Tomi Ahonen: Apple will revert to niche status as Chinese advance in smartphones

“How safe are Apple and Samsung in smartphones – could one or the other be vulnerable, right now, to a new hit phone?” Haydn Shaughnessy writes for Forbes.

“Continuing my conversation with Hong Kong-based mobile expert Tomi Ahonen, I asked for his view on the status of the Apple vs Samsung battle,” Shaughnessy writes. “I say this competition defines the smartphone sector. Tomi’s view is that the relevance of Samsung vs Apple is already on the wane.”

Apple’s current 20% market share will not hold to the end of this decade, as the global handset production shifts from the current 45%/55% smartphone/dumbphone mix, to 100 smartphones produced by 2020. Apple’s market share likely falls to half its current level, to be similar to the historical share that the Macintosh had for decades in the PC market, as a highly-desirable ‘Apple way’ to do computers, for a luxury niche end of the global PC market, doing particularly well in the affluent West.

For Apple this is a critical year, can the next iPhone be a big hit again to protect the top end where Apple is no longer always the coolest most desirable device; but more importantly when will Apple give us a lower-cost i.e. mid-price iPhone to help its position in less-affluent emerging world markets, and hold some market share at the lower price points?

I think Apple’s share this year will decline but gradually, as the global smartphone market breaches the 1 billion new devices sold per year level by Christmas. – Tomi Ahonen

Read more in the full article here.

MacDailyNews Take: Those who consider market share as the only measure of success do not understand basic business concepts.

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42 Comments

    1. Definition of an “expert”: someone that lives more than 60 miles from you.

      Ahonon’s “expert analysis” isn’t worth the time to read it. It is chock full of ‘conventional wisdom’, ‘wisdom’ that Apple has destroyed in the last 13 years.

    1. It doesn’t make a lot of sense, does it? Analysts are generally full of it, and the really good ones are seldom giving away their information. The wealthy and powerful have those really good analysts on contract.

      Besides, if you agree with Tomi Ahonen’s numbers, smartphone sales will more than double, from 45% to 100% of units, on top of the unit sales effects of an increasing population. If Apple’s marketshare drops by 50%, as conjectured, it will still be selling more iPhones in 2020 than it is right now. That is not a disaster scenario for Apple by any means. And all this assumes that Tomi Ahonen’s speculative numbers are valid, which is not necessarily true.

  1. So, prior to Apple signing a deal with China Mobile which has 70% of the Chinese mobile customers, Apple is trashed again. I thought China Mobile was modifying their towers to work with iPhones and a deal with Apple should be signed this year. So, what is “20% market share” of the 70% of the Chinese mobile customers that are signed with China Mobile? Bigger than the USA market.

  2. Even if Apple is only a niche player, Apple will make more money then any of the market leaders. Because they will be basically giving away there devices for that market lead which really means nothing in business. If you want to stay in business you need to make money for two reasons. More R&D for the next generation and profits for the company to keep going farther. Giving away your stuff doesn’t make money and puts a strain on getting more R&D done when you can’t invest money into it because your not making any money.

    1. Interesting point, b9. Except for your obvious and disconcerting problem with homophones [then ≠ than, there ≠ their, and your ≠ you’re], I agree entirely. Profit is NOT a bad thing in business!

  3. This guy is ridiculous. There will never be a 100% smartphone production. There will always be a market for very cheap phones that are just that — a phone and not much more.

    This guy obviously thinks that hardware is the defining factor in smartphones. He is sadly mistaken. The entire reason the iPhone is such a hit is because of iOS and the apps. Apple could stop developing new hardware today, not release a new iPhone for 5 years, and the capabilities of the iPhone would continue to expand thanks to app developers.

    BTW, these app developers actually make money off of their iOS apps, something I’m sure would not be anywhere near as safe and predictable under a Chinese smartphone seller/OS developer/app store.

    And since Samsung is about to be bombed out of existence by North Korea, Apple should actually gain market share. 😉

    1. Even if one ignores that factor, the numbers in his prediction simply do not make sense:

      Today:

      (20% share)*(45% smartphone) = 9% of all cellphones

      Prediction:

      (10% share)*(100% smartphones) = 10% of all cellphones

      Golly gee: no change in total sales = “niche” (and failure)

      -hh

    2. So THAT’S how Apple plans to shut Samsung down! I didn’t realize that was the real plan/connection when I saw those pictures of the North Korean leader in front of an iMac! Clearly you’re much more insightful than I am.

