Whether the November launch of the iPhone X was a strategic decision or driven by manufacturing issues, Apple took a huge gamble this year by deviating from its rhythm of releasing the new flagship in late September.
The move was further complicated by the company’s decision to release its more incrementally updated iPhone 8 and iPhone 8 Plus in that September slot. Knowing how consumers would react to these unusual choices was anyone’s guess: Buy the new iPhone 8 right away? Wait for the iPhone X? Not buy anything?
For the moment, Apple says the iPhone X is selling like gangbusters and the company is racing to ramp up production to meet demand. But a new report from Kantar Worldpanel ComTech reveals just how much ground Apple lost in October and how much it needs those iPhone X sales to compensate.
According to Kantar, for the three months ending in October 2017, Apple’s iOS lost 7.6 percent market share in the U.S., while Android gained 8.2 percent. Between the two, they captured 98.6 percent of the U.S. market share. The market share for iOS also dipped in Europe’s five largest countries and in Japan.
“It was somewhat inevitable that Apple would see volume share fall once we had a full comparative month of sales taking into account the non-flagship iPhone 8 vs. the flagship iPhone 7 from 2016,” said Dominic Sunnebo, Kantar’s global business unit director, in a statement. “This decrease is significant and puts pressure on the iPhone X to perform.”
Now, to be clear, this is far from a disaster for Apple. Rather, it just points to how much it has riding on the iPhone X. Part of the short-term success of the iPhone X will be determined not by consumer demand, but by how fast Apple can increase production to meet that demand. It’s quite possible some number of sales will be pushed into the post-holiday quarter if Apple can’t ship enough iPhone X units this quarter.
That might disappoint some analysts, but the end result wouldn’t really change for Apple over the long-term. In addition, even if the company sells fewer iPhone X units, their whopping price tag could help close the gap with any potential revenue shortfall this quarter.
And Apple has another bright spot. Kantar said its iOS market share slightly increased in China’s urban markets during the same three-month period. That’s a big deal for a couple of reasons. First, it indicates the turnaround in China that Apple revealed in its last earnings report seems to be continuing.
In addition, the frenzied Chinese smartphone market has been undergoing massive consolidation, according to Kantar. A couple of years ago, numerous Android brands were competing alongside Apple. Now the top 5 brands have 91 percent market share, compared to 79 percent one year ago.
Even a brand like Samsung, once among the leaders in China, has been all but shut out, with a puny 2.2 percent market share. So Apple can claim a victory for still being one of the top 5, along with the fact that it has started growing in China again.
Ultimately, we won’t know the full impact of the iPhone X until Apple reports earnings in late January or early February. And, depending on manufacturing capacity, we may not really have the full picture until April.