Apple Needs To Adjust According To Smartphone Market Saturation

Apple has to enter the low-end smartphone manufacturing to avoid the high-end smartphone market saturation.

Over the past few months, Apple’s stock has been in the mid-$90 range which has risen few doubts among the investors and analysts, although the tech giant reported highly commendable profits and sales of its prestigious current generation iPhones last quarter. Industry experts have expressed that the Silicon Valley business is facing this year’s anticipated “marked slowdown in higher-end, higher-cost devices.” CEO Tim Cook confirmed the slowing sales forecasts. Many analysts believe that highly anticipated crunch of global smartphone market has already commenced.

Overall, year 2015 was not that bad for the iPhone sales. The Connecticut-based research firm, Gartner, reported that in 2015, the company sold 225.85 million iPhones that went up from 2014’s 191.43 million. Another glad tiding for the organization is that during last year, it increased its share in the global market to 15.9% from previous year’s 15.4%.

What is alarming in Apple’s sales is how the year ended for it. The sales estimates forwarded by Gartner do not reflect the units shipped by the tech giant to its large number of vendors. If the sales are examined on those parameters, then Apple’s devices have taken a substantial hit in calendar Q4. The tech behemoth noted, during the conference call that, it “sold 74.8 million iPhones in the quarter,” indicating a 300,000 units bump from previous year’s fourth quarter.

The data compiled by the research firm highlight that currently several million iPhones are placed on telecom providers and retailers. Apple, along with its partners, in fourth quarter 2015 sold around 71.5 million smartphones, which were down from the prior year’s 74.8 million. Apart from marking a year-over-year 3.3 million unit sales decline, the market share of the company came down to 17.7% in 2015 from prior year’s 20.4%.

The only smartphone manufacturer who posted a year-over-year improved sales was Apple’s South Korean rival, Samsung, which crawled up to 20.7% after the tech company sold 83.44 million smartphones. It is more than probable that Samsung is likely to fall prey to the growing smartphone market saturation but it has some better strategies for the future.

The edge for Samsung in the market is apart from offering a wide range of electronics is that it produces and sells low-cost smartphones as well. According to Gartner estimates, “basic and lower-end” variety will hold about “two-thirds” of the global smartphone sales in just three years.  

It is prudent for the organization if it even considers manufacturing iPhones, which are a bit lower in cost and affordable, so that it can easily enter the uncharted territory of low-end smartphones.

At the market which closed on Thursday, Apple Inc. stock stood at a price of $101.50. The 52-week range of the stock is expected to be between $92 and $134.54.