Apple Could Knock Samsung From Smartphone Perch With iPhone 4S

Last week, Strategy Analytics came out with a report showing that as of Q3 2011 Samsung had overtaken Apple in the global smartphone market. ^[1]

This was not surprising considering that Apple had a comparatively weaker last quarter when it could only sell 17 million iPhone units, a sequential quarterly decline of 16% (see Adjusting Apple's Estimates to $500 Post Earnings). The report also suggested that Nokia’s downfall continues as its smartphone market share declined to only 14% from an year earlier market share of 33%.

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iPhone 4S brings optimism, but may not be good enough to topple Samsung

Apple had a good start with iPhone 4S, when its sales topped 4 million during the first weekend of its release around mid-October. However, we believe that even with highly optimistic estimates for iPhone 4S sales, Apple will find it difficult to overcome Samsung’s lead.

The gap between Apple and Samsung is large enough with Samsung already capturing around 24% smartphone market share compared to 15% for Apple. The advantage with Samsung is that it keeps coming up with new smartphones to keep a novelty factor and give customers a broader choice of options.

Last week, it announced the launch of its Galaxy Note mobile device, adding to the flagship Galaxy line of products.

If Apple wants to overtake Samsung, it will need to come out with newer versions of the iPhone at a faster rate and bring new hit features like Siri to its new lineup. This enhances the Apple ecosystem that makes it a “stickier” platform, which enables it to get away with not offering a wider selection of handsets.

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Clearly it was late in coming out with iPhone 4S in October this year, which was 16 months after the launch of iPhone 4 in June last year. Normally, Apple releases a new version of iPhone every summer.

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Notes:

1. Strategy Analytics: Samsung Becomes World’s Number One Smartphone Vendor in Q3 2011, October 27th, 2011 [↩]

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