Analyst: Apple iPhone not immune to the laws of economics

Analyst: Apple iPhone not immune to the laws of economics
Needham analyst Charlie Wolf has noticed how Apple's Mac continues to sell in the face of a recession and a PC market that has taken the brunt of an assault by the expanding demand for tablets. But Wolf sees no such immunity for the Apple iPhone. The analyst told clients in a note issued on Tuesday that while the Mac "seems to defy the laws of economics," the Apple iPhone "is not so fortunate."

Whereas the Mac continues to grow its share of the PC market, the Apple iPhone's share of the smartphone market peaked in the fourth quarter of 2011 at 23.8%, according to Gartner. A year later, the iPhone's slice of the smartphone pie stood at 20.9%, a figure that declined even further to 17.8% in the fourth quarter of 2013.

Wolf notes that the Apple iPhone has lost "meaningful share" of the smartphone market in emerging markets in the Asia-Pacific, Middle East and Africa regions. These are areas where low-end models have been popular because of their price. The analyst says that there is nothing Apple can do as he doesn't see any way that the tech titan can drop the price of the iPhone to allow it to compete in those regions.

There is some good news for Apple's iconic smartphone. Wolf did point out that the Apple iPhone continues to increase its share of all mobile phones, including featurephones. Adjusted for seasonal fluctuations, the Apple iPhone had a record 10.2% of the worldwide mobile handset market in the fourth quarter of last year.



source: AppleInsider

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30 Comments

1. pwnarena

Posts: 1129; Member since: Feb 15, 2013

is this title still part of april fools' ?

3. PBXtech

Posts: 1032; Member since: Oct 21, 2013

BS. Apple can lower costs but refuses to do so. Their decline in market share is their fault, but seeing they make the most in mobile profits, I doubt they care. Until their profits start to lose share, don't expect any changes.

9. Taters

Posts: 6474; Member since: Jan 28, 2013

Yes they CAN technically lower costs and still make a profit but it's a tricky situation for them. Yes, they would increase market share but they would also dilute their image as a high end yuppy brand which might not work out. So might as well keep the prices sky high until, like you said, they start to decline.

12. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Apple is not giving up on the 'emerging markets' - they recently restarted production of the iP4 (yes, the 4). The interesting thing is that the iP4 still has a threshold cost to produce of probably around $150/unit (down from ~$200/unit). Further, if Apple is going to compete for a share of the emerging market sales, they are going to have to reduce the price of the iP4 to the prevailing price level, which means less margin for Apple. Apple - nothing like having to live with economic reality, eh?

29. verty

Posts: 132; Member since: May 07, 2012

Who told you emerging markets have not moved beyond your iPhone 4. Emerging markets are growing too. Especially the low appeal of a small screen. I can guarantee you that they will be disappointed.

27. stealthd unregistered

Well duh. Profits are more important than market share. Selling more units at lower margins saturates the market quicker, and once your margins and prices are down it's extremely difficult to pick them back up. So it's just a steady decline, like what HP and Dell have been in. It doesn't work very well in the long term.

30. express77 unregistered

it is only for the people of US, other very rich countries and rich people of remaining countries. even mid economy people cant afford their cheap 5c in there. wish steve jobs was alive. we would have seen some real innovation and better competition. anybody realise that their many macs are easy to repair,not limited and good specs even they are expensive. wish they do same with iphone but not going to happen unless sales decrease highly.

4. SamDroid unregistered

They expect people to buy their phones for $1000 when phones like the HTC One and even Note 3 are cheaper and more powerful....

14. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Apple does in fact expect people to buy their phones for $1,000. Only problem is that not a lot of people are willing to pay $1,000 for a phone. Which is why Apple is facing a market share decline. Even in the U.S.

22. SamDroid unregistered

I think if the phone was on contract here many people would buy it but we don't have that option. And anyway why go for that when I could get much more powerful, bigger and beautiful phones? That's one of the reasons why I didn't buy an iphone as my main phone but I got an iPod for the music apps (GarageBand) which is where all android phones truly suck at, extremely...

5. Augustine

Posts: 1043; Member since: Sep 28, 2013

It's simple: OSX is vastly superior to Windows, Mac hardware is more consistent than PC hardware. iOW, a Mac has much better quality and user experience than a PC, so much so that it's worth the premium price. On the other hand, iOS is just comparable to Android, iPhone on par with Android premium phones, not to mention excellent value that some phones, like the Moto X and Nexus 5, provide. IOW, the iPhone is not much better than its competitors in the same price range and is even undercut by cheaper quality phones.

13. true1984

Posts: 864; Member since: May 23, 2012

you do know you cant state opinion as fact right? macs use the same hardware you can find in a windows computer for the most part, and a lot of people, myself included dont like macs

18. Augustine

Posts: 1043; Member since: Sep 28, 2013

Your statement confirm mine. When I said that Mac hardware is more consistent, meaning that Apple doesn't have to care about device drivers for a myriad of chips, I meant the same as you, for you said that "most" of the Mac hardware can be found in a PC. You didn't say that it's exactly the same, for it's not. Now, Windows has to run on most diverse hardware, many parts of poor quality, marring the user experience with software glitches caused by poorly written drivers and short useful life caused by premature defects. And these are facts.

