Shifting Trends in the Smartphone Industry: How will Apple Fare in the Coming Years?

23 Dec

Brands like Palm, Nokia, Motorola and RIM have each had their moments of glory within the mobile industry. As many would agree, though, it wasn’t until after the release of the first iPhone that the smartphone craze as we know it truly begun to take form. By now, the mobile scene has reached a point where competition is both aggressive and unpredictable, and where the Cupertino company is no longer the one to dictate the rules within the market. A few major questions, hence, are worth pondering at this point. In the next few years or so, where can we realistically expect the volatile smartphone market to go? More important, what’s going to happen to Apple, now that it isn’t the only towering giant in the playground, and now that the iOS doesn’t hold the title for the most dominant platform anymore?

One possibility, farfetched as it may sound, is that the Cupertino company’s influence will eventually begin to diminish. The problems with the iPhone 5 have already been covered by various media, so we won’t dig too deep into those issues here. What’s particularly worth noting, rather, are events such as Walmart’s recent low priced iPhone 5 promotions, the iPhone 5’s much-earlier-than-expected-release within the Chinese market, and the reported decline of orders that have been encountered by various of Apple’s suppliers. At first glance, it is tempting to simply interpret these as innocent holiday promotions and supply-chain issues experienced by any typical manufacturers within the industry. When taken together and observed from a realist perspective, however, a much more distressing scenario emerges: Apple’s new smartphone, which many were sure would become an immediate, monster hit, may not be faring as ideally as the folks at Cupertino had anticipated.

As observed from forums such as mobile01’s iPhone board, loyal Apple fans seem to be neither fretting nor directing much blame at the Cupertino company. This should not come as that big of a surprise, seeing how compared to consumers who use other smartphone brands, hardcore Apple users tend to be slightly more forgiving with their company’s shortcomings, even when the problems involve such setbacks as obvious hardware issues, maintenance-related difficulties, and software glitches.

But not all consumers are, nor will ever be, arduous followers of Apple. And the fact of the matter is, soon, not all Apple fans—not even the really, really loyal ones— may find it practical to cling onto the relationship that they are stuck in at the moment.

To get clearer picture, let us take a look at some of the current iPhone issues that the Cupertino company may eventually have to confront in the future.

Product Strategy and Consumer Preferences

From the first iPhone device to the current sixth generation iPhone 5, Apple has exhibited a habit of satisfying and serving consumers with just one smartphone release per year. Given how the competition had not been as fierce back then as it is now, the strategy certainly had its benefits. The long production cycles, for one, have made the production management and promotional processes relatively easy to execute. This in turn allowed the company to direct pretty much all of its focus, resources, and innovation into just one product.

By the time the iPhone 4 was released, both the power balance and consumer trend within the market have changed. Samsung launched its first Galaxy S smartphone, which had similar hardware specs to the iPhone 4, but featured a (much) larger screen, impressive OLED technology, and other unique in-house components. The handset went on to be a hit, and eventually became the first Android phone to ship over 1 million units. At the same time, notable tech firms like Motorola, Sony, HTC, and LG saw their statuses rise and have begun to release their own respectable line of high-end smartphones.

With more and more alternatives arriving on the scene, buyers, naturally, are imbued with more options to choose from. A slightly worrying trend Apple may eventually have to confront is the potential lack of new iPhone users. High-end smartphones from other companies are being launched at a faster pace, and sport much more impressive specs upon each release. If consumers were to put various of today’s high-end smartphones side by side for spec comparisons, many may inadvertently discover that the strength of the iPhone is, in fact, getting weaker. Reportedly, some Apple customers have begun to switch to other brands, while others are known to be patiently waiting for a better version to come along.

Other than general features like hardware specs, software effectiveness, and storage capacity, a smartphone’s display size, aesthetic appeal, hardware design, overall style, and adherence to trends are beginning to have greater influence over a consumers’ purchase decision. Apple’s iOS platform, no doubt, is still ahead of Android in terms of its simplicity and apps, but the company needs to start putting a lot more emphasis on the aforementioned hardware features and capabilities.


Main Specs for High-End Smartphones (prices in USD)


Below is a diagram showing a variety of handsets that consumers have been looking to buy from 2010 to 2012. Samsung’s high numbers, shown on the right, is a clear indication of its rapid ascension in the smartphone industry. Companies like Motorola and Nokia, on the other hand, remain on the low end with the smallest numbers of the bunch, while RIM, unsurprisingly, is continuing to struggle. HTC has obviously taken a hit from Samsung’s dominance and the patent war with Apple, with numbers showing a general downtrend.

