percent—of global smartphone shipments in the third quarter, with LG accounting for 6.4 percent, enough to drive it to the fourth vendor worldwide past Huawei.

It wasn't just Samsung that was down, however, as Xiaomi also lost some ground in the field owing to cuts in company subsidies and a set of competitors taking pages out of Xiaomi's book in regards to marketing strategy. Indeed, the iPhone 6 launch also had a damper on most of the Chinese brands, as consumers decided in large numbers to hold off on device purchases ahead of the new iPhone's arrival. Indeed, several Chinese brands are starting to look to markets like India for growth opportunities, as China's own mobile device market has largely matured and India offers several opportunities for gain, specifically a comparatively young population with an interest in smartphones, and a comparatively low level of smartphone market penetration.  In other words, a combination of high interest and low supply seems to be driving the Indian market for Chinese brands.

The market in general is a vector of comparatively rapid change, as is evidenced by the fact that even Chinese brands are beginning to look outside China for new opportunities in the field.  This means that consumers are likely to see an array of new products, new technologies, and new offers to help keep older users coming in the door and younger users keeping up as well.

Edited by Maurice Nagle

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