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Apple’s (NASDAQ:AAPL) Scariest Competitor Rises 8% Amid iPhone Decline

01/09/12 by  
Filed under Bourbon & Bayonets

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iPhone demand is still very high, but only one company is experiencing a massive increase.


Once a harmless cellular phone manufacturer, now a dangerous iPhone competitor with the hottest Android devices, Samsung made significant progress in December. In addition to manufacturing the best-selling phone in England (or so a PC Advisor report claims), a new ChangeWave Research survey shows that more American consumers are looking toward Samsung smartphones.

The survey – which was conducted in December and included 4,000 North American consumers – asked, “Who is the manufacturer of the smartphone you plan on buying?” Not surprisingly, Apple (NASDAQ:AAPL) leads the pack of manufacturers, which includes Motorola (NYSE:MMI), Research in Motion (NASDAQ: RIMM), and HTC.

With more than 50% of consumers choosing an iPhone (specific models weren’t mentioned, but it’s safe to assume that most buyers are planning to get the iPhone 4S), Apple is still the easy champion. There is really no comparison. Research in Motion couldn’t even muster 3% of the market – since September, consumer interest has dropped to 2%! If that weren’t so sad, it’d be hilarious.

HTC’s decline is even worse, going from 6% to just 3%. While consumers may have been excited by its iPhone clones in the past, the company is clearly losing its edge in the Android market.

Then we have Motorola, which actually rose from 5% to 7%. I’m not even sure how this was possible, but it seems as if the redesigned RAZR may have sparked new interest in the struggling manufacturer.

From September to December, Apple dropped from 65% to 54%. Regard;ess, the iPhone maker still maintains a massive lead in the smartphone market (in terms of prospective consumer desire, at least). Better still, the ChangeWave results found that Apple has “never dominated smart phone planned buying to this extent more than two months after a major new release.”

The real winner of this survey, however, is Samsung, which saw an eight-point increase in consumer interest from September to December, jumping from 5% to 13%. While Apple may still be the dominant player in America, Samsung’s rise in consumer interest presents a couple of problems for Apple.

First, it means that Samsung is effectively rising as the number-one manufacturer of iPhone alternatives. This is not necessarily a bad thing, as there will always be iPhone alternatives that manage to devour any portion of the market that Apple can’t reach. However, it would be best for Apple if those competitors were all on the same weakness level. When one begins to jump ahead, that’s when Apple could be in trouble.

Second, Samsung rose in the months after the iPhone 4S was released. This could simply be due to the fact that in September consumers were anticipating the release of the iPhone 5. Once the iPhone 4S was unveiled instead, some consumers may have decided to wait for the iPhone 5, and therefore said that they were more likely to buy another manufacturer’s product within the next 90 days. This would be great news for Apple, since it would mean that these consumers will likely abandon its competitors and buy an iPhone 5 later this year.

That is the best-case scenario for Apple. The worst-case scenario would be that consumers were disappointed with the iPhone 4S and decided to look elsewhere.

But if that’s the case, how was Apple able to maintain its dominance – and such a massive lead – two months after its latest phone was released? Doesn’t that mean that Apple is actually improving its popularity?

No – it just means that Android’s carrier advantage is finally over. Up until last year, consumers couldn’t buy an iPhone without signing up for AT&T (NYSE:T). That changed the moment the iPhone 4S was released. Though the older iPhone 4 had come to Verizon (NYSE:VZ) earlier in the year, it wasn’t until the 4S arrived that consumers could get a brand-new iPhone on all three of the major carriers, including Sprint (NYSE:S). Thus, the number of consumers who can now buy an iPhone is much greater than the number who could obtain one before, which inevitably helped the company maintain its powerful lead.

What’s scary is how fast Samsung is growing despite Apple’s lead. Today, Samsung will be a laughing point to iPhone loyalists. They’ll snicker and sneer at the idea that anyone – least of all the maker of the Galaxy S II – could compete with Apple.

But with every month of improving sales, Samsung inches closer and closer to threatening Apple’s dominance.

Louis Bedigian

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6 Comments on "Apple’s (NASDAQ:AAPL) Scariest Competitor Rises 8% Amid iPhone Decline"

  1. StonehamMel on Mon, 9th Jan 2012 3:30 PM 

    There will always be competitors to Apple in every segment. And some may even have individual points of hardware superiority.

