Apple Inc. (AAPL) has toppled Samsung to become the leader in the smartphone market in the fourth quarter of 2011. According to the data compiled by research firms Strategy Analytics and IHS iSuppli, Apple returned to its former glory in the smartphone market, buoyed by robust holiday sales of iPhone 4S.
In terms of units sold, Apple sold 37 million iPhones during the October- December period, while Samsung shipped approximately 36.5 million smartphones. Nokia Corp (NOK) sold 19.6 million smartphones during the same period to grab the third position. Sony Ericsson ranked fourth, with 6 million units sold, while Motorola Mobility Holdings Inc. (MMI) sold 5 million units to settle for the fifth spot.
In the U.S. market, among the 9.4 million smartphones activated by AT&T Inc. (T), the second-largest wireless carrier in the country, 7.6 million were iPhones. Of the 7.7 million smartphones activated by Verizon Wireless, the largest provider, 56% were iPhones.
Apple with its launch of iPhone 4S in October, which featured voice recognition facility, caught the imagination of the holiday crowd. Not only did this help Apple climb to the top, but it also helped the company in reporting impressive first quarter earnings results. In the recently concluded quarter, the year-on-year growth of Apple’s iPhone sales was a staggering 128.0%.
Though Apple, with its 23.9% market share in calendar fourth quarter 2011, has gained a slender lead over Samsung’s 23.5% share, data from Strategy Analytics reveals that the iPhone maker is short of Samsung’s 19.9% market share as against Apple’s 19.0%, when compared on a full-year basis.
The figures clearly show that the smartphone market is being dominated by Apple and Samsung, with others falling way behind. Though Nokia is still the highest cell phone maker by volume, its sluggish share of the smartphone market (12.6% in the fourth quarter) is due to its dull touchcreen smartphone portfolio and limited U.S. market penetration. Other smartphone makers also lag the the top three in terms of innovation.
Apple remains the biggest growth story, based on its superior product pipeline, Apps, recently launched iCloud and iPhone 4S, as well as the upcoming update of iPad and Apple TV. Apple is also well positioned to gain from a loyal customer base and international expansion, in our view.
Particularly, Apple’s expansion in China, Brazil, Russia and in other emerging economies in the Asia-Pacific region will lead to incremental growth over the long term. Apple’s ability to spread the popularity of its products in developing nations, where pricing is often an important consideration, will go a long way in deciding the company’s future growth.
However, legal complexities and patent litigation cases against Samsung will remain the primary headwinds in the near term. Moreover, competition from other smartphone makers will remain an overhang on the stock.
We maintain our Neutral recommendation on Apple over the long term (6-12 months). Currently, Apple has a Zacks #1 Rank, which implies a Strong Buy rating in the near term.
To read this article on Zacks.com click here.
Zacks Investment Research
