To: oled_future who wrote (31787 ) 11/27/2015 10:56:17 AM From: puborectalis Respond to Morgan Stanley ’s Katy Huberty today writes that smartphone sales are set to be weaker next year than even her reduced expectations, though she sees upside for Apple ( AAPL ) taking share with the iPhone. Overall, the smartphone industry missed our lowered expectations. We now look for 11% growth in 2015 (up 8% Y/Y in 4Q, implying in-line seasonality of 14% Q/Q) compared to our original forecast of 18% at the beginning of the year, and 12% in our most recently published model. In our view, the deceleration in smartphone shipments highlights two trends: 1) maturing smartphone ownership with penetration now 44% globally and 117%/74% in US/China which are the two largest regions, while 2) users are upgrading to more powerful devices with advanced ecosystems allowing Apple to take share. While we see share gains in the US and China, we currently reflect share losses in Europe and the rest of Asia. We model iPhone units growing in-line with the overall industry, baking in share gains in the high-end segment. High end smartphones ($300+) have been growing slower than the overall market, driven by dynamics within LatAm, EMEA, and APAC ex-China regions. However, in China (where we expect share momentum for Apple in 2016), the high-end market continues to outgrow the industry, and in North America high-end phones still represent a large majority of the overall market (~70%). This is supported by our AlphaWise survey data, which indicated Chinese users shifting to better smartphones and more US users planning to upgrade this year than last year. As a result, we expect Apple to take share in its two largest countries in 2016 despite materially lower expectations for overall smartphone unit growth.
