Google Inc (GOOG), Apple Inc. (AAPL): A Numbers Game in the Smartphone Industry

The data and research provided by companies assessing consumer buying patterns and essential shipments figures has always been a primary component of technology investment. However, these trends are usually used to assess long term product and technology life cycles, having very little impact on the short term investment strategy. The smartphone industry is markedly different in this regard because fortunes can change in a single quarter for players of this highly dynamic space. IDC has recently released shipment data for all the leading smartphone and feature pone manufacturers. This provides us an insight into this highly competitive industry and the consumer success of various companies.

Shipments

The smartphone industry is increasingly becoming more interesting with some major product launches expected in the next few months. According to IDC, in 1Q2013 smartphone shipments have overtaken feature phones. There was a 4% y/y growth in phone shipments, which were 418.6 million for the quarter. In the fourth quarter of 2012 a total of 483.2 million shipments had been made, denoting a 14% q/q decline. The global economic stagnation and factors related to product life cycle led this q/q decline.

Market Share

Smartphones continued their dominance over features phone and accounted for approximately 51.6% of total phone shipments. The growth in this space was phenomenal at 41.6% q/q. The biggest beneficiaries of this growth have been Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF). Samsung retained its top spot during the quarter with a total 32.7% market share. Apple closely follows behind with a market share of 17.3%, and LG has surprisingly acquired third place with a 4.8% market share. The success of LG and Samsung shows the domination of Google Inc (NASDAQ:GOOG) over the smartphone industry and the increasing strength of the Android operating system. The primary reason behind the success of LG has been the sale of Google Inc (NASDAQ:GOOG)’s Nexus 4 devices by the manufacturer.

Product launches

The two biggest product launches in the smartphone space are Samsung’s Galaxy S4 and Apple Inc. (NASDAQ:AAPL)’s iPhone 5s. The Galaxy S4 has already been launched in Korea and has so far received favorable reviews from the industry. The device does not make any leaps and bounds in terms of technology but is an attractive update to Galaxy S3. However, the spotlight is still on Apple Inc. (NASDAQ:AAPL) and its summer product launches. There is a lot of speculation on the prospects of a cheaper iPhone for South American and Asian markets. While many would argue that Apple Inc. (NASDAQ:AAPL) should keep the premium iPhone image, the company is not alien to rolling out multiple iterations of a product e.g. iPod, iPad etc.