IDC: Apple iPhone’s higher margins are much more valuable than chasing market share

According to a new mobile phone forecast from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, smartphone shipments are expected to grow 10.4% in 2015 to 1.44 billion units. This is lower than IDC’s previous smartphone forecast of 11.3% year-over-year growth in 2015. IDC expects to see a noticeable slowdown in smartphone shipments in 2015 as China joins North America and Western Europe in a more mature growth pattern. However, steadily falling average selling prices (ASPs) will fuel steady growth through the end of the forecast period, with global shipments reaching 1.9 billion units in 2019.

China remains the focal point of the global smartphone market in 2015, although the results haven’t been as positive as in previous years. As the largest market for smartphones – China consumed 32.3% of all new smartphone shipments in 2014 – its importance remains great even if its growth has begun to slow. Shipments are forecast to grow just 1.2% year over year in 2015, which is down from 19.7% in 2014. China will remain the largest market for smartphone volumes throughout the forecast period. However, its share of the overall market is expected to drop to 23.1% in 2019 as high-growth markets like India continue to expand.

“China clearly remains a very important market. However, the focus will be more on exports than consumption as domestic growth slows significantly,” said Ryan Reith, Program Director with IDC’s Worldwide Quarterly Mobile Phone Tracker. “India has captured a lot of the attention that China previously received and it’s now the market with the most potential upside. The interesting thing to watch will be the possibility of manufacturing moving from China and Vietnam over to India. We’ve begun to see this move as a means to cut costs and capitalize on financial benefits associated with localized India manufacturing. It is the local vendors like Micromax, Lava, and Intex that will feel the most pressure from international competition within its market.”

Apple's 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus
Apple’s 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus
Despite Apple’s continued success with its variants of the iPhone, the story among operating systems is not expected to change throughout the forecast, with Android’s 81% share in 2015 carrying forward until 2019. Markets with the biggest growth opportunity are extremely price sensitive, which IDC believes will not change, and this is the main reason Apple will be challenged to take Android share throughout the forecast. Even if Apple were to introduce another low-cost iPhone (e.g., ‘C’ version), IDC believes the price will struggle to compete with Android OEMs that are focused on portfolios aimed at price points of $200 and less. This isn’t to suggest that Apple’s success with the iPhone won’t continue, and IDC believes its efforts to maintain significantly higher margins compared to its competitors are much more valuable than chasing share. Android shipments globally are expected to grow from 1.06 billion in 2014 to 1.54 billion in 2019, while iOS shipments will grow from 192.7 million in 2014 to 269.6 million in 2019. IDC’s view that Microsoft/Windows Phone will remain a marginal challenger at best has not changed.

On the device front, phablets (smartphones with 5.5″-7″ screens) will continue to drive shipment volumes in both emerging and developed markets. “Since Apple finally delivered a larger screen smartphone with the iPhone 6+, the demand for large screened devices among consumers has been at a record high,” said Anthony Scarsella, Research Manager with IDC’s Mobile Phones team. “Smartphones featuring display sizes from 5.5 inches to 6 inches are forecast to grow 84% in 2015 compared to last year, while phablets overall will make up over 71% of shipments by 2019.” It is also worth noting that this screen size (5.5″-6″) also plays the role of having the highest average selling prices for devices throughout the forecast. IDC expects this screen size band to be the placeholder for a majority of vendors’ flagship device launches throughout the forecast period.

Worldwide Smartphone Forecast by OS, Shipments, Market Share, Growth and 5-Year CAGR (units in millions)
IDC: Worldwide Smartphone Forecast by OS, Shipments, Market Share, Growth and 5-Year CAGR (units in millions)
* Forecast data

Source: IDC Worldwide Quarterly Mobile Phone Tracker, August 25, 2015.

MacDailyNews Take: IDC believes Apple’s efforts to maintain significantly higher margins are much more valuable than chasing market share, as does anyone else with at least half a brain.

