Markets

Apple Inc. Losing Ground to Samsung in This Important Market

A big part of the Apple story during its last product cycle has been market segment share gains against high-end Android vendors such as Samsung . Indeed, as Samsung's mobile revenue plunged during the iPhone 6/6 Plus cycle, Apple's iPhone-related revenue soared.

Although it reported record iPhone shipments in the first quarter of its fiscal 2016 (albeit helped along with some channel inventory fill that wasn't there a year ago), Apple's revenue in the Americas region dropped 4% year over year.

At the same time, a new research report from market intelligence firm Parks Associates shows that in 2015, Samsung actually began to close the gap with Apple in terms of installed base share in the United States. Indeed, per the report, 31% of smartphone users now have Samsung devices, just 9 percentage points behind Apple at 40%.

It would appear, then, that Apple is losing unit share to Samsung in this region which, unsurprisingly, is Apple's largest.

Not totally apples-to-apples

It's important to note that Samsung tends to very aggressively cut prices on older-generation phones as well as even its latest phones mid-cycle. For example, the 32-gigabyte Galaxy S6, which launched less than a year ago, sells for just $460 or so without a contract.

Older Samsung devices, like the Galaxy S5, can be had for under $400 without a contract.

The 16-gigabyte iPhone 6, now more than a year old, still sells for $550 without a contract. For even more storage, a 64-gigabyte model is available for $650.

Moving up to Apple's latest phones, the 16-gigabyte iPhone 6s can be had for $650 ,and it'll run customers $750 to get the device in a 64-gigabyte configuration.

Although Apple and Samsung are clearly close in terms of unit share in North America, Apple obviously has a significant advantage in terms of average revenue and likely gross profit per device.

Maintain or grow share without sacrificing profitability?

As overall smartphone market growth wanes, Apple will need to focus on trying to grow market share to drive revenue growth. Additionally, since Apple seems interested in growing its installed base in a bid to further monetize it, unit/share growth will be critical.

One thing that I can see working in Apple's favor is the iPhone 7 cycle. In addition to potentially catalyzing an upgrade cycle among the current installed base, it is likely to waterfall the current iPhone 6s/6s Plus phones to the price points that the iPhone 6/6 Plus currently occupy.

Where things have the potential to get even more interesting, though, is that Apple could actually keep the iPhone 6/6 Plus around and push them to even lower price points following the iPhone 7/7 Plus launches. This would put the 16-gigabyte iPhone 6 at $450 and the 16-gigabyte iPhone 6 Plus at $550.

These prices are still fairly high as far as the overall smartphone market goes, but as far as iPhones go, they're quite inexpensive. And although those phones will be a couple of generations old by then, they'll still be excellent large-screen devices that could serve as a nice, low-cost entry point into the Apple ecosystem for budget-conscious smartphone customers.

And, of course, for customers who want a smaller screen, the rumored upcoming iPhone 5se should do quite nicely, especially since it is said to have better internal specifications than the iPhone 6/6 Plus.

3 companies poised to explode when cable dies

Cable is dying. And there are 3 stocks that are poised to explode when this faltering $2.2 trillion industry finally bites the dust. Just like newspaper publishers, telephone utilities, stockbrokers, record companies, bookstores, travel agencies, and big box retailers did when the Internet swept away their business models. And when cable falters, you don't want to miss out on these 3 companies that are positioned to benefit. Click here for their names. Hint: They'renot the ones you'd think!

The article Apple Inc. Losing Ground to Samsung in This Important Market originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AAPL

Other Topics

Stocks

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More