Apple back in top spot as Samsung battles brands from China

Singapore

AS worldwide smartphone sales crossed the one billion mark in 2014, the fourth quarter of the year saw Apple, armed with two bigger sized iPhones, firing a salvo at long-time rival Samsung. After four years and many quarters of giving ground to the Korean giant, Apple retook the No 1 crown by claiming a 20.4 per cent market share in comparison to Samsung's 19.9 per cent (INFOGRAPHIC: Trading places).

The massive change in fortune for these two top rivals is evident when one looks at the one-year ago market share numbers. In the fourth quarter of 2013, Samsung clocked in 29.5 per cent market share while Apple had a 17.9 per cent share. However, truth be told, Samsung may have lost only marginal market share directly to Apple in the fourth quarter of 2014. That's evident from the fact that the US company increased its share by a little more than 2 percentage points - from 17.8 per cent to 20.4 per cent - while Samsung lost nearly 10 percentage points, 29.5 per cent to 19.9 per cent. Roughly 8 per cent of Samsung's market share has been gobbled up by other vendors.

The Korean IT giant has been bleeding most of its market share in the mid- and lower-tier handset segments to Chinese vendors such as Xiaomi, Lenovo and Huawei. Xiaomi in particular has made a major splash with its hugely popular handsets and chic marketing style, not only in China but also in the entire Asia-Pacific market. The result is that its 2 per cent market share in fourth quarter 2013 rose to 5 per cent in the 2014 fourth quarter.

Overall, worldwide sales of smartphones saw a record fourth quarter, rising 29.9 per cent year on year to reach 367.5 million units, according to research agency Gartner.

In the Asia-Pacific market, Apple had 14.8 per cent market share during the quarter while Samsung came in at No 2 with a 12.7 per cent market share. In a testament to the popularity of its handsets in this region, Xiaomi - globally at No 5 - came in third in Asia-Pacific with a 10.7 per cent market share. Lenovo came in at fourth place with 7.4 per cent market share.

In 2014, smartphone sales totalled a staggering 1.2 billion units, up 28.4 per cent from 2013. This accounted for two-thirds of global mobile phone sales. With a steep fall in prices of handsets, smartphones continue to replace feature phones in price sensitive growth markets.

Anshul Gupta, principal research analyst at Gartner noted that Samsung continues to struggle to control its falling smartphone share, which was at its highest in the third quarter of 2013. This downward trend shows that Samsung's share of profitable premium smartphone users has come under significant pressure.

"With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market," Roberta Cozza, research director at Gartner, added.

Mr Gupta noted that Apple sold a record 74.8 million units in the fourth quarter and this helped it to move to No 1 position in the global smartphone market.

"Apple's first ever large-screen phones continued to see huge demand with sales in China and US, growing at 56 per cent and 88 per cent, respectively. Apple's strong ecosystem and its new iPhone 6 and iPhone 6 Plus drove strong replacements within the iOS base. These new smartphones also offered new users, who are looking for larger screen phones, a strong alternative to Android," Mr Gupta said.

Lenovo moved up the table strongly to No 3 after the acquisition of Motorola. It reached a 6.6 per cent market share, growing 47.6 per cent year over year. Lenovo's sales of mobile phones in its home market, China, grew 7.8 per cent in the fourth quarter of 2014. In addition, its strong mobile phone sales in Russia, India, Indonesia and Brazil in the fourth quarter of 2014 helped it grow by 26 per cent in the global mobile phone market.

Gartner's Ms Cozza noted that Chinese vendors, such as Huawei and Xiaomi, are continuing to improve their sales in China and other overseas markets, increasing their share in the mid- to low-end smartphone market. "Chinese vendors are no longer followers, they are producing high quality devices with appealing new hardware features that can rival the more established players in the mobile phone market. Brand building and marketing will be key activities in deciding which Chinese vendors can secure a foothold in mature markets," she added.

Mr Gupta added that the availability of smartphones at lower prices accelerated the migration of feature phone users to smartphones, pushing the smartphone operating system (OS) market to double-digit growth in most emerging countries, including India, Russia and Mexico.

This trend continued to benefit Android, which saw its market share grow 2.2 percentage points in 2014 to 80.7 per cent. Chinese vendors and other smaller players drove Android's performance in 2014, while more established players at the higher end of the market continued to struggle to increase stickiness to their brands and ecosystems. A measure of Android's dominance can be gauged from the fact that out of the 1.2 billion smartphones sold in 2014, the Android OS was on more than one billion of those phones.

Windows Phone's performance was flat but it recorded strong results in some markets in Europe, and in the business segment.

Worldwide mobile phone sales - that is, both smartphone and feature phones - totalled nearly 1.9 billion units last year, a 3.9 per cent increase from the same period in 2013. All regions recorded growth in 2014, except Japan and Western Europe, which recorded declines of 2.8 per cent and 9.1 per cent, respectively.