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Technology giant Apple Inc. (NASDAQ: AAPL) has had an excellent run over the last years amid strong demand for its products. However, in the last few months there has been rising concern over increasing competition, especially in the smartphone market. Amid these concerns, the Wall Street Journal, citing people familiar with the matter, has reported that the Cupertino, California,-based company has slashed orders for components for the iPhone 5 due to weaker-than-expected demand.

Two people familiar with the matter told the Wall Street Journal that Apple's orders for iPhone 5 screens for the January-March quarter have fallen to roughly half of what the company had previously planned to order. One person with knowledge of the situation also said that the company has slashed orders for components other than screens.

This is a trend and not a short-term phenomenon. As an analyst, I am particularly interested in discovering whether a situation indicates a trend or a fluke. The slashing of orders looks to be a trend because if you study global market share, you can see how Apple's is falling while competition is coming up. Market share, it might be argued, is not the sole indicator of competitiveness - and it isn't - but I think it is the long-term indicator. Other indicators, like profit per unit, will eventually equalize across brands; in the end, market share will be the sole deciding factor in which brand dominates the market.

The iPhone has been the most successful product in Apple's history. Apple shares' performance in the last few years can be attributed to a large extent to strong iPhone sales. Just ahead of the launch of the iPhone 5, Apple shares hit an all-time high of $705.07 in September 2012 and in the process also became the world's most valuable company in terms of market capitalization. However, everything has been downhill since then.

Apple shares are down more than 20% from their September 2012 high of $705.07. The report from Wall Street Journal is expected to put further pressure on the stock.

Increasing Competition from Samsung and other smartphones running on Android operating system

Apple's problems can be mainly attributed to increasing competition from Samsung and other smartphones running on Google Inc.'s (NASDAQ: GOOG) Android operating system. While Apple still dominates the smartphone market in the U.S., it is a different story in other regions.

According to data from Kantar Worldpanel ComTech, for the 12-week period ended November 25, 2012, Apple's share of the U.S. smartphone market reached 53.3%. Android market share in the U.S. in the 12-week period fell to 41.9% from 52.8%. However, things were different in Europe. In the five biggest European countries (Great Britain, Germany, France, Italy and Spain), Android's market share rose from 51.8% to 61% for the 12-week period ended November 25, 2012. Apple's market share rose from 22.8% to 25.3% for the 12-week period. The increase was mainly due to the launch of iPhone 5. Research In Motion (RIMM), meanwhile, lost market share in both the U.S. and Europe. For the 12-week period, the BlackBerry maker's market share in the U.S. fell to just 1.4%, while in Europe it fell to 1.9%.

In China, the world's fastest growing smartphone market, Apple has a lot of catching up to do. While Apple's products are popular in China, the company is struggling against cheaper local brands. According to the Kantar Worldpanel ComTech report, Apple's market share in urban China, for the 12-week period ended November 25, 2012, was 19.2%, compared to Android's 72.2%. The story is similar in Brazil, where Android had a 60.7% market share, compared to Apple's 1.6%. Research In Motion's market share in Brazil was 1.9% for the 12-week period.

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Source; Kantar Worldpanel ComTech

A report from research firm IDC showed that Apple's rank in China's smartphone market dropped to No.6 in the third quarter of 2012. The IDC report showed that Apple's market share in China by shipment was below 10% in the third quarter. The top spot in China in the third quarter was taken by Samsung, which sells mostly Android-based phones.

According to research firm Canalys, Samsung was the world's top vendor in the third quarter of 2012, shipping an estimated 55.5 million smartphones, compared to Apple's 26.9 million units. Canalys data showed that Research In Motion shipped just 7.5 million units in the third quarter of 2012.

Source; Canalys

All Eyes on Apple's Quarterly Results

With Apple struggling lately due to increasing competition, investors and analysts are keenly waiting for the company's quarterly results. The company will release its first-quarter results on Wednesday, January 23, 2013. Expectations ahead of the first-quarter results have been low.

Stock to Remain Under Pressure

Apple shares have fallen sharply in trading today following the Wall Street Journal report. Apple shares are currently trading close to $500, well-off their September 2012 high of $705.07. Given the concerns over iPhone sales, the stock could remain under pressure in the near-term.

Source: The Trend Of Order Slashing Does Not Bode Well For Apple