The prophets of gloom and doom have been hovering the mobile industry for some time now, and their latest target was the Apple iPhone. History shows, these prophets are almost always wrong.
Image source: Apple
Analysts study the mobile industry, to give you advice on what stocks to buy and not to buy. They predicted the implosion of Android because of operating system fragmentation. Instead all the other mobile operating systems were the ones that became fragmented. The prophets also put Nokia and BlackBerry on deathwatch. We are still awaiting their demise. More recently, they surmised that Samsung stock prices were downgraded because the fastest selling in smartphone history, did not sell as fast as expected. Now they have set their sights on the Apple iPhone.
Forbes wrote an article entitled “Apple Earning: iPhone Sales Dumbfound The Experts” where the author wrote “The narrative around the ‘demise of Apple’ stories and its franchise product centers on things like saturated markets for high-end smartphones and the inability of the company to profit at lower prices. But this quarter seems to suggest neither is true” x x x “The pros pegged iPhone sales at 26.5 million units; Apple instead shipped 31.2 million. So much for the peak.”
To the consumer this sounds like Apple’s iPhone is selling well. The reality is quite the opposite. iPhone sales are slowing down at an alarming rate, which is bad news. But since analysts predicted that it would be worse, all of a sudden, it’s good news. That might make sense to somebody. But a look at the numbers would show that Apple’s iPhone is on the demise:
Q1 2012 Apple iPhone shipments – 35.1 million units
Q2 2012 Apple iPhone shipments – 37.4 million units
TOTAL Q1 & Q2 2012 = 72.5 million units
Q1 2013 Apple iPhone shipments – 26 million units
Q2 2013 Apple iPhone shipments – 31.2 million units
TOTAL Q1 & Q2 2013 = 57.2 million units
The iPhone is in a slump.
TrendForce reports that Global smartphone shipments for the second quarter of 2012 are up 31.4% year on year. With the market up 31.4%, Apple iPhone sold 6.2 million units, or almost 17% less than the sales in the previous year. Adding the results of the first two quarter of the year, that is fifteen million less units sold in the first six months of the year, as compared to the previous one. That is an alarming drop in sales.
Apple’s declining market share cannot be attributed to cheap Androids or a saturated market.
In the second quarter of 2013, the Samsung Galaxy S 4 was estimated to have shipped 23 million units as against 22 million iPhone 5’s. Adding over 3 million HTC One’s sold in the second quarter of of 2013, Sony Xperia Z sales, and LG Optimus G Pro sales, one thing is clear. More high end Androids are sold than Apple iPhone 5’s.
Adding an exclamation point to all this, is that in the second quarter of 2012, Samsung has become the most profitable smartphone manufacturer in the world. During the same period, LG’s profits from smartphones have increased 34% year on year.
Ultimately, it would not be so hard to predict the demise of Apple’s iPhone. If you look at the hardware it has been playing catch-up for three generations of iPhone’s now. Also, the company only offers one new size option per year.
What this all means to us.
Analysts write for those who invest in the stock market and their analysis are really speculative predictions. But to the regular consumer who is wondering what smartphone to buy, all these predictions are meaningless.
If we were to believe analyst predictions just two years ago, Windows Phone will topple Apple’s iPhone in sales in two years time and Android would hit a 45% market share by 2015. Newer market studies instead show that Windows Phone will start catching up to Apple’s iPhone by 2017. Meanwhile, Android already hit a 67.1% market share in 2012, far beyond analysts predictions two years ago. I suspect next year, we will again see a different set of predictions.
The problem with analyzing the tech industry, is that it is too fluid. New advancements are made at unprecedented rates. This also results in unprecedented drops in price. Apple has been trying to buck these trends. In an industry in a state of flux, the companies involved are not like cats transfixed on an oncoming car’s headlights. They adjust and innovate. Apple for instance, could switch gears this year.
Until smartphone technology hits a plateau, predicting the future of this market is not any better than tossing a coin. If you are an investor, there really is little you can do but study analysts’ studies with a grain of salt. However, if you are just thinking of what smartphone to buy, all this analysis of where the market is going is something you should simply ignore. Look at what is on the shelf, and pick the best technology available for the money.