If nothing really changes, Samsung is expected to widen its lead against Apple [AAPL] this year, according to Strategy Analytics. But will things stay the same, or will 2013 be the year the iPhone company changes the rules with an iPhone mini and more frequent product upgrades?
Fragmentation, or diversity?
Samsung has become the world's dominant smartphone maker by market share, partly by virtue of its decision to offer a wide range of devices. Apple's focus so far has been to offer one primary best-of-breed phone alongside older models.
This difference in the way they operate is helping Samsung force a strong grip on the rapidly evolving industry, and while Apple reaps the lion's share of profits, its Korean rival spends heavily on marketing in order to secure its sales.
At present in the US, Apple holds 34.3 per cent of US mobile subscribers in contrast to Google's 52.6 per cent, according to ComScore.
Diversification has been key to Samsung's success, though only a few of its phones can be considered directly competitive with the iPhone. This diversity helps Samsung reach value conscious customers that may not have the coin to catch Apple's iPhone train.
Responding, Strategy Analytics believes Apple's preparing to initiate a diversification plan of its own; this runs in three parts -- all of which seem broadly in tune with the Apple-watching industry zeitgeist:
- Release frequency
- Diversity of models
- New products
There's been mutterings that Apple's iPhone release schedule may change. At present it offers an annual refresh of its flagship product. This has fostered a situation in which the company ships a new model that competitors then try to match on features and price. This means that Samsung, for example, traditionally now introduces its latest flagship Galaxy phone approximately six months after the iPhone debut.
This leaves Apple exposed, and this reflects in the number of phones the company sells: you see a spike in sales for the first few months of any new model, with the curve later maintained by deployment of the device on new carriers and in new markets worldwide, with Cupertino capitalizing on pent-up international demand in order to maintain sales targets.
It doesn't take a genius to figure out that once Apple has relationships with all the carriers and a presence in every territory, that business plan becomes less effective.
This makes it a viable proposal that in order to maintain interest in its devices it could begin to offer as many as two flagship models each year. In the case of the iPhone 5, this opens the door for a mid-year launch of an iPhone 5S model. This model would add missing features (NFC, perhaps?) to the existing device. This strategy also relies heavily on Apple's love for incremental improvements to its phones.
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