Apple nearly catches Samsung as smartphone sales soar

Apple’s latest iPhone developments fueled strong growth for the smartphone sector and nearly toppled Samsung from its perch atop the smartphone market, International Data Corp. (IDC) reported, citing preliminary data from its Worldwide Quarterly Mobile Phone Tracker.  

Powered by the launch of its iPhone 6 and 6+ models, Apple posted a nearly 50% year-over-year increase in smartphone shipments in the fourth quarter—to 74.5 million units, from 51 million in the fourth quarter of 2013. Samsung, in contrast, saw an 11% drop in shipments, though it was able to cling to the market lead with 75.1 million units shipped even as Apple’s new, larger screens resulted in big gains in the United States—where shipments rose 44%—and in China, Brazil, and Singapore, where sales doubled.

Apple, which has long posted the highest profits in the smartphone sector, came as close as it had in three years to regaining the top spot in smartphone shipments, as Samsung struggled not only with Apple’s challenge in the high end of the market but also with Chinese competitors in the lower end, where Lenovo, which completed its Motorola acquisition, continued to dominate the sub-$150 handset market and edged ahead of Huawei and Xiaomi, with LG and ZTE close behind.  

“Most of the industry expected an extremely strong holiday quarter from Apple, especially with regards to the iPhone. However, worldwide shipments of 74.5 million units beat everyone’s expectations,” said Ryan Reith, program director with IDC’s Worldwide Quarterly Mobile Phone Tracker, in a news release. “Beyond the record-setting quarter, a few impressive things stand out with regard to Apple. First, at a time when average selling prices (ASPs) for smartphones are rapidly declining, Apple managed to increase its reported ASPs in the fourth quarter due to higher-cost new models. Second, the growth of iPhone sales in both the U.S., which is considered a saturated market, and China, which presents the dual challenges of strong local competitors and serious price sensitivity, [was] remarkable. Sustaining this growth and higher ASPs a year from now could prove challenging, but right now there is no question that Apple is leading the way.”

Looking ahead

Apple’s surge helped push worldwide smartphone shipments past 1.3 billion units, a year-over-year gain of 27.6%. For the quarter, smartphone vendors shipped 375.2 million units, up 28% from the fourth quarter of 2013.

While that growth is impressive, it was down from 40.5% growth in 2013, and IDC forecasts growth slipping to the mid-teens in 2015 as the market continues to mature.

“That the worldwide smartphone market grew by 27.6% in 2014 is noteworthy, but it also represents a significant slowdown compared to 2013,” said Ramon Llamas, research manager with IDC’s Mobile Phone team. “Mature markets have become increasingly dependent on replacement purchases rather than first-time buyers, which has contributed to slower growth. In emerging markets, first-time buyers continue to provide a lot of market momentum, but the focus has shifted toward low-cost devices, creating a different dynamic for both global and local vendors.

“What remains to be seen is how the vendors beyond Samsung and Apple will assert themselves,” he said. “With Lenovo acquiring Motorola, and Xiaomi having greater aspirations beyond China, the competitive pressure will come more from below and less from above. This will make the smartphone race continuously competitive as 2015 shapes up.”

On the tablet front

IDC’s report came a couple days after online advertising network Chitika reported that Samsung had gained a little ground on Apple’s wide lead in the North American tablet market. Samsung users generated 11.5% of the North American tabled-based web traffic, according to Chitika’s sampling of tens of millions of U.S. and Canadian tablet-based online ad impressions running through the Chitika Ad Network earlier this month. It was the first time a vendor other than Apple posted a double-digit share since Chitika launched its tablet studies in 2012. Apple continued to dominate the market with a 70.8% share, but that was down 7.4 percentage points from January 2014.

Samsung’s traffic rose in part because its holiday sales benefited from deep discounts on its tablets by retailers Amazon, Costco, and Best Buy, Chitika said.

—Jeff Drew (jdrew@aicpa.org) is a JofA senior editor.

Source: IDC Worldwide Quarterly Mobile Phone Tracker, Jan. 29, 2015.

Table notes:

• Data is preliminary and subject to change.
• Vendor shipments are branded device shipments and exclude OEM sales for all vendors.
• The “Vendor” represents the current parent company (or holding company) for all brands owned and operated as subsidiary.
• For year-over-year comparison, an extra line has been added below the quarterly and annual tables to show what Lenovo’s growth would have looked like had its acquisition of Motorola been completed prior to the start of the quarter.