The US Smartphone Wars According to comScore, June 2015 Update – Apple Makes a Move

(Notes: The comScore report “lags” two months – the original date of publication is Aug. 7. Also, this post is primarily in the context of “market share”, which inherently does not account for market unit growth year-on-year. And since this is a comScore meta-analysis, take as many grains of salt as you may require.)

That Was Then, This is…Not Quite One Year Later

When I last looked at comScore’s US smartphone market share data (in November, part 1 is here, part 2 is here), Android OEMs (dominated by Samsung, then LG, Moto and HTC rounding out the “Big 4”) were holding steady at a greater than 50% “market share” per comScore’s 30,000-person survey of smartphone owners, measured on a 3-month average basis. (So, call it a hybrid of installed base and market share analysis, considering the methodology.) Meanwhile, Apple was in the low 40s, but it didn’t look like much else was happening. Android was “holding steady” since Dec. 2012, more or less, and Apple “appeared to have plateaued” (though with a bit of net upward movement from late 2013 onward).

When I took a closer look at the data, though, I noticed Samsung, as the US Android standard-bearer, was losing positive momentum in a pretty relentless way. Combined with their dramatic reversal of financial fortune – and retrograde growth starting CY14 – I predicted that Apple would experience “comScore market share growth” of closer to 400 basis points (similar to its Dec. 2012 – Feb. 2013 comScore share jump) than flat growth (read: essentially zero).

How’s that prediction turning out so far, with 3 data points left to measure? Approaching half-right, perhaps, but that’s secondary to the trends themselves.

A “Gradual” Turning of Tables?

Everything up until the dividing line was the data I used for my first two posts last year – and here’s what happened afterward.

comscore-overall-june2015

I know, I know, the chart ain’t pretty, but I still think it gets the point across. I’ll explain the key lines, and isolate/derive further in an effort to boost clarity.

First, since it’s the only secondary-axis line, the purple line, representing Samsung’s 3-month average basis point share gain/loss. The downtrend continued – and Samsung only found “average share growth” in one out of the last 6 comScore reports – all of 10 basis points, in May 2015. The result? Samsung hitting a share ceiling at around 29.7% (darker blue line), with its first plateau/decline phase in this chart timeframe. As of the 3-month period ending in June (let’s just call it June), Samsung’s share stands at 28.1% – far above the nearest Android OEM, but a far cry from the days and narratives of Samsung relentlessly catching up to Apple. (In reality, Apple has never been less than 11.9% ahead of Samsung in the US according to comScore.)

The secondary, related effect of Samsung’s loss of US share also meant that for the first time, Samsung’s Android share (lighter blue line) also saw a “definitive” decline. It peaked at about 56.5%, and as of June, it’s about 54.5%.

Second, Apple. Apple (greenish line) did see a plateau-type phase between August 2014 and February 2015, which seemed a little curious at first. Apple went from 41.3% comScore-measured share in February 2014, to a peak of 42.4% in July 2014, back down to 41.3% in January 2015. I wondered a little, what was going on? Considering the raging success of iPhone 6, when, if ever, would that be reflected in Apple’s stronghold market? Was it just a bit of a lag effect? Turns out, the answer was “wait until closer to July 2015” – Apple’s June 2015 market share stands at 44.1%. And that “inverse relationship” between Apple’s strength and Android losing ground is starting to look a lot clearer.

And yet…it’s not “quite” a direct inverse relationship? Clearly, Apple’s rise is having a gravitational impact on Android. Yet, Android doesn’t appear to be pulled down to the same extent as Apple’s share gain. So what’s going on? I’ll get to that in a little bit.

Third, LG (adobe/bubblegum line, hey, Excel chose it for me). Right off the bat, it must be noted that LG is the only (tracked) Android OEM on a positive trajectory since Sep. 2014 – and indeed, despite a rough patch, it’s at 8.3% US smartphone share, close to its 8.4% March 2015 high, and a slight gain from 7.1% share back in December 2012, when comScore began measuring OEMs on a smartphone-only basis. However, LG’s success, as graphed, may cause the combination of LG, HTC and Moto to look more stalwart than it actually is.

Apple’s Gain, at Not-Exactly-Android’s Expense. And Yet…

From “December 2012” to about 30 months later, Apple’s share vaulted from 36.3% to 44.1%. In that same period, Android aggregate share declined, but only 180 basis points, from 53.4% to 51.6% (with Android appearing to “recover share” from Aug. 2014-Jan. 2015 due to what now appears to be the effects of a considerable iPhone sales pause as the iPhone 6 was rumored, launched, and, over time, brought within supply/demand balance).

At the OS level, it looks like Apple’s 780 basis point gain, while clearly impacting Android somewhat, was largely at the expense of other non-Android OEMs (mostly, Blackberry). That group’s collective comScore market share eroded from 10.3% to just 4.3% during that same time span:

comscore-non-android-non-iOS-OEM-share

Just focus on the line if it offends your sensibilities less. 😉

Sure, you can look at this multiple ways – you can feel free to chime in or disagree via the open-mic comments below or Twitter, but here’s two of my not-necessarily-earth-shattering takeaways:

• Given the choice, US smartphone users of other platforms, when they move away from Blackberry or Microsoft, choose iPhone.

• A related point: In terms of the US market, platform stickiness is much more an Android problem than it is an Apple problem. This goes to both retention and, as the above pretty clearly shows, acquisition. Which is not to say it’s not a prime imperative of all OEMs involved to keep their users happy with their platform/vendor choice. It’s just statistical fact, at the moment, that one OEM has been continuously gaining share in the more saturated, mature US market over time, while Android as a platform claims one kind-of-bright spot (LG) and one used-to-have-momentum major player (Samsung) in the US. Yes, if Apple reverses, I’ll both blog about it if I’m still blogging, and…it’ll probably be pretty obvious why.

