Apple and Samsung reached détente in their global patent war, ending litigation in all jurisdictions outside of the US one year ago. This turned out to be a huge turning point in both firm’s smartphone fortunes. Even as they reached their deal consumer interest in Samsung devices had already begun to wane.
While Apple’s iPhone remain the world’s most popular premium smartphone, Samsung’s fortunes have collapsed. (Jan Dawson, founder of Jackdaw Research, has a useful series of charts illustrating this collapse).
Apple sold 47.4 million iPhones in the three months ended June 27, an increase of about 35% from a year earlier and more than double the tally from four years ago. "The gap is widening between us and our competitors," Apple Chief Executive Tim Cook said in an interview with The Wall Street Journal, noting that the company had the highest rate of switchers from Android phones ever during the quarter.
In every metric – user engagement, customer satisfaction and revenue – Apple exceeds its former prime competitor. Samsung sold 73 million against Apple’s 75 million units in Q4 2014. And Apple took 92 percent of worldwide total operating income in the smartphone sector in Q1 2015 in contrast to Samsung’s 15 percent, claims Canaccord Genuity.
Arguably what’s undone Samsung is its failure to deliver uniquely compelling sales propositions. The company’s entire strategy was wedded to the concept of it being “the anti-Apple” to such an extent the company forgot to ensure it also competed against the 24,093 products that comprise the Android ecosystem, according to Open Signal. (Interestingly, Samsung makes 37.8 percent of those products, putting the company in competition with itself).
It’s a testament to the power of unique product design that Apple holds its own against these thousands of available devices with a product catalog of just ten items.
Apple’s decision to cease litigation deprived the multinational conglomerate, Samsung, of the opportunity to play David against Tim Cook’s Goliath. (Even though the Goliath in that movie makes only a few products). In conjunction with this, Apple’s success in helping consumers recognize the emulative nature of the Korean firm helped topple Samsung from its throne.
A Gartner report revealed how dominant Apple became by the end of 2014, the first time since 2012 it beat Samsung’s global marketshare. Under pressure from Apple and other Android vendors, Samsung lost 10 percentage points of market share in Q4 2014. “This downward trend shows that Samsung’s share of profitable premium smartphone users has come under significant pressure,” Gartner said.
"With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market," said Roberta Cozza, research director at Gartner.
Apple’s hugely successful iPhone 6 is about to be replaced by iPhone 6S. In conjunction with that release, Apple now offers a range of supporting services, including Apple Music, Apple Watch, Apple Pay and more. The contraction of the smartphone market in recent weeks suggests millions will upgrade to the new device.
The Android client
Apple is also planning fundamental shifts in the way it competes with the Android ecosystem. We know it will introduce Apple Music for Android later this year, but it is also recruiting engineers to build other Apple solutions for Android. These should make it far easier for customers to switch.
Things really have changed since Apple reached that deal.
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