News Column

Apple, Samsung wounded in smartphone war

August 15, 2014

Bonnie Tubbs

Smartphone giants Samsung and Apple are in the firing line as new low-cost devices and high-end challengers continue their onslaught.

Smartphone darlings Samsung and Apple are in for injury, inflicted by the rise of low-cost devices, coupled with intensified efforts by high-end challengers particularly in emerging markets like SA.

This is according to industry observers and comes in the wake of a statement by rating agency Fitch this week, which predicts Samsung and Apple's global smartphone shipment market share will decline to around 25% and 14%, respectively, by 2015. This is down from 31% and 15% in 2013.

The decline, says the agency, will be largely due to rising competition in emerging markets, where lower-priced handset models from local competitors should continue to gain market share at the expense of the big two.

"Competition has also intensified as more manufacturers have been able to produce devices which exceed most consumers' design and technical requirements," says Fitch. It adds that Apple's next iPhone rumoured to be launched in September ? is likely to have a larger screen, and developments are likely to be incremental rather than revolutionary.

year of the low-cost smartphone (../index.php?option=com_content&view=article&id=136852:Seven-sub-R1-000-smartphones&catid=260), with both MTN and Vodacom bringing their own branded Android devices to market at a price point of under R1000 joining the pool of similarly priced handsets from the likes of Huawei, Alcatel, Samsung and Nokia.

Fitch says devices from smartphone war rivals retailing at $100 to $300 can offer most of the key features of more expensive phones from Samsung and Apple. A year ago (../index.php?option=com_content&view=article&id=66427), World Wide Worx MD Arthur Goldstuck said low-cost smartphones already offered a positive user experience at a fraction of the price of high-end phones.

Clinton Jacobs, senior IT sector researcher at BMI-TechKnowledge, says with WhatsApp being one of the largest drivers for smartphones on the low end he does not see "feature-rich" as such a great value proposition. "As long as [users] can WhatsApp, use Facebook and perhaps [have] a few other key applications."

Jacobs says not only will there be margin compression as new low-end rivals enter the market, but existing players are also upping the ante on their high-end offerings, at lower prices. He mentions HTC as a case in point. Some of the other names analysts believe pose the biggest threat to the Samsung and Apple armies are Huawei, Alcatel and Windows.

HTC, meanwhile, just recently made its local comeback (../?id=136000:HTC-re-enters-SA-market). HTC country manager Douglas Jewson says the manufacturer has re-entered a "hyper-competitive" market in which "everyone is competition". HTC does not underestimate any competitor, he says.

Ovum analyst Richard Hurst says Windows is a competitor that should not be forgotten amid all the smartphone sparring. "We expect [Windows phones to be] around 10% of smartphones shipped by 2015, rising to around 13% of shipped devices in 2017." He says other important challengers for market share in emerging markets will be the Chinese-manufactured Shenzen devices.

Africa Analysis analyst Dobek Pater says a stronger move into low-cost smartphones, while retaining the quality of their high-end devices, may shield Samsung and Apple's market share from the onslaught that is coming from all sides.

"One could argue that the brand or image may suffer if every subscriber and his or her dog can run around with a top brand name device in their pocket. However, in the pre-smartphone days, Nokia was able to successfully service a broad section of the market ? from high-end to low-end phones ? without the brand suffering."

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Source: ITWeb

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