July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Hon Hai Precision Industry, better known as Foxconn, reported an almost 20 percent drop in earnings in the past quarter. The problem, apparently, is lower than expected iPhone sales.

What does that mean for Apple earnings, coming up in two weeks?

Sixty to 70 percent of Foxconn’s revenue is dependent on assembling Apple iPhones and iPads, Reuters says, and a drop in demand resulted in sales dipping from $33 billion in the fourth quarter of 2012 to $27 billion in the first quarter of 2013.

That’s clearly not great news for Apple, which will be reporting quarterly earnings on April 23.

But it’s also a little surprising, given that according to ComScore numbers released just recently, Apple’s Apple’s U.S. iPhone sales are up 11 percent this past quarter. Which could mean that the international mobile market, already dominated by Android, has increasingly pivoted away from Apple.

Credit Suisse analyst Kulbinder Garcha said recently that competition is heating up and that iPhone sales will be only 38 million units. While that’s up from Q2 2012 numbers of 35.1 million, it’s a massive drop from Q1 2013′s 47.8 million. And DisplaySearch raised an alarm in February that Apple’s iPad sales are shifting massively to the cheaper iPad Mini — which could be disastrous for both Apple’s revenue and margin numbers.

Foxconn’s drop, however, could also mean that Apple is diversifying its supplier list. The company does have 748 suppliers, mostly in China.

The Wall Street consensus projections for Apple’s Q2 are in the $42.5 billion range. Even if Apple hits that, however, it would signal a slowing of the company’s growth rate. And even hitting it would likely be a disappointment for an increasingly unsatisfiable Wall Street, which hit Apple’s stock hard even for its last quarter, in which Apple reported a monster $54.5 billion in revenue and $13.1 billion in profit.

Apple’s earnings in two weeks will tell the tale.

In 2012, Samsung sold just over 30 million smartphones in China — a 300 percent increase from the previous year and good for almost 18 percent of the Chinese market. In a stat that shows just how explosive the Chinese smartphone market is, that 18 percent market share is up only 5.3 percent from 2011, despite the tripled number of units.

That compares to Apple’s 11 percent market share.

Apple, which has achieved astonishing success in China, including selling two million iPhone 5 units on its opening weekend, still does not have a deal with China Mobile, the big kahuna of Chinese carriers, with more than 700 million mobile subscribers. Morgan Stanley recently suggested that Apple could triple its Chinese market share with an “iPhone mini,” a clear sign that even a month ago, the data on Apple’s sales in the Middle Kingdom were not where they could be.

But the big loser in China was not Apple.

Eleven percent market share in a vast and growing market — with a premium product — is actually a very good performance. The title of biggest loser goes to Nokia, which lost almost all of its share, dropping from 30 percent to 3.7 percent in a now-familiar story.

Lenovo is now the number two smartphone seller, with 13.2 percent of the market in China. Huawei captured 9.9 percent, and Coolpad trailed with 9.7 percent.

photo credit: My Daily Sublime via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

After just three months of iPhone supremacy, Android is back as the top-selling mobile operating system in the U.S. And those who want Apple to produce a cheaper iPhone will know exactly why.

Price.

When iOS had the lead with 53.3 percent market share in the three months ending in October 2012, Apple and Android smartphones were about the same price, Kantar analyst Mary-Ann Parlato told me via email. But not in the three month period from October 2012 to January 2013.

“This latest period saw a significant price drop to $95 for Android, while iOS increased slightly to $146,” Parlato said.

The result?

Phones running Android jumped to 49.4 percent of all smartphone sales in America, up 6.4 percent over the same period a year ago. iOS came in second, of course, with 45.9 percent. Interestingly, Windows Phone was the only other mobile operating system to grow, adding over a percentage point of market share, while BlackBerry dropped to only a third of its previous share, to only .9 percent of the market.

The big difference between the August-October 2012 period and the November 2012 to January 2013 period was wireless carrier Sprint, which went from an even split of Android/iOS sales to a 72 percent Android landslide. One big driver was a price drop on the Samsung Galaxy S III from $199 to $99 during the holiday period.

Kantar’s consumer panel, where the data for this report originates, is the “largest continuous consumer research mobile phone panel of its kind in the world,” surveying more than 240,000 people annually to track mobile phone purchase and usage.

Ultimately, Apple still has an incredibly strong hold on the domestic market, with three of the top five selling smartphones in the country and a much more unified OS, device, and apps ecosystem than Android. And that’s clear when you look at what phones wireless carriers AT&T and Verizon are mostly selling:

But those who are calling for a cheaper — or, shall we say, less expensive — iPhone will find plenty to grind their axes on here. Apple could triple its market share in China, Morgan Stanley analyst Katy Huberty said recently, if it introduced an “iPhone mini.”

A cheaper iPhone would also help domestically, it appears.

And so the question really becomes: How crazy does Apple want to get? How much does the company that wants more than anything to produce the perfect product also want market share?

photo credit: laihiu via photopin cc