    Apple products succeed, IMHO, because they

    a) are cool, and dominate the coolest consumers to own – the 18-24 year old age group – and increasingly, corporate America. If a corporate exec has a call on his Blackberry, he may ignore it rather than pull it out of his/her pocket or purse and be labeled a “yesterday’s tech” person.

    b) are part of an ecosystem both consumers and corporate America want to join. The synchronized calendars and apps – especially high-cost specialty apps – are unparalleled on any other platform

    c) have the iPad – hands down the device revolutionizing corporate American selling across dozens of industries. Combined with cloud computing, the corporate laptop is close to dead.

    d) are more resistant to hacking, viruses and trojans. Not immune – and maybe not forever – but for now.

    e) aren’t distracted by the need to sell mass merchandise at Costco and BJ’s and other outlets

    f) are the only ones generating a 30% or more profit on everything they sell.

    Today, the geeks hate Apple the way they used to hate Microsoft. They might easily constitute 10% of the market – maybe more. But the investment Apple made in education over the years, and the simplicity of the iPad, have combined to make that class of product the choice and lust object of the next generation of consumers.

    Apple long!

  2. superspeck on Mon, 9th Jan 2012 11:22 PM 

    Alert me up when Samsung passes AAPL’s profit per device. I’m not holding my breath. Until someone else is as profitable as AAPL in the mobile space, I think we’ll see AAPL continue to lead the pack.

  3. Benjamin on Tue, 10th Jan 2012 3:02 AM 

    All the data I’ve been following indicates Samsung’s growth is coming at other Android device maker’s expense, not Apple’s. Samsung simply does not have what it takes at this point to pose a serious challenge to Apple’s market segment. If we pretend for a moment that Android is as good as iOS(my experience with my Epic 4G indicates otherwise), Samsung still doesn’t have the entire ecosystem of content and device interaction that Apple offers. No iTunes. No iBooks. No movie store.

    You can get music, books, and movies on an Android device in general, but not in the same seamlessly integrated way as you can on Apple devices. It’s just not as painlessly elegant/convenient on Android devices in general(the Fire would be the exception at this time).

    And it’s not just the content. Once consumers begin investing in Apple products, they find a great deal of satisfying interaction between them. An AppleTV can be controlled with an App on your iPhone or iPad. You can even stream music and movies to it from them. Then with iCloud, your pics, media, and apps are shared effortlessly among all your devices, including your Macs.

    Samsung simply does not have any analog to the full Apple experience and that experience is what cultivates extreme customer loyalty among Apple’s market segment.

    Samsung doesn’t have anything like that and hasn’t demonstrated either an interest in building anything like that or the ability to do so.

  4. Ehh? on Tue, 10th Jan 2012 9:47 AM 

    Samsung certainly is gaining mindshare in the latest ChangeWave survey. Your reading of how Apple is doing is a bit off though.

    Yes, they did experience a sequential decline in the percentage of people who said an iPhone would be their next smartphone. This happens every quarter AFTER a new iPhone is released. What is surprising is that the drop isn’t larger than it is…it actually shows that demand for the iPhone4S NOW (a quarter after it’s launch) is still higher than it was for any other iPhone AT launch. That’s hardly bad news for Apple.

  5. Bruce on Tue, 10th Jan 2012 10:56 AM 

    I guess you have to write sensational headlines to get click thrus these days. But any responsible analyst would have noted.

    1. Recent reports have suggested that the iPhone 4s has done extremely well and that what looked like a decline may have been just a pause on a very strong growth curve.

    2. One area the Samsung does not do well in compared to Apple is margin. Various reports have noted that Apple has been capturing a large share of total smartphone profits – while the Android makers have found it difficult to maintain margins.

    So Samsung can and will grow – it makes nice products – I have their TVs all over my home – but it is NOT a threat to Apple until it can drive it’s own margins higher – or Apple’s lower.

  6. Tony on Tue, 10th Jan 2012 12:40 PM 

    A hardly heard of survey done months ago will make you create a bunch of stupid loop sided conclusion. Amazing…the suvey pool is not identified. I will respect you more if you use actual sales figure, which you don’t have, to judge something. BTW, how much money did Samsung paid you with?

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