Contributed by Warren Fisher of Manole Capital Management
There have been dozens of articles written how iPhone sales have plateaued, as well as how Apple has lost market share in the important smartphone industry.
According to recent estimates from Strategy Analytics and Counterpoint Research, Apple continues to hold 3rd place, in terms of global smartphone market share. By shipping 38 million units last quarter, Apple captured roughly 10% of the worldwide market.
There remains significant pressure and competition from numerous Chinese brands. The biggest threats to iPhone sales comes from Samsung, Huawei, Xiaomi and Oppo. In fact, both research firms believe Apple is the only Top 5 brand to have lost market share last quarter. The 2nd quarter, without a new version of its iPhone, was not going to be a terribly busy quarter for existing customer upgrades. Apple is certainly hoping that its newest version, expected the final week of the 3rd quarter (right before the holidays), could spur sales.
In addition, there has been much publicity concerning Apple’s attempt to migrate their business from 1x hardware sales to more predictable and sustainable Services revenue. We don’t blame them one bit! That’s exactly what they should be doing.
However, they have had a remarkable lack of success, in our opinion. In their most recent quarter, iPhones, iPad’s, Wearables, Accessories and Mac sales still represent 79% of Apple’s total revenue. Services, at 21%, is growing, but we are somewhat disappointed. Why? Let us explain…