Consumer Products

Samsung's Startling Market Share Decline in Q4

Source: courtesy of Apple Inc.
When Apple Inc. (NASDAQ: AAPL) reported fourth-quarter iPhone sales of more than 74 million units worldwide, the company overtook rival Samsung Electronics as the unit shipment and share leader in the smartphone market. Samsung’s decline was startling: from more than 83 million units in the fourth quarter of 2013 to just barely 73 million a year later, and a market share loss of 9.4% to 19.9%.

Apple, meanwhile, sold almost 50% more phones year-over-year and drove its share of the worldwide market from 17.8% to 20.4%. The data were reported late Tuesday by research firm Gartner Inc.

Samsung’s top of the line Galaxy S5 smartphone did not challenge Apple’s iPhones at the high-end of the market, not even the iPhone 5s, to say nothing of the iPhone 6 and 6 Plus. The company introduced its new Galaxy S6 last Sunday in Barcelona at the Mobile World Congress. The big difference is that the new phone no longer has the cheap-feeling plastic case and the user interface has been simplified.

Samsung also included its own mobile payment solution called — catchily enough — Samsung Pay. Unfortunately the new payment option will not be available at launch but will ship as a software update later this summer.

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A Gartner research director said:

With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market.

Samsung has not fared well either against Apple at the high end of the market and vendors like Xiaomi at the low-end. By trying to be everything to all people, Samsung has split its brand into too many pieces for customers to keep track of.

Apple takes home about 89% of the global operating profit for smartphone platform makers. Only Google Inc. (NASDAQ: GOOGL), maker of the Android operating system Samsung has used on virtually all of its phones, challenges Apple’s iOS platform.

For the full 2014 calendar year, Samsung’s worldwide share of the smartphone market totaled 24.7%, down from 30.9% in 2013. Apple’s share was about flat at 15.5% in 2014. Lenovo and Huawei also grew share in 2014, to 6.5% and 5.5%, respectively.

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