Three months ago, yours truly here dissected some data about the smartphone market that should have bugged Apple (AAPL) investors, and downright bugged Samsung (OTC:SSNLF) shareholders. That is, Samsung phones were - in general - not gaining any market share, while Apple's iPhone was outright losing share.
Even suggesting that lower-cost, second-tier smartphones mattered inspired some, shall we say "colorful disagreements?" Those vocalizations, in simplest terms, suggested that as long as the smartphone market was continually growing, both Apple and Samsung could afford to lose share, since their whole piece of pie was getting bigger.
As I feared was going to be the case sooner than later though, the whole pie (the whole smartphone market) also is starting to shrink, yet stalwarts Apple and Samsung are still capturing an increasingly smaller sliver of that market.
It's not a step in the right direction for either company.
Apple, Samsung Still Losing Market Share
First things first... the data.
Last quarter, all-things-technology research outfit Gartner reported a modest improvement for Samsung's smartphone sales. That 7% increase in the number of units sold by the company translated into a ten basis point improvement in market share. It's not a decisive year-over-year improvement, but it sure beats the alternative.
Of course, one quarter does not make a trend, and broadly speaking Samsung is still losing share.
As for Apple, the picture is even more alarming. Despite the fact that the entire smartphone market grew 6.6% last quarter, Apple's unit sales of its flagship iPhone fell just a bit. Its total share of the smartphone market fell from 12.9% to 12.1%, extending a lengthening (even if mild) streak of waning market share.
The graphic below puts things in perspective. Last quarter's 12.1% market share for Apple compares unfavorably to the Q2-2016 market share of 12.9, which compares unfavorably to Q2-2015's market share of 14.6%. For the world's most recognized maker of the world's most popular smartphone (Samsung makes several different smartphones), it's a curious and alarming trend, suggesting the iPhone isn't quite the must-have it once was.
By the way, Oppo and Vivo are now both owned by BBK. Oppo has always been reported separately, but BBK and Vivo are essentially one and the same.
Perhaps the more interesting part of the story is the competition that's keeping Samsung in check and keeping Apple in backpedal mode. It's cheaper phones from names like Oppo and Huawei, both of which saw significant growth in their market share last quarter... as they have for several quarters now. They're both especially popular in Asia, where - outside of China - smartphone demand grew the most during the second quarter.
But Apple still holds a commanding lead in the all-important U.S. market? That's true... sort of. It's still got the lead in terms of total smartphones in use, and depending on the time of year. For the three-month stretch that ended in May of this year though, Samsung's Galaxy S8 helped it capture 36.2% of U.S. sales versus Apple's 34%.
While the two big powerhouses are just trading blows in the United States and elsewhere, both of them may want to look over their shoulders. See, though the precise number is still up for debate, consumer electronics maker LG quietly won more than 10% of the United States' smartphone market share between November of last year and January of this year (right in the middle of the mania surrounding the updated version of the iPhone 7) and LG continued to expand its U.S. footprint in the following quarter.
Meanwhile, Huawei - which has struggled to make a dent in the United States despite increasing popularity everywhere else - is still looking to beef up its partnership with a seemingly willing AT&T (T). Specifically, AT&T is reportedly going to offer one of Huawei's top-tier phones in 2018. If it can do here what it did there, and what LG is already doing here, Samsung and Apple are both about to face nagging headaches.
Just to stave off disagreements with points I didn't make, no, Apple isn't apt to be displaced as the number one or number two smartphone name here or abroad anytime soon. Both companies will be fine, and any headwinds they may face in this particular arena will be offset by growth in other business lines.
On the other hand, it would be naive to think Apple and Samsung are immune to competition now that its competitors have had 10 years to catch up and figure out how the smartphone market ticks. There's also the not-so-small matter that smartphones are increasingly like a commodity, which disallows the premium pricing that's allowed Apple to become a monster. The allegedly-$1,000 sticker price on the upcoming iPhone may make that point all too painfully, given the industry's subtle undertow that's now favoring value-oriented pricing.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.