Apple Inc. (NASDAQ:AAPL) has been losing market share in smartphone as well as tablets category to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and other vendors. But Barclays analysts believe that the Cupertino-based company can recapture some market share with the launch of new products in the fall.
Smartphone Growth Slowing
It’s not just Apple Inc. (NASDAQ:AAPL), the overall smartphone market is also witnessing a slowing growth. Barclays expects smartphone unit growth to be 37 percent in 2013, and most of those sales will come through low-end units in Asian markets with lower ASPs. Sales growth in developed markets will be hampered by longer sales cycles and a slowdown in innovation. However, analysts say Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) remain well-positioned. But these two giants need to focus more on software and services to protect their ecosystems and subsidy levels.
The premium smartphone market is expected to grow at a slower pace in the next few years, though there will still be opportunities in countries where the population of the middle class is rising. Research firm Gartner reports that the premium smartphone sales rose at 29 percent in 2012, compared to 44 percent growth in overall smartphone sales. Premium smartphone sales are expected to slow further in 2013. But Barclays still sees some opportunity in premium smartphone market as mid-tier smartphone users look to upgrade their devices for better functionality.
Apple Expected to Recapture Market Share
Apple Inc. (NASDAQ:AAPL) has witnessed a contraction in its market share after refreshing its product portfolio in 2H2012. That’s the reason why investors are panicked. Apple Inc. (NASDAQ:AAPL)’s market share in smartphones has declined from 23 percent last year to 18 percent in the first quarter. Its position in the tablets market is even more alarming. The iPads now account for only 40 percent of the total smartphone sales, compared to 65 percent last year. According to IDC, the overall tablets market is growing at 142 percent, while iPad sales are growing at just 65 percent. That’s mainly because of lukewarm customer response for the 9.7″ iPad and fierce competition from Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930).
Barclays expects Apple Inc. (NASDAQ:AAPL)’s market share to improve with the launch of new products in the December quarter. Analysts said investors would react positively to new builds which begin in June. However, Apple is unlikely to dent Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s position because it has already missed the big screen trend. Meanwhile, Samsung may catch up with the iPhones in the premium smartphone segment (priced above $400), because Apple Inc. (NASDAQ:AAPL) is still focusing on iPhones with a 4-inch screen which is too small for the premium segment.
But Apple Inc. (NASDAQ:AAPL) will regain momentum by the end of this year, and a large part of that growth will come from mid-tier and low-cost smartphones. Analysts don’t expect Apple Inc. (NASDAQ:AAPL) to adopt to big screen until 2H2014.
Apple Inc. (NASDAQ:AAPL) shares were up 0.62 percent to $434.89 at 3:32 PM EDT.