iPhone Delay Could Lead To Market Share Loss For Apple

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Sanford Bernstein Research Analyst Toni Sacconaghi predicts that Apple could lose market share in the ever competitive smartphone race if the latest iPhone release were to be delayed.

In a note to investors, Sacconaghi calculated that iPhone sales grew 7% year over year in a sell-in basis (12% in a sell-through basis) while the overall smartphone market grew by about 36% with a net result that Apple’s share within the global smartphone market went from 23% last year and dropped down to 17% share this year, resulting in the largest year-over-year decline in the iPhone’s history.

The situation doesn’t look any better for June. Using Apple’s fiscal Q3 revenue guidance, Sacconaghi expects the iPhone’s market share to drop down to around 12% which would be the lowest for Apple since the beginning of 2009. The exact figures will depend on overall market growth; if the overall market grows 30%, Apple’s share is calculated to be 12.3% while an overall market growth of 36% would mean Apple’s slice drops down to 11.7%.

It gets even worse – if the new iPhone does indeed get delayed, then there won’t be a new device to bring in new buyers which would mean that Apple’s share of the smartphone market could be down to 9%.

That being said, this doesn’t necessarily spell doom for Apple as market share doesn’t necessarily correlate with profitability  “Currently, Apple’s iPhone positioning is increasingly mirroring the Mac, which commands just 5 percent PC market share, but is highly profitable, accounting for an estimated 40 percent of total PC industry profits,” Sacconaghi said. Unit sales of the iPhone are also expected to keep growing year over year, for the next year and a half, and Apple’s selling millions of other iOS devices like the iPad and iPods, he added.



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