Apple continues to pivot from a hardware to a software service company and iPhone sales are slowing as mobile saturation hits a peak before 5G phones (and folding phones) phase-in.
Apple recently slipped to 4th place in a list of the world’s top smartphone makers after a record drop in iPhone sales.
Apple lost its third spot in the global market to Chinese phone maker Oppo in Q2 2019, according to IHS Markit.
Are iPhones Losing their Shine?
It feels like each year the latest iPhones are viewed with a bit less hype. With the trade war also Apple’s performance in China is expected to be lackluster moving forwards into the 2nd half of 2019. This means Huawei and Oppo can do fairly well.
Apple now sits behind the global smart phone leaders Samsung, Huawei, and Oppo, a Chinese smartphone brand that’s lesser-known in the West.
Apple’s iPhone 11, 11R and 11 Max are coming, but it feels entirely different this year. Apple has many paths to revenue generation but it certainly appears that its subscription revenue will become more important from software services vs. its headway in hardware now. Some analysts have a fair point when they even suggest Apple is losing its grip on the smartphone market.
The Rise of Chinese Smart Phone Makers
With long-term projections showing Huawei overtaking Samsung sometime in the next few years Apple is falling behind. The US tech company slipped to fourth place in IHS Markit’s list of the world’s top smartphone makers for the second quarter of 2019. This is puzzling even with the Huawei ban. It shows just how global Huawei is as a smartphone brand and how little impact the U.S. sanctions have on its growing dominance there.
How bad was it for iPhones in Q3? Estimates from Strategy Analytics and Counterpoint Research pinning iPhone shipments as down 12% (this may have been down as high as 15%) and 11%, respectively, YoY for Apple’s Q3.
Oppo Shipped for Phones than Apple in Q2 2019
To put this in perspective in terms of volume with the upstart Oppo, Apple shipped 35.3 million units in the second quarter of 2019, while Oppo shipped 36.2 million.
Samsung and Huawei, despite all its recent troubles in the US, shipped 75.1 million and 58.7 million phones, making their market shares 23% and 18%. Even in an era where Samsung and Huawei are both slumping significantly, they are still outperforming Apple, as smartphone saturation hits really extreme levels.
It’s a huge jump for Oppo, which saw its year-over-year shipments jump by 13% that grew and about the clip that Apple’s iPhones have declined. It’s not clear yet how serious its decline was in China.
With the pivot to software services iPhones aren’t the start product any longer, we’ll just have to get used to that. In mid-2019, iPhone sales now account for less than half of Apple’s overall revenue!
Global Smartphone Saturation Continues
Analysts say this is because users are holding on to their old phones for longer to avoid forking out for the newer, more expensive models. I guess we’ll find out when 5G phones come out early next year in 2020.
Apple’s premium brand elitism is partly to blame when you think about it. Apple’s refusal to create a cheap iPhone that could be targeted at people in emerging markets means it has missed out on a key audience and allowed its rivals to make gains. Meanwhile, Apple is pivoting its business model to become a walled garden platform monetizing better it’s already considerable consumer ecosystem.
This means re-focusing on subscriptions, software, and wearables that have had mixed success. What’s new Siri? It turns out nothing very much. Even as the AppleWatch has improved considerably, Apple’s HomePod was a huge disappointment.
As for the fate of the iPhone, we’ll likely have to wait until September 2020 before Apple has its next trending phones. The smartphone market may be a different place by then if folding phones take off.
Huawei boosted sales in mainland China and is likely taking market share away from Apple there importantly. With global smartphone saturation however, it’s a different market in recent times, where IHS’ data shows the entire smartphone market down almost 4%.
Apple is no longer tethered to the iPhone in 2019, it’s really the end of an era. Slipping to 4th place should be mainstream business news, since Apple’s stock has done just fine in 2019 thus far.
The data marks the seventh consecutive quarter of year-over-year decline for the smartphone market and iPhones have lost their glamour especially outside the U.S.