Apple Inc. (NASDAQ:AAPL) and Samsung Electronics are arguably the largest smartphone companies in the world in terms of market share, with shares of 31% and 15% as of 2013 according to Fitch Ratings. The two companies have mostly derived their huge market share in developed markets of Europe and America.
Saturation in developed markets essentially means that the race is on for emerging markets, in Africa and Asia, which over the recent years have emerged as key market areas for smartphones. Fitch Ratings now considers that the market share for Apple Inc. (NASDAQ:AAPL) and Samsung could be under threat as a result of increased competition, especially from lower priced handsets currently being produced in the key emerging markets.
Fitch Ratings expects Samsung and Apple Inc. (NASDAQ:AAPL)’s market share to drop to lows of 25% and 14% respectively, by 2015 as local competitors continue to launch new products that are poised to gain a substantial amount of market share. One of the attributes that looks set to work to Apple’s and Samsung’s disadvantage is the fact that in emerging-markets, consumers are mostly attracted to products based on costs rather than brand as is the case in developed markets.
Competitor’s devices retailing at between $100 and $300 are set to offer a stiff competition to expensive smartphones manufactured by the two players in the space. Fitch Ratings expects combined sales of Samsung and Apple Inc. (NASDAQ:AAPL) to stagnate between 450 million and 460 million units in 2014 compared to 467 units sold in 2013; this is in contrast to the global smartphone market that is growing at a 20% rate and set to clock 1.2 billion units.
China and India are expected to lead the park from key emerging markets, consequently accounting for 60% of the smartphone shipment volumes. Some of the key competitors that Apple Inc. (NASDAQ:AAPL) and Samsung look set to compete against in the key emerging markets include the likes of China’s Xiaomi, Lenovo, Huawei and India’s Micromax Informatics. Xiaomi has already outlined its credentials as a possible threat to the big two, after shipping more than 15 million devices with a market share of 15% in China compared to Samsung’s 12%.
Apple Inc. (NASDAQ:AAPL) and Samsung are also poised to suffer from saturation in key developed markets; competition is also ripening up as more companies continue producing phones with key customer’s requirements. Focus now shifts to the much-awaited iPhone 6 that is set to be released sometime in September awaiting to see its impact in terms of market share for Apple Inc. (NASDAQ:AAPL).
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