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iPhone Loses Global Market Share as Rivals Advance

iPhone Loses Global Market Share as Rivals Advance
February 2, 2010 12:58PM

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Despite strong iPhone sales and profits in the fourth quarter, Apple, Inc.'s iPhone lost global market share as its rivals advanced. Nokia remained dominant in the market, and its Ovi Store has overtaken Apple's App Store in emerging markets. Samsung has been rising fast, and Android-powered devices are flooding the market against Apple.

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While the technology world continues to focus on Apple's yet-to-be-launched iPad, it seems iPhone sales may be slowing. Apple lost market share in the global smartphone market in the fourth quarter, ABI Research reports.

Apple's share fell from 18.1 percent in the third quarter to 16.6 percent in the fourth quarter, according to ABI's data. This comes despite the fact that Apple posted record iPhone sales for the quarter of 8.7 million units, up 100 percent from the year-ago quarter and up 18 percent from the third quarter.

"2009 may have started with a whimper, but by the fourth quarter of 2009 the global mobile handset market ended with a pretty reasonable bang," said Jake Saunders, vice president for forecasting at ABI. "We estimate 336.5 million handsets were shipped in the fourth quarter of 2009, up 15.1 percent quarter over quarter."

Nokia vs Apple

Despite market leader Nokia's weakened position in the smartphone segment, ABI said the company still managed to maintain 37.7 percent of the overall handset market. Korea's influence on the handset market is underscored by LG Electronics and Samsung. With 10 percent of the market, LG ranks behind Apple. LG has been counting on its S-class smartphone series to help it secure a bridgehead in the market, ABI said.

Nokia has another advantage over Apple. While Apple's App Store is still the most popular worldwide, Nokia's Ovi Store has overtaken Apple in crucial high-growth emerging markets in Asia-Pacific and Latin America, according to the newly released Wireless Development Survey from Research and Markets. Microsoft's Windows Marketplace for Mobile and apps sold directly through a carrier were also popular channels.

"The app-store model is now an expected part of any wireless developer program," said Janel Garvin, CEO of Evans Data. "And while Apple's iPhone App Store set the pace in North America and Europe, Nokia has been busy cultivating developers outside the U.S. in their traditional offshore strongholds, and has been remarkably successful in the short time of the Ovi Store's existence."

Samsung's Juggernaut

Meanwhile, ABI said Samsung, the market-share juggernaut, seems unstoppable. Between June 2008 and December 2009, Samsung increased its market share from 15.2 percent to 20.5 percent. Samsung has benefited from a strong lineup of feature phones as well as a strong reputation for innovative smartphones.

Turning to HTC, the handset maker's market share didn't fare well early last year, but its circumstances improved slightly in the fourth quarter to a one percent share. HTC announced a revamped handset portfolio strategy, not just targeting high-end devices but also launching smartphones that appeal to purchasers with smaller wallets. Then there's Motorola.

"In the third quarter of 2009, Motorola, under the direction of Sanjay Jha, has come out of its corner fighting with a refreshed portfolio," said ABI practice director Kevin Burden. "The Droid has received critical acclaim. However, Motorola's market share continued to contract to 3.6 percent."

Apple's slight decline could be thanks to the Droid and other Android-based phones, noted Rob Enderle, principal analyst at the Enderle Group. Apple, he said, is feeling a certain amount of pain from a market-share perspective in the fourth quarter.

"Even in the pain, Apple is realizing a much higher level of profit than any of the other handset vendors. Clearly, Apple is favoring profit over market share," Enderle said. "That is consistent with Apple's strategy. The company may very well continue to drop market share, but you will see them hold viciously on the profits."

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