  4. Let me put it in words that Tomi boy can understand.

    Apple isn’t going after the whole smartphone market but the most profitable segment of the market, one that will gladly pay year after year for a brilliant new iPhone and one that will generate profits year after year.

    There’s little sense going after the dumpster divers market. Let the bunghole manufacturers take that market.

    1. You’d think analcysts would bother to ACTUALLY study Apple’s history, as opposed to quoting ye olde Apple mythology and conventional street wisdom. But no, that behavior would be far too professional. They don’t have to understand what they’re blethering on about! That would be EARNING their salary! Unheard of! 😛

    2. Really? Apple almost completely bit the dust on this type of strategy for the Mac. Jobs saved the company with his return, but if they make the same mistake again its lights out for Apple. If Jobs had not come back Apple would not even exist anymore. And this time, there is no Steve Jobs to save them. Sure they should keep their high end devices, but they should have lower priced point entry devices as well. Stop being Apple fan boys.

  5. That’s it, then. Apple is doomed to niche status soon. It won’t produce another hit product to leapfrog the competition. Put it in the bank. This is the leading mobile expert talking. He’s never wrong. Sad, but it was a great run. Excuse me while I trot off to my Mandarin class. One must prepare for the inevitable.

    1. Let the mourning begin. Black mourning suit. Black veil over the head. Go shopping for the urn. Plan the funeral.

      HAHAHAHA! I do so love what’s really coming down the pike for Apple this year. Analcysts will be leaping from the rooftops in shame.

      1. Except for one small point, Derek: the analcysts suffer, to a man, from transient global amnesia. The syndrome kicks in shortly after evidence begins to trickle in that their prognostications were preposterous, their statements silly, their advice abysmal. Soon they awake as if nothing had happened, and continue their campaign of sabotage, calling into question the notion that this species is sapient.

  6. The cheap iPhone will be a new iPhone missing a key component, as iPod is missing telephony. What is the key component? Not sure. My guess is the cheap one will equal the current 4S inside, but the 5S/6 will have something mindblowing lay cool — my guess is inductive charging in a rethought and efficient way.

  7. In a way I hope he’s right. The only way for Apple to retain a high amount of market share is to start producing junk. So if 10% market share means profitable, innovative, high end products while the rest of the industry eats each other alive then that sounds good to me.

  8. smartphone hardware will continue to be commoditized and with that price pressures on the hardware. Apple can only hope for continued growth in numbers sold to power sales growth. The good thing with the numbers they have is economies of scale that no other brand can match except the Samsung top phones. this allows good growth in net profit even if margins start to take a hit.

    the iOS ecosystem continues to be power the Apple branded products with a complete solution for most users. it’s profitable for apple and their developers. Creating apps that sell for more than zero allows them to create more feature rich apps that aren’t dependent on ads to pay for.

    iCloud is a fabulous example of good app/service that isn’t filled with ads.

  9. Apple knows world market better than this Forbes writer.

    Apple also knows peoples needs in Asia are not inherently different than other cultures, just varied.

    I will not be surprised if apple manages to supply a smaller phone that costs less but does mostly what the big ones do. Leave the height the same but cut its width by a third or half. I don’t need the real estate, just the main functions.

    If I want real estate I’m on another device.

      1. No, but we know when we read crap and have at least some common sense. If you read the article, the ‘expert’ states:

        ‘Samsung is undeniably the world’s largest smartphone maker at about one in three smartphones sold, and will very likely hold roughly that share when its dumbphone customers are migrated to smartphones, as Samsung has over 25% market share in the far cheaper dumbphones. Its fair to say, Samsung is the handset giant, the ‘gorilla in the room’ so to speak.’

        So the ‘expert’ thinks their dumbphone users will automatically pick Samsung when they get a smartphone? How arrogant!

  10. So the market doubles and Apple’s market share decreases- that equals more iPhones. Good for Apple. As long as Apple maintains the “walled garden” approach lots of people will still stick with Apple.

    I think the market share on a global basis for Mac iOS will increase because, unlike several years ago you, you can do anything you need to do on a Mac. I hope Apple straightens out things like their Video software, updates their Desktops quicker and addresses Business computing more throughly.

    I think the total number of iPads and iPhones sold will increase at a healthy pace for the next several years. Percentage-wise I do think the “top-line” growth of the last several years is unsustainable- but increases of 8-20% are almost a certainty. Any other company who die for this level of sales increases over a several year period including Dell, Google, Microsoft, Rimm, and even Facebook. I want to see Apple keep up the quality of both the software and hardware rather then go for market share. I believe long term profits and share price increase will follow.

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