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Apple’s smartphone fortunes grow while the iPad faces growing competition

iPhone 5

While Apple's star in the smartphone market continues to ascend, recent numbers suggest the company's influence in the tablet category is increasingly under attack from Android devices.

Apple became the No. 1 mobile vendor by volume in the United States for the first time during the fourth quarter of 2012, pointing to the growing role that smartphones play in the overall market, according to new research from Strategy Analytics. At the same time, research from IDC shows that Apple lost share in the tablet category for the second straight quarter as competition from Android tablets grows.

“We estimate that Samsung should be able to jump back to number one position [as a mobile phone vendor] soon leveraging its broader portfolio and presence at almost every carrier in USA,” said Neil Shah, senior analyst for the global wireless practice at Strategy Analytics, Newton, MA.

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“Apple benefitted from generous subsidies, the new iPhone 5 launch, and some steep discounts by retailers (e.g. Walmart) during the holiday quarter as iPhone shipments reached a record high,” he said.

“However, in a non-seasonal quarter such has Q1 it will be slightly difficult for Apple to maintain the lead.”

A remarkable performance
Apple’s performance in the mobile phone category is particularly remarkable considering that it is only a smartphone vendor while Samsung supplies both smartphones and feature phones.

Samsung held the top mobile phone vendor spot since 2008 and is still close on Apple's heels, suggesting the competition between the two will be intense this year.

During the fourth quarter, Apple shipped 17.7 million iPhones for a 34 percent share of the U.S. market while Samsung shipped 16.8 million mobile phones for a 32 percent share.

Apple's share of the market jumped from 25 percent in the fourth quarter of 2011.

Samsung's market share also grew over the past year - from 27 percent to 32 percent - but it was not enough to hold off a surging Apple.

Overall, U.S. mobile phone shipments grew 4 percent year-over-year for a total of 52 million units, with growth being driven by strong demand for 4G smartphones and 3G feature phones.

Shipments rebound
While mobile phone shipments were strong in the fourth quarter, they were weak during the first three quarters of the year. As a result, U.S. mobile phone shipments for the year were down 11 percent from 2011 for a total of 166.9 million units.

“This is the first time when US mobile phone shipments has reached a record 52 million units ending the year on a positive note after five straight quarters of shrinkage in demand for mobile phones,” Mr. Shah said.

“Apple became the top mobile phone supplier during the quarter whereas Chinese vendor Huawei climbed up our rankings capturing the fourth spot tied with Motorola,” he said. “The Chinese vendors such as Huawei, ZTE and TCL-Alcatel are quickly growing in this important US market.”

LG remains the third largest player in the U.S. mobile phone market with 4.7 million units shipped for a 9 percent market share. However, its share is down from 14 percent a year earlier.

LG struggled to compete against the strong growth in demand for smartphones from Apple and Samsung but is expected to fight back this year with new and improved models such as the Optimus G 4G LTE with Android.

Strong iPad mini launch
The IDC numbers covering the tablet category shows that strong competition led to Apple's market share declining for a second quarter in a row, coming in at 43.6 percent in the fourth quarter, down from 46.4 percent in the previous quarter. However, iPad shipments continue to grow and were up 48.1 percent for a total of 22.9 million units, driven by a strong iPad mini launch and availability of the fourth generation full-sized iPad.

No. 2 vendor Samsung saw significant growth of 263 percent year-over-year for a total of nearly eight million combined Android and Windows 8 tablets shipped. Its market share was 15.1 percent, the same as the previous quarter.

Amazon and Barnes & Noble both saw their market shares increase significantly.

Amazon shipped more than six million tablets during the quarter and increased its share to 11.5 percent, up from 8.3 percent in the previous quarter.

Barnes & Noble shipped close to a million units, increasing its share to 1.9 percent from 0.7 percent. However, its year-over-year growth fell 27.7 percent.

Asus' share dropped from 7.8 percent to 5.8 percent despite continued strong shipments of its Google-branded Nexus 7 tablet. On the plus side, its year-over-year growth in units shipped was 402.3 percent.

Microsoft failed to break into the top five tablet vendors despite entering the market during the fourth quarter with its Surface tablet, as shipments failed to top 900,000 units.

The continued growth in smartphones is opening up new opportunities for marketers to reach consumers via these devices.

So a solid performance from Apple and Samsung in the smartphone space has taken the smartphone sales penetration of the total mobile phones to 75 percent, an all-time high,” Mr. Shah said.

“This has opened more doors for marketers to target smartphone users with smarter advertising, loyalty programs, etc,” he said.

“The smartphone installed base in U.S. continues to grow at a healthy space as more and more consumers are adopting smartphones on these high-speed cellular data networks.”

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Research, Apple, iPhone, Samsung, Galaxy, Strategy Analytics, Neil Shah, iPad, IDC, mobile marketing, mobile

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