Wall
Street analysts have expressed concerns that slower overall
smartphone sales will make it harder for Apple to hold smartphone
market.
Business
Standard : A raft of profit warnings from Apple
Inc suppliers this week has fuelled investor concerns that iPhone
sales, in terms of volume, have hit a wall that could spell trouble
for the company's plans to make services its main pillar of growth.
For
the past year, investors had largely been willing to overlook
stagnating unit sales of the iPhone because average selling prices
kept rising. But it now faces fierce competition from mid-priced
phones from makers such as Xiaomi Corp.
Apple
has often stated its plan to increase its revenue from paid services,
such as Apple Music and iCloud. That, at least in part, requires a
growing base of device owners driven by its iPhone, which analysts
believe accounts for about two-thirds of the 1.3 billion Apple
devices in use around the world.
Wall
Street analysts have expressed concerns that slower overall
smartphone sales will make it harder for Apple to hold smartphone
market share as people put off buying its generally more expensive
phones. That, in turn, could hurt the growth of Apple's services
revenue, said Bernstein's Toni Sacconaghi.
Without
volume growth in promising overseas markets such as India, Brazil and
Russia, the worry among analysts and investors is that Apple has at
least parts of its strategy wrong with too much emphasis on its
premium brand and the high prices that go with it, more than $1,000
for its top models.
Hal
Eddins, chief economist for Apple shareholder Capital Investment
Counsel, said phones like the OnePlus 6T are roughly comparable to
Apple's high-end phones for almost half the price. "You can get
a lot of phone for a lot less," he said. "The phone
landscape is rapidly changing and I think manufacturers are missing a
trick by going the $1,000 route."
Apple
declined to comment on its strategy, or the share moves among its
suppliers.
The
company's executives have warned investors in the past against
fixating on sparse data points from its large supply chain. Apple has
for more than a decade insisted that its gadgets should not be judged
on their specs alone, an argument that sales data suggests Apple made
successfully.
The
company also has customer satisfaction and loyalty rates that are
unparalleled in the mobile phone industry, said Ben Bajarin, an
analyst with Creative Strategies.
Nevertheless,
a trio of Chinese
smartphone makers - Xiaomi, Oppo and Vivo - accounted for roughly
a quarter of the global market in the first half of 2018, according
to data from research firm IDC, up from just 8.9 percent for all of
2014 and almost 20 percent last year.
With
the exception of fiscal 2015, Apple has not increased its market
share. It had 13.6 percent of the world market in the first half of
this year, down from 14.8 percent for 2014, although its share
typically rises with full-year results due to strong sales in
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