26. -box-

Posts: 3991; Member since: Jan 04, 2012

OSX is ancient, lacking security, a joke to use, has a rubbish interface, and needed an overhaul about the time the original iphone came out. It's laughably bad. I'd rather use a chromebook with internet apps than a mac. Thankfully I have the option to use Windows,the best consumer-friendly computer OS on the market. Iphone is similar, outdated but with fresher appearance, but woefully inadequate compared to android and Windows Phone. It's a glorified media player and app launcher, which is why it needs almost a million apps to do anything remotely functional.

28. stealthd unregistered

Oh look, a troll spouting nonsense

6. Whopyourass unregistered

This Charlie Wolf guy is really looking dumb here thinking his analysis is rocket science.He notes that while Apple maintains a steady market share in advanced economies and is dwindling in emerging economies where price is a factor .. yada yada .. blah blah .. Oh please, if Apple wanted to be no.1 in market share they could easily roll out cheap $100 off-contract iPhones with no need for Charlie Wolf the genius to teach them how to. Obviously, Apple is mindful of it's brand value and reputation here. The last thing Apple wants to be associated with is to be known as a maker of bazillion cheap budget phones. Period. Simply put, that's the equivalent of telling Rolls Royce, or Mercedes-Benz and BMW to roll out cheap budget cars to grab more market share since emerging markets are buying more from the cheaper brands that cause a market-share drop for these expensive brands. Bah.

11. tedkord

Posts: 17131; Member since: Jun 17, 2009

Sigh. The silly luxury car analogies continue...

17. Finalflash

Posts: 4062; Member since: Jul 23, 2013

It's for broke retards who can't afford actual luxury brands to help them pretend the can. No one in their right mind considers iPhones to be luxury or premium other than the ignorant.

19. Whopyourass unregistered

Omg, what an enlightening statement: ' it's for broke retards who can't afford actual luxury brands yada yada... ' - coming from one who worships xiaomi cheapo nippo and calls that a premium phone for himself. Very enlightening indeed. rofl.

31. iushnt

Posts: 3060; Member since: Feb 06, 2013

21. Whopyourass unregistered

Sigh. And the silly Yan-Can-Cook-So-Can-You + There's-No-Such-Thing-As-Poor-People-in-this-World analogies continue...

16. Planterz

Posts: 2120; Member since: Apr 30, 2012

Apple, by intent or accident, has become a social symbol like owning a Mercedes/BMW. They're unwilling to "tarnish" their image by offering low-cost options. This became even more obvious and clear with the 5c, which everyone HOPED would be a low-cost option, but ended up being only a slightly-less cost option. The same way a 1 or 2 series BMW is still a BMW, but not quite as expensive as a 3 series. Apple is perfectly capable of producing a low-cost iPhone. The hardware isn't all that different than any other phone, yet Motorola can produce the Moto G, Samsung can make the Galaxy Light, and LG can make the Nexus 5, all of which cost significantly less than other phones with similar specs, and way less than any current iPhone. But they won't. Being less affordable is part of their business model. Being expensive is what makes them desirable (to some), like a Prada bag or a pair of Air Jordans.

24. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

The problem with these article writers, they don;t understand what is a cheap phone and neither does APple. As mentioned, Apple went and started production on the iPhone 4 to help increase its chance of selling a "cheap" phone. The problem is, there are BIGGER and BETTER phones that still cost less than the iPhone 4 on or off contract. The Moto X for example is certainly bigger and better than an iP4 and the 5S in certain ways. Yet it costs less. Apple can simply sell the iPhone 5C cheaper. Why won't they? PRIDE. They have people beliving their products are premium simply because they use metal and jeck up the cost. If people actually knew what they were buying, they wouldnt buy them. The Mac is growing in sales thanks to an increase in school using Macs and more professionals that do media whichis also growing. Yes PC sales are dropping because many people can do what they need on a tablet. I mean if all you need is email, texts and media consumption, you don't need an expensive PC. Any OEM who sees declines in PC sales, should simply fill the gap with a few nice tablets which will more than make up those loses. Apple is NEVER going to hit the price points needed to compete in asian markets. My wife is from the Philippines and her family wants an iPhone because they are considered a status symbol. They are an outside display of people with money, because poor people dont have iPhones. However, that si changing as other phones like the Galaxy S and Note have become big sellers in countries where the iPhone isn;t doing so great. For example, in Dubai; the Note sales have increase siginifcantly because of it capability. Still costs less than an iPhone and yet does way more. This si why Apple is rushing to make a bigger phone, because a biiger phone can command a high price. Buy again, this could backfire. For one and iPhone off contract still costs more than other comparible devices that woudl have a similar screen size.

25. GeekyGene

Posts: 88; Member since: Aug 25, 2013

tldr; Did it predict Apple is doomed? I bet it did right. /sigh

* Some comments have been hidden, because they don't meet the discussions rules.

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