Apple is squeezed as smartphone market expands

The global smartphone market showed healthy growth in the second quarter, but Apple's iPhone was squeezed by competition from Samsung and other Asian manufacturers, surveys showed Friday. Apple's share of the global smartphone market fell to 13.1 percent in the April-June period, according to research firm IDC. A separate report by Strategy Analytics gave Apple 13.6 percent, but noted that it was the US firm's lowest share since 2010. Samsung extended its dominance, capturing nearly one-third of all smartphones sold worldwide, according to the surveys, while South Korea's LG and China's Lenovo and ZTE showed accelerating growth. Neil Mawston, executive director at Strategy Analytics, said Apple is being squeezed on both the high and low ends of the smartphone market, by manufacturers using the free Google Android operating system. "Apple is at risk of being trapped in a pincer movement between rival three-inch Android models at the low-end and five-inch Android models at the high-end," he said. Mawston noted Samsung sales grew 56 percent from a year ago to 76 million smartphones, while Apple's growth was just 20 percent, less than half the industry pace of 47 percent. Strategy Analytics said Apple was not only beaten on sales, but overtaken by Samsung as the world's most profitable smartphone maker. The research group said Samsung's operating profit for its handset division was 5.2 billion in the second quarter of 2013 to $4.6 billion for Apple. "Apple's reign as the world's most profitable handset vendor lasted almost four years," Mawston said. "Apple's profit margin for its handset division has been fading recently due to lackluster iPhone 5 volumes and tougher competition from rivals. Samsung is performing well in the US market, while Huawei, ZTE and other local brands are growing vigorously in China. "Apple is now under intense pressure to launch more iPhone models at cheaper price-points or with larger screens to fend off the surging competition." Ramon Llamas at IDC said Apple's sales appeared to have been hurt by people waiting for new iPhone models in the second half of the year. "Market opportunities exist at all levels, including the high end," Llamas said. "While Samsung and Apple accounted for significant share of the overall market, they were not the only vendors active in the high end of the market," he said. "And recent device introductions and upcoming launches signal more vendors targeting this space. Comparisons will certainly be made to the flagship Galaxy and iPhone models, but clearly the competition refuses to be shut out altogether." IDC's figures showed 52 percent growth in smartphones with shipments totalling 237.9 million. It showed Samsung on top with 30.4 percent to 13.1 percent for Apple, with LG third at 5.1 percent, followed by Lenovo (4.7 percent) and ZTE (4.2 percent). Strategy Analytics said growth was 47 percent annually to 230 million units. Its survey gave Samsung 33.1 percent to 13.6 percent for Apple, with LG at 5.3 percent, ZTE and 5.0 percent and Chinese maker Huawei in fifth place at 4.8 percent.