Politics and the Chinese Smartphone Invasion into the U.S could Cause some Havoc for both Samsung and Apple in 2017
Earlier this month Patently Apple posted a report titled "Samsung is going to Experience the 'Big Squeeze' in 2017 and their U.S. Market Share is Headed for a Crash." The report pointed to Huawei, Oppo and Xiaomi entering the U.S. market in early 2017 for the first time and between that and Google ramping up their Pixel smartphone business in the coming year would certainly mean a downturn in total market share and profits for Samsung. A new report this morning forecasts strong smartphone growth for Huawei, Oppo and Vivo in 2017 who are currently ranked in the third, fourth and fifth positions worldwide.
The report further noted that the three Chinese vendors combined will account for 500,000 million smartphones in 2017. Both Vivo and Oppo, who are owned by BBK Communications Equipment, will account for an estimated 310 million smartphones which technically is likely to be more than Apple will ship unless their Anniversary iPhone breaks a sales record.
Strong shipments from the three vendors will result in a drastic change of market share of the major players in the segment, while also affecting the profitability of smartphone vendors and component suppliers, sources said.
In 2017 the U.S. will experience a Chinese smartphone invasion and for Android fans in general it's nothing but good news. It's bound to spark a price war that will no doubt eat into Samsung's bottom line. Yet when you take the increase of smartphones being sold in the market overall in 2017, it's very possible that Apple's market share will dangerously near the dreaded 10% mark.
The Anniversary 2017 iPhone could be a grand slam for Apple and the rumor of a top-line third iPhone model coming to market could help them stay above 10% if not grow their market share. But if things don't go according to plan, then all bets are off.
While we know that Apple has owned the profits of the smartphone industry for several consecutive quarters, it should be balanced so that developers remain interested in developing for a platform that continues to lose market share every year.
I don't think the world would end if Apple took 71% of the industry's smartphone profits instead of 91% if it meant adding a third iPhone model at the top to work with Apple Pencil and perhaps beef up the iPhone SE or add another model with a 5" display to be more competitive in India, Indonesia and other emerging markets to win back some market share. Apple doesn't have to make crap, just make a little less profit to make it happen.
I think bells will go off with some developers if the iPhone drops below 10% market share. I know the drill, I know that market share supposedly doesn't matter, but it does at a particular crossroads and below 10% could be a negative that pushes some developers to think of developing for Android first and not iOS. Just ask Microsoft who is struggling with less than 10% market share with their hardware. How long will they be able to stay in the hardware business if they can't crack 10% market share over the next five years?
Apple today is not the Apple some of us remember back in 1996 when the knife was falling. Today Apple has a massive base it never had with the Mac. Apple is swimming in profits and won't need to beg Microsoft for a bailout. So a dip below 10% won't kill Apple or put them at any risk short term, period.
But it could be an alarm bell that no one really wants to hear being tripped, especially by the Wall Street crowd that could turn on Apple on a dime if they're unable to stop their market share slide in 2017. At some point, market share does matter.
I hope that day never comes and believe that Apple will shake things up to ensure that it never does.
Yet with that said, 2017 is going to be both an exciting and unpredictable year. This is the year that Chinese smartphone vendors invade the U.S. big time while the Trump administration stands up to China to reset their trade relations and to ensure that their new cyber laws kicking in next summer don't hinder American companies. Without a crystal ball, no one knows how this is all going to play out which could make 2017 one of the most interesting yet volatile years in our lifetime.