Friday, February 3, 2017

Apple Winning Premium Phone Market - Can Do Better

Pointing out the obvious, this BGR post points out that Apple is winning the premium segment of the phone market (still don't like calling it the phone market since most people do not use their iPhones or Android devices as phones anymore) - and the lead Apple has over Samsung (and not really anyone else has any meaningful share here) has increased.

It's likely that Apple can increase its lead even more with the next iPhone, no matter what Apple calls it, since it will likely have a new design and features.  What Samsung can do to slow down Apple's increasing lead in terms of percentage is make sure it has a flawly Galaxy 8 and Note 8 launch.  No more exploding phones - it's that simple (or not quite that simple). 

But Apple can really put this thing to bed if it answers Samsung's one unique feature in its premium device:  that the Note has a stylus.  Of course, Apple would never support the use of a stylus on the iPhone.  So, it can add Pencil support to the iPhone.  That may draw so much sales away from Notes that Samsung's mobile profit will shrink even more, perhaps to mere single digits.

According to Fortune, Apple took more than 102% of the mobile profit in the third quarter of 2016.  That is possible because Sasmung broke even because of the Note 7 disaster (not bad considering) while other mobile players in the market lost money.  It's unlike that this will happen again in 2017 and Samsung should be able to mount some sort of a comeback once its next generation flagship devices launch and ship.

A better comparision would be 2015 when Apple had 90% of the profit in the same third quarter while Samsung has more than 10%.  So, should Apple maintain its momentum, it could conceivably knock Samsung's 2017 profit share down to less than 10% even if there is a penned up demand for its Note 8.  Of course, Apple could make sure Samsung has less than an optimal quarter if the next iPhone Plus supports the Pencil.

Personally, I rather have picture-in-picture support for the next iPhone but I'll make due with Pencil support.

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