Apple Inc., Samsung Dominate Q3 Value Share As Competitors Struggle

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According to a new report from Cannaccord, Apple Inc. (NASDAQ:AAPL) may see its share of the smartphone market increase in the fourth quarter of 2013. The December quarter is the most important for sales across the economy, and it is no different for the smartphone market. A market share bump in the fourth quarter could be a boon for investors. Apple Inc. (NASDAQ:AAPL) shares have made no gains in 2013 so far.

According to the report the strong uptake in the iPhone 5s should see Apple Inc. (NASDAQ:AAPL) increase its share of the smartphone market, while the steady demand for the iPhone 5c should also help the Cupertino-based company. The report’s research was done by Canaccord analysts T. Michael Walkley, Matthew D. Ramsay, and Siddharth Sinha.

Apple versus Samsung

The third quarter of the year saw Samsung and Chinese manufacturers take a bigger bite of the smartphone market according to the report. The most important trend in the quarter gone by is one that has themed the smartphone market for a long time: Apple Inc. (NASDAQ:AAPL) and Samsung dominate smartphones. Everybody else is getting pushed out by the big two companies in the business.

According to the report the losses at companies like Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) allow Samsung and Apple Inc. (NASDAQ:AAPL) to take 109% of the profits in the smartphone industry. Apple takes 56% of the profits in the market, while Samsung takes in 53%.

Apple Inc. (NASDAQ:AAPL) is still doing exceptionally well in the smartphone market, and the company is likely to continue taking the lion’s share of the profits for some time to come, but its market power is not what it was two years ago. That mean the company’s margins are getting smaller, and the company needs to do something to reverse the trend.

Apple tablet share

The report also took a look at the new Apple Inc. (NASDAQ:AAPL) tablet, the iPad Air. According to their research sales of the tablet in its opening days were strong. That leads the analysts to believe that Apple should have an excellent fourth quarter in the tablet market, alongside its achievements with the iPhone.

Nobody is quite sure how much the iPad Air is costing Apple Inc. (NASDAQ:AAPL) to make, but it seems likely that the company’s margins in tablets are still lower than those in smartphones. Apple has struggled to compete with the lower end of the tablet market. Its iPad Mini with Retina display comes in at a much higher price point than competitors like the Google Nexus 7.

If tablet share does come in better than expected in the fourth quarter, it may be another positive catalyst for the business. The iPhone’s ability to command a market is waning, and Apple Inc. (NASDAQ:AAPL) needs to fill the gap that will open up in its accounts as profits wane. A secondary product like the iPad will help the company to fill that gap.

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