Samsung will never overcome Apple’s advantage in mobile device profitability – July 30, 2015
Apple’s iPhone owns 92% of smartphone industry’s profits – July 13, 2015
Apple iPhone takes smartphone market share from Android around the world – March 4, 2015
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013
Apple will continue to ignore Android market share stats all the way to the bank – October 29, 2013
Why market share doesn’t matter to Apple – October 21, 2013
Digging in on the Church of Market Share – May 25, 2013
The Church of Market Share revisited – April 26, 2013
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012
iPhone users smarter, richer than Android phone users – August 16, 2011
Study: Apple iPhone users richer, younger, more productive than other so-called ‘smartphone’ users – June 12, 2009


  1. There has to be some reason investors are mostly interested in market share but I haven’t been able to determine why. Even high market share is no guarantee of a company not going belly up. I would think it would be more important on how a company’s books look which to me means fundamentals. An ultra-high multiple would mean trouble to me but Wall Street is very comfortable with companies running absurdly high multiples. It’s like a company is able to defy reality is what really excites investors.

    Instilling confidence in investors seems to be very important and yet its something Apple hasn’t ever figured out. Maybe the only way you can instill confidence is with high market share and that’s why Apple always loses out with investors. Maybe only a believable CEO can instill confidence. Maybe Apple needs a huckster as a front man to sell Apple snake oil. I had thought Apple’s P/E would expand as Apple’s revenue and profits grew but it turned out to be the exact opposite. Silly me. Apple’s value to Wall Street is worse now than it has been in many years.

    Did Apple run out of share repurchase money when Tim Cook emailed Jim Cramer? You’d think Tim Cook wouldn’t care if they could purchase much cheaper shares, so that sort of surprised me. I’m glad Tim Cook tried to do some damage control but in the end it probably won’t work for Apple shareholders and the share price will continue to fall due to China headwinds.

  2. IDC, ooophs. We were wrong our guess, uh, forcast. Short- wrong. But, here is some vague ramblings with a lot of, cover your arse, angles. We will also doom Apple as this hlps the story. Look, Apple doomed, other will thrive. Angle covered. But, Apple has this preminum market and they may again make mone- well now let us add market share in not the important part- angle covered. IDC, smoke and mirrors which great amount of guessing so the average android user can understand while the Apple owner bangs head against wall while seeing the worthless articles for what it is- baiting clicks.

  3. Another article about Apple’s share price, what else is new? Stock prices have very little to do with company performance, just look at Amazon, who still has yet to turn a profit. Stock prices are more in tune with the algorithms that fire off trades based solely on the next ask price.

  4. No shit sherlock. These guys are friggin geniuses.
    In 4 years time, a new product may emerge and the likelihood is that Apple will be there to lead the way.
    As for Android, it will remain the darling of the cheap phone with successive companies taking the market share lead only to be outdone by someone else.

  5. It seems beyond belief that analysts could ever have felt that massive profits were not as important to a business as bragging rights ( market share ). It’s even more incredible that this state of affairs happened for several years.

    Market share is meaningless if worthwhile profits are not being made. I can think of many businesses that were market leaders, but which collapsed due to not being profitable.

    There’s not much that any company can do to protect itself from external factors like the current situation in China, or from false rumours being circulated in order to manipulate the stock, but if a company delivers solid and reliable profits for year after year, then it’s proven to be a fundamentally sound business, irrespective of what the analysts might try to suggest.

  6. Market share and gross profit margins are a delicate balance.

    If you have a huge market share but your profits are so slim that your net (post tax) profit is virtually zero or negative (looking at you Samsung) then its not sustainable in the long run. Conversely, if your gross profit margins per unit are quite good, but your market share is tiny (looking at you Microsoft) then your aggregate net profit is not enough to sustain the IR&D, marketing and distribution costs to keep things moving forward making this also not sustainable in the long run.

    At the moment, Apple has a great balance in this regard. High gross profit margins and a good market share. No other vendor has as good a balance.

    One thing I don’t understand about most of these analysts’ projections is the repeated projections that Microsoft’s Windows phones are going to keep growing and growing. This hasn’t happened in any significant fashion — ever. Yet, these analysts keep predicting it time and time again.

    Lastly, the security issues and the fragmentation issues that keep them from being corrected will very likely (I believe) eventually catch up with the Android platform and the various vendors that support it. Either Google figures out some way to conclusively fix this problem, or a disaster will happen that will hit the international news media and the general public in a very big way. If that likely turn of events does happen, then we can expect the Android market share to crater.

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