1. Akshay Masand's Avatar

    Market research firm IDC recently reported new figures that sought out to explain why Apple, the most profitable smartphone vendor on the planet is “underperforming the overall market” by not emulating the profitless manufacturing of low end phones by its competitors, most of whom are losing money. IDC collectively referred to iOS and Android as accounting for 93.8% of all smartphone shipments in 2013, describing the two platforms as pursuing opposite strategies without referencing the fact that Apple earns the majority of the world’s handset profits.

    According to IDC’s Research Manager Ramon Llamas:

    Android relied on its long list of OEM partners, a broad and deep collection of devices and price points that appealed to nearly every market segment. Apple's iOS, on the other hand, relied on nearly the opposite approach: a limited selection of Apple-only devices, whose prices trended higher than most. Despite these differences, both platforms found a warm reception to their respective user experiences and selection of mobile applications.
    IDC failed to note that software development for Android failed to keep pace with iOS, both among consumers and in the enterprise where Apple’s iOS now accounts for 73% of corporate mobile deployments. Instead of focusing on platform health and profitability, IDC recommended that hardware vendors look only at its research that “shows that consumer buying is rapidly shifting toward products with significantly lower price points,” which is exactly what IDC recommended PC makers pursue prior to the largest retraction in the computer market ever.

    The shift in PCs was best weathered by Apple and its premium Mac business, while low end makers of netbooks and cheap PCs have performed poorly with Dell even evaluating plans to leave the consumer PC market entirely. IDC’s Ryan Reith noted that the firm saw the “sub-$200 smartphone market grow to 42.6% of global volume, or 430 million units” but the firm didn’t break down how much of each platform was made up of these low end ultra-cheap devices.

    Given that Apple doesn’t sell any sub-$200 phones, it becomes obvious that the vast majority of these low end devices were fleshing out Android’s 78.1% unit share of the “smartphone market” and accounting for the majority of its growth. The growth comes at the expense of ASPs and margins. IDC now reports that Android’s Average Selling Price has plummeted to $276, in stark contrast to Apple’s iPhones which still command $650.

    In November, IDC’s number indicated that two thirds of “smartphones” associated with Android were actually low end devices selling for an average of $215, as Samsung reported to investors that its high end models “stayed at [a] similar level” while “mass market models” led its shipment growth. Reith also commented that Samsung’s efforts to put its Galaxy brand on both low end devices and higher end models like the Note 3 and S4 “has been an important factor in how Samsung has sustained its market lead.”

    However, Samsung is well known to have spent roughly $14 billion on marketing and promotion in 2013, a figure that is the real reason why carriers and retailers are selling Samsung devices rather than the similarly priced products of other Android makers. The South Korean electronics manufacturer is under increasing pressure from its investors to dial back its marketing budget, particularly as its results have fallen short of expectations tied to that spending.

    Source: IDC via AppleInsider

    Twitter: @AkshayMasand
    2014-02-14 07:01 AM
  2. quidam_brujah's Avatar
    That was a good analysis: sell more and make less per unit, or sell less and make more per unit. With Apple in control of their own destiny, it's probably the best strategy for them. Their bank accounts show the results. Of course, they have more in the bank sine the bank is in Dublin and they've not paid the measly taxes that are really due but, still...
    Last edited by quidam_brujah; 2014-02-14 at 02:40 PM.
    2014-02-14 02:37 PM
  3. wolverinemarky's Avatar
    2014-02-15 12:12 AM
  4. gonsaloc's Avatar
    Plenty of sub $200 here, iphone 5c - Best Buy. Also, I wish these companies can put these into real prospective and quit saying, "This is why this, and that". Admit your mistake and move on.
    2014-02-15 08:55 PM