Apple Inc. (NASDAQ:AAPL) is not the leader in world smartphone production. The company’s earnings report for the three months through September, which ends its full year 2013, showed that the company shipped 33.8 million iPhones in the quarter. In the same three months Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) managed to ship more than twice that amount, recording a total of 88.4 million smartphone shipments in the quarter.

Apple

Apple Inc. (NASDAQ:AAPL) and Samsung are, of course, not directly comparable. That’s because Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) offers a large range of smartphones at different margins, with some of the phones being given away for profits that would make an Apple Inc. (NASDAQ:AAPL) investor shudder. Apple maintained a gross margin of 37% across its business in the September quarter.

Apple smartphone shipments

Apple Inc. (NASDAQ:AAPL) smartphone shipments grew by around 26% in the September quarter, while Samsung shipments grew by around 55%. The South Korean giant is dominating the lower end of the smartphone market and making a huge impact at the high end at the same time.

Market share is another important factor for Apple Inc. (NASDAQ:AAPL). The company’s share of the smartphone market declined from 15.6% to 13.4% year on year. That’s a bad sign for a company still reliant on iPhone sales to fuel its business. Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) share increased in the period from 32.9% to 35.2%.

Apple iPhone future

Apple Inc. (NASDAQ:AAPL) will eventually have to come to terms with its new position in the smartphone market. The company will almost certainly never have the market share it had in the last five years. That means the market is going to be different going forward. Apple Inc. (NASDAQ:AAPL) needs to make sure that iPhone buyers continue to be disproportionately valuable in terms of application sales.

Software is all about the range of applications available. Apple Inc. (NASDAQ:AAPL) and Android competitors are reaching a less than competitive place in terms of operating system improvements and hardware design. Ecosystem will win out in the years ahead. If Apple Inc. (NASDAQ:AAPL) begins to lose application developers to Android, the battle will be lost quickly.

Despite the losses in market share Apple Inc. (NASDAQ:AAPL) is doing incredibly well right now, as the company’s most recent earnings report attests. The company needs to build a clear strategy for its place as a niche phone maker going forward, however.