Android’s “Masked Plateau”

Is there anything wrong with a plateau per se? Well, it depends on who the subject is, for one. 😀 Sarcasm aside, no – static share in a growing market means net growth.

But it’s certainly not an ideal situation if your market share hasn’t gone anywhere in 30 months, while that other smartphone OEM continues on its uptrend.

Why hasn’t Android made gains? No easy answer, but part of it might be Android OEMs fighting each other for share, versus, well, “be[ing] together[,] not the same”:

comscore-us-android-thru-june2015

When you separate out the “Big 4” Android OEMs – Samsung, LG, HTC and Moto – you get a strong impression of inter-OS conflict. While the minor Android vendors (greenish line) have slowly gained around 90 basis points of share from Dec. 2012 to Jun. 2015, Samsung and the “Smaller 3” have a startlingly inverse relationship. The data appears to be saying that Samsung’s growth was entirely at the expense of LG, Moto, and HTC (though less so for LG). Considering that iPhone never actually stopped growing on a unit basis in any one quarter (year-over-year basis), this does make sense, even as it seems to run against the narrative that Samsung was winning against Apple. The “truth” is probably closer to Samsung’s Galaxy series blunting, but not stopping, iPhone growth.

The more uncomfortable takeaway for US Android OEMs? The Big 4, for now, make it very difficult for any other smaller Android vendor to stand out (though the way HTC is fading, there’s always that chance another vendor will show up in comScore’s monthly reports). And the Big 4 themselves aren’t putting up anything resembling a “united front” against Apple. While it’s still at least arguable that Android is merely “in neutral” (give it another few months), you can’t say the same for the Big 4, whose combined share has dipped from 47.4% to 44.7% over 30 months. Jun. 2015 represents the first data point where combined 3-mo. avg. share has ended below 45%.

When vendors are competing against each other rather than the “common enemy”, it certainly hurts the overall Android OS cause.

A Few Wrap-Up Thoughts on the Apple v. Android Matchup

Let’s put any “investment” I have in my November prediction aside and give Android some extra benefit of the doubt. Sure, “Android infighting” looks very real. Sure, Android looks to have peaked. But if the battle lines are hardening, is that really such a bad thing for Android? Also, Apple’s been picking up most of its additional share from non-Android OEMs. That batch of lowest-hanging fruit is almost fully picked, with Microsoft positioning to reassert relevance in the smartphone market (any day now).

So, to continue that line of reasoning, isn’t it possible that once Apple runs out of dissatisfied users to claim from alternative OSes, it’ll just end up an epic stalemate, with Apple getting to maybe 45-46% share, but no further?

I’m sorry if it sounds a bit strawman, but it’s the best argument I can think of for the pro-Android camp given the state of the market. And it’s not a very compelling one.

Now, it’s possible that Apple’s US market share according to comScore may see another dip for some period of months. But the most likely explanation for that phenomenon is seasonality as iPhone 6S approaches. And even as the stock market is losing its mind, thinking iPhone is all out of growth, the sellers seem to have completely forgotten:

So even if you’re the most ardent “iPhone is only about replacement cycle now” cynic? Well, that supercycle, which is its own rather obvious growth driver, isn’t even a third over yet. It’s barely 25% done, and of course, since iPhone has never stopped growing, the pool of “upgrade-eligible” iPhone users only increases with time (until they upgrade, that is). It’ll take quite the global slowdown in consumer spending to slow this supercycle down much this cycle.

I’d also point out that “the iPhone everyone really wanted”, iPhone 6, drops down to second-tier in about a month. It’s a heck of a lot more attractive “premium mid-range” device than iPhone 5S, and, as a BigPhone, more competitive as well (especially if iPhone 6 Plus sticks around).

The US carriers, meanwhile, are friendlier to iPhone than they’ve ever been. Consider the last two iPhone holdouts.

Remember when the HTC Evo 4G (with Wi-Max tech) was Sprint’s flagship, by the way?

Finally, I’ll close this “interim update” with comScore’s “heat index” in the US smartphone market the past 30 months (thru June). This chart measures share growth in basis points on a rolling 3-month basis (same as comScore). Yes, it looks awful, but I’ll break out the lines:

comscore-us-heat-index-ios-android

First, you’ve got Apple (green). Since mid-2013, it’s been chugging along, mostly in positive territory, never really in negative territory, with the latest March-June 2015 surge more than making up for that mini-slump/iPhone 6 sales pause.

Second, Samsung (black). A definitive loss of momentum. More interestingly, there was never much of an “inverse momentum relationship” between Samsung and Apple.

Third, the “Big 4” US Android vanguard of Samsung, LG, Moto and HTC (red). A mixed bag at best, and illustrative of true competition within that group rather than “coopetition”.

Fourth, LG, Moto and HTC (purple), the latter two being clearly damaged by Samsung’s share gains. Late 2014 is more return to stability (analogy: a medium-term goal for iPad’s continuous retrograde growth) than any increase in momentum. And absent a major trend shift, it’s certainly looking like any gains this subgroup can make will hurt Samsung much more than Apple. LG, the sole share gainer as of late, is extremely unlikely to impact iPhone much given the results of Samsung’s best efforts.

To wrap up: Apple’s run out of non-Android territory to claim in the US, but Samsung is flagging, and its competition with LG, Moto and HTC are signals of brand churn. So if US Android users, according to a 4,000-person CIRP survey, are indeed slightly more loyal to their OS than iOS users are – Android OEMs need every advantage they can get, as Apple, with some active carrier assistance, prepares its iPhone 6S assault.

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