Is Trouble Brewing for Apple in Emerging Markets?
By John Udovich
Oct 2, 2012 9:21:55 PM PDT | 1 Comment(s) - Post a CommentRating
smallcapnetwork.com
The Apple (NASDAQ: AAPL) iPhone 5 launch may have grabbed all of the attention lately but the latest mobile market share figures show that competitors like Google (NASDAQ: GOOG), HTC Corp (TPE: 2498), LG Electronics (KRX: 066570), Nokia Corporation (NYSE: NOK),Microsoft Corporation (NASDAQ: MSFT), Research In Motion Limited (NASDAQ: RIMM) and Samsung Electronics Co. (KRX: 005930) are far from out of the picture just yet although some are more troubled than others. In fact, Samsung Electronics Co. (005930) may have lost in the courtroom to Apple (AAPL) but they still hold 25.7% of the US mobile hardware market according to the latest comScore data while LG Electronics (066570), another Korean group, comes in at number two at 18.2%. However and when it comes to mobile operating systems, the Android operating system from Google (GOOG) is firmly north of the 50% mark with a 52.6% market share. Meanwhile, Research In Motion Limited (RIMM), Microsoft Corporation (MSFT) and Nokia Corporation (NOK) have been left in the dust as BlackBerry has an 8.3% share (and is declining), Windows Phone/Windows Mobile has a 3.6% share (and failing to gain traction) and Symbian has a 0.7% share.
Outside the USA and in emerging markets in particular, there is a different mobile market share picture emerging. In Europe, Google’s (GOOG) Android operating system has two thirds of the market (having increased its market share by 20.2% in the past year) while Microsoft Corporation’s (MSFT) Windows Phone/Windows Mobile has managed to maintain a 5% share (thanks in part to heavy discounting). Of course, the economic troubles in Europe means customers there are seeking value for their money when it comes to mobile phones with Android having a whopping 84% market share in hard hit Spain where a quarter of the population is unemployed.
Likewise and in emerging markets, there is a wave of cheap mobile phones running on Android coming from from Huawei, LG (066570), Motorola, Samsung Electronics Co. (005930) and ZTE causing a surge in market share for the Android operating system. Specifically and in Mexico, Android’s smartphone market share has surged from 19% to 37% in a year while in Brazil it’s grown from 20% to 47%. In fact and in Brazil, Android vendors have slashed smartphones to well below 300 reals ($148) in Brazil while Apple (AAPL) iPhone prices continue to hang around 2,000 to 3,000 reals ($986 to $1,480) or 1,200 reals ($592) for a subsidized model.
That may sound like a lot of money for someone living in an emerging market to spend on a mobile phone but remember, children often live at home in these markets (especially true in Asia) until they are old enough to afford to get married and then get their own place to live. That means many consumers in emerging markets may actually have more disposable income than consumers in so-called richer countries like Spain or even the USA.
Moreover, Samsung Electronics Co. (005930) is building up such a massive volume of sales in emerging markets that its inevitable that it will gain key advantages on the sourcing front and the ability to slash prices even further. That means Apple (AAPL) will need to make some difficult decisions about pricing to remain competitive in these markets and by default, in developed countries with increasingly troubled economies and stretched consumers looking for value.
Research In Motion Limited ( RIMM): Still Going Strong in Emerging Markets
That also brings me to troubled Research In Motion Limited (RIMM) and the BlackBerry. While Research In Motion Limited (RIMM) may have seen its market share crater to below 1% in Germany and go from 23% to 11% in the UK, it rose from 2.1% to 4.1% in Brazil plus BlackBerry has a huge following in SE Asia where it had a first mover advantage. In fact and in the emerging economic powerhouse of Indonesia which as 240 million people, BlackBerry is king with 50 million users and a market share that was predicted to hit the 42% mark at the end of 2011. Hence, Indonesia will be a key launching pad for the BlackBerry 10 next year. And in Thailand, a low-end BlackBerry can reportedlybe bought for upwards of 6,000 THB ($189) while the Apple (AAPL) iPhone 4S is available starting from 20,900 THB ($660) – meaning BlackBerry is still a very competitive phone verses the iPhone. However, Research In Motion Limited (RIMM) is increasingly under siege from both Apple (AAPL) and Google (GOOG) in these markets – meaning its continued dominance is not assured but it does give the struggling company a lifeline for now.
The Bottom Line. Obviously the race to dominate the mobile market is far from over with or assured and much could still change for investors in Apple (AAPL), Google (GOOG), Nokia Corporation (NOK), Microsoft Corporation (MSFT) and Research In Motion Limited (RIMM). |
