The latest numbers from IDCABI and Strategy Analytics (the latter not yet online) paint an interesting picture of where the smartphone business currently stands, and where the iPhone sits within it.

The overall picture for smartphones is, of course, strong. IDC reports:

In the worldwide smartphone market, vendors shipped 237.9 million units in 2Q13 compared to the 156.2 million units shipped in 2Q12. This represents 52.3% year-over-year-growth, the highest annual growth rate in five quarters. Second quarter shipments were up 10.0% when compared to the 216.3 million units shipped in 1Q13.

While ABI pegged the year-on-year growth at a significantly lower 44 percent, it’s clear that much of the traditional featurephone market is switching to smartphones.

The high-end also remains strong, with both the iPhone and Samsung S4 outpacing the smartphone market as a whole, though both sets of figures show iPhone growth at a long-time low … 


Despite the surprising tenacity of premium smartphones, Apple’s market share (14.6%) dropped to its lowest point since 3Q’2011. ABI Research attributes this share loss to the success of the Samsung Galaxy S4 launch and the continued growth of low cost and mass market smartphone shipments.


Apple posted its second-lowest year-over-year iPhone growth rate in almost four years as some buyers presumably held off on iPhone purchases in advance of an expected next-generation device launch this fall. Nonetheless, the 31.2 million iPhones Apple shipped last quarter was impressive as its flagship iPhone 5 model, which has been in the market for three quarters, was faced with additional global competition in the form of Samsung’s Galaxy S4 and HTC’s critically-acclaimed One models.

Strategy Analytics also notes that Apple’s near four year reign as the most profitable handset vendor came to an end in Q2, when Samsung took the lead:

We estimate Samsung’s operating profit for its handset division stood at US$5.2 billion in the second quarter of 2013. Samsung overtook Apple for the first time, which recorded an estimated iPhone operating profit of US$4.6 billion. With strong volumes, high wholesale prices and tight cost controls, Samsung has finally succeeded in becoming the handset industry’s largest and most profitable vendor.

The iPhone is weathering two storms: strong competition from extremely well-received high-end Android handsets, and increasing pressure from the mid-market. Both Samsung and HTC have launched less expensive ‘mini’ versions of their flagship handsets which offer decent specs and, despite the ‘mini’ labels, actually have slightly larger screen sizes than the iPhone.

Maintaining iPhone growth in this environment is actually a pretty impressive achievement.

The current quarter is likely to be a different story. Assuming the iPhone 5S does indeed launch in September, and assuming that it has at least one killer feature (of which fingerprint security seems the most likely contender, with NFC a distant second), that alone is going to drive substantial sales. If Apple manages to launch the plastic iPhone in the same quarter, the numbers are going to go through the roof. Or, in IDC’s more prosaic language:

Apple’s growth is likely to accelerate globally assuming it launches a lower-cost iPhone and continues to penetrate prepaid markets in the quarters to come.

Of course, Apple isn’t the only smartphone maker busy developing new products. Google is reportedly throwing a staggering half a billion dollars behind the marketing of its about-to-be-launched Moto X handset. That’s more than Apple spent last year on the combined marketing of the iPhone, iPad and iPad Mini. And it’s not a case of a lack-luster phone having lots of money thrown at it: based on a series of leaks, the Moto X is going to add a very strong third strand to that tough high-end Android competition.

But we must not ever forget the Apple Factor. Not just the brand halo, but the fact that Apple likes to surprise. While we may like to think we have a pretty good steer on what the company has planned for its next iPhone launches, and supply chain feedback may make it unlikely we’re going to see any dramatic surprises, with Apple, one never knows.

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