For the iPhone, consumer interest in 3Q12 has taken a dip, although in the following quarter, interest rose due to the announcement of the iPhone 5. Despite this increase, the situation for Apple is no longer as optimistic as it once was. Competitors like Samsung, along with changing consumer preferences, are no doubt going to present ample challenges for the Cupertino company in the times to come.


Potential iOS Issues

The current smartphone market, in some ways, largely resembles the computer industry 20 years ago, when the scene was primarily dominated by the battle between PC and Macintosh. The PC’s open ecosystem had been key to drawing major software developers, whereas its cheap price and operational efficiency helped it accumulate major market share within the industry. As was the case with Macintosh, Apple’s smartphone has been able to prevail in today’s market despite sporting a comparatively more expensive price tag, being relatively less used than its rivals (if we were to compare it with Android usage in general), and, as many tech experts would love to say, not always having the most superior specs in the hardware department.

Apple’s trademark platform, the iOS, without question played a prominent role in assisting the iPhone maintain its successful record. In summary, the two core elements that make Apple’s mobile operating system popular include:

1. A fully loaded app store, which allows users to find and download almost any software they can think of.

2. A very easy to use interface, made all the more accessible by the iPhone’s simple home button and the utilization of universal resolution.

At present, a major issue that the Cupertino company will eventually have to confront is the rising dominance of the Android platform. While Apple’s app store already has over 700 thousand apps as of September 2012, the Google Play Store is gradually reaching within distance, having amassed approximately 670 thousand apps of its own. The software giant’s platform, moreover, is gradually attracting more and more users to its camp, as can be seen in the graph below.


iOS6 ?or iOS5 ?

To make matters a bit more complicated for Apple, the iOS is apparently heading in a questionable direction, as can be seen in the criticisms directed towards iOS 6. At first, the only two noticeable differences were the replacement of google maps and the omitted youtube app. As time passed, problematic issues were spotted: the speed is said to be much slower in some areas, whereas power usage is allegedly less efficient than the iOS 5’s. Apple’s map, on the other hand, is so atrocious that Apple CEO Tim Cook had to give a public apology. The problems experienced were apparently noticeable enough that when people upgraded to the new iOS, some had reportedly tried to revert to the old platform.

The Pricing Factor

The graph below shows the advantages of price when it comes to marketing a smartphone. When a high-end phone like Samsung’s Galaxy S3 is being offered at the $500 mark, the iPhone 5’s $700 price tag seems significantly more expensive by comparison. Within the market, moreover, there are a good number of smartphones that arguably sport much better specs but are priced in a cheaper range than the iPhone.


With an apparent upper hand in the price and customization departments, much of the advantage is now tipping towards Samsung, whose market share and user base is growing at a substantial rate.



Just as the iPhone 5 is projected to ship more than 4 million units in 4Q12, Samsung’s Galaxy Note 2, which measures at 5.5 inches, has reportedly already sold more than 1 million units. In the future, there’s been speculation that Samsung will release an even bigger Galaxy Note, rumored to measure at 6.3 inches.


Possible Smartphone Sizes from Apple and Samsung

With little compromises apparently made to the smartphone’s overall weight and battery life, large displays have become one of the most popular trends in the industry. The Galaxy Note 2 is said to be particularly popular with the women segment, many of whom are able to conveniently carry the large sized handset in their bags. Competing products like HTC Butterfly, on the other hand, is making a good impression in Japan due to its impressively high resolution. In the 4.8 inch display category, notable consumer choices include the Galaxy S3, HTC One, Sony Xperia, TX, and Nexus 4.

It seems Samsung will likely be aiming for the 5.5~6 inch market in 2013. Apple’s iPhone 6, which will probably not be released until the third quarter of 2013, is rumored to measure at 4.8-inches. By the time Apple comes up with such a phone, the new mainstream size is likely to be 5 inches, which would put the Cupertino company behind trends once again.


QoQ Global Shipment Figures for iPhone

2013 Mid to Low End Smartphone Competition

For 2013, aggressive competition is likely to take place in the mid-to-low end market. The reason for this is not only because affordable phones are popular within regions like China, but also that the country has become an ideal setting for smartphone promotion and development. HTC, Nokia, Motorola, Sony, and Apple will no question want to take this new market opportunity very seriously.

At the moment, the iPhone 5S is rumored to be the “cost down” version of the iPhone 5, and is likely to be Apple’s answer to the mid-end market.

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