Apple and Samsung may be doing battle in a Californian court, but it is the rest of the phone industry they are trouncing. The two manufacturers have taken their patent dispute in front of a jury, with the world’s press set to be glued to a case expected to run throughout August.
However, Apple and Samsung are sitting pretty at the top of the charts, with the latest figures suggesting Cupertino and Korea’s finest are actually stretching their lead over rivals. Smartphones from both companies account for 49.5% of all shipments, according to IDC figures covering the second quarter of 2012. This represents a 20% rise on the same period last year. The market share of the rest of the top five combined fell away during the same period, from 27.9% in 2011 to 17.5%. ZTE was the only manufacturer of the remaining three to record growth, up 300% to eight million units.
Operators and retailers talk of the importance of breaking the duopoly. O2 CEO Ronan Dunne said: ‘We absolutely support broad plurality of supply across hardware and operating systems. It’s no good for anybody if we have a weak Nokia, for example. Samsung supports a number of operating systems as well as Android. Across the UK, Apple and Samsung are the dominant players but we need a healthy RIM and Nokia, not at the expense of other players, but to give customers a choice in the longer term.’
This scenario has not transpired in practice. IDC said Samsung and Apple’s success is rooted in their different approaches to the market. Samsung opts for a ‘shotgun’ approach, with a diverse portfolio of models covering a wide range of markets, whereas Apple limits itself to a small number of high profile smartphones.
However, Neil Mawston, executive director at Strategy Analytics, argued that the two businesses have much in common that has driven their mutual success.
He said: ‘Firstly, they both have good distribution with lots of products on shelves.Secondly, they have high brand awareness. Thirdly, they have a grand sweep of supporting services, whether it’s iTunes with Apple or the Google Play marketplace with Android. And fourthly, operators are pushing down the cost of phones to lower price points.’
IDC said Samsung stretched its lead over Apple during the second quarter as iOS aficionados sit tight ahead of the launch of the next iPhone, widely expected to be announced next month. Samsung was boosted by the success of the flagship Galaxy S III, as well as strong sales of the Galaxy Note.
An unbreakable duo?
Despite the hopes of HTC, RIM, Nokia and Sony to turn the top two into a top three or four, Mawston said the duopoly is unlikely to be disrupted by a new challenger. ‘Shoppers tend to have a herd instinct and follow what their friends are buying. Historically the UK has polarised around two or three brands. It used to be Nokia and Motorola, now it is Apple and Samsung.’
But there are encouraging signs of greater competition from the US. Last week, new research by Strategy Analytics predicted that Google’s Android is reaching its peak after the operating system lost four points of market share. Yet Apple’s inexorable march continued, with the manufacturer seizing 10 points of market share and volume growth despite the lack of a next generation iPhone.
So how likely is the UK to follow suit? Mawston suggested that any change would probably take place in two years’ time, with the launch of next generation mobile technology. He said: ‘If you look at the market from 1 to 2 to 3G, it led to a change in the market leader. Motorola dominated the 1G generation, Nokia did with 2G and Apple and Samsung have with 3G. When 4G comes along, that’s really the point that will drive new players. That’s a great opportunity for rivals to disrupt the market but it looks like the UK will stay broadly the same until at least the end of 2013.’
Ramon Llamas, senior research analyst at IDC, is also sceptical about how attempts to grow share will pan out. He said: ‘With half of 2012 behind us, vendors are looking ahead to 2013 and how key markets – particularly Europe and emerging markets – will play out. Despite recent manoeuvres to shore up several countries within the Eurozone, the effectiveness of these efforts remains to be seen. Meanwhile, emerging markets will continue to be strong contributors due to their sheer size and growth trajectory, but how much they can offset potential declines in other countries is unclear.’
It looks like Apple and Samsung will be outpacing the rest of the pack for some time yet.