The smartphone market in the US basically boils down to three businesses – Apple, Samsung and all the others. And all the others may soon shrink.
Recently, a report claimed that LG can leave the smartphone business, referring to years of losses for the division of the electronic giant. That report surfaced shortly after LG made a splash with this year’s CES a mobile phone suggests how difficult it is for smartphone makers other than Apple and Samsung to gain continued interest from US buyers.
The fortunes of appliance manufacturers will not normally be of much interest to those who just want to find the product best phone out there. Who cares if Phone Maker X struggles to break through as long as I can upload a new iPhone or Galaxy S model every time?
But even companies with the records of Apple and Samsung need competitors to propel them forward. And you could argue that the dual-pair show is the US smartphone market these days, bringing a sense of similarity to the latest flagship devices.
Take Apple’s decision a few years back to stop putting a headphone jack in its new iPhones. Samsung resisted the movement with its own flagships – until it did not. You will not get a Galaxy S or Galaxy Note model with a headphone jack. The recent Galaxy S21 models are all shipped without microSD card slots, something Apple has always left out of its iPhones. And after they mocked Apple’s decision not to include a charger with the USB iPhone 12, Samsung did exactly the same with the Galaxy S21.
To be sure, you are not going to confuse the iPhone 12 with the Galaxy S21 anytime soon. But some of the distinguishing factors between the two smartphone brands are starting to disappear.
The Apple-Samsung duopoly according to the numbers
No one disputes the fact that Apple and Samsung are the leading phone manufacturers in the US Counterpoint research, in the third quarter of 2020, Apple enjoyed a market share of 40% to 30% of Samsung. LG was the next largest player with a 13% share, while other handsets made up 11% of the market.
We do not yet have the fourth quarter, but you would think that Apple’s share will only grow, given the company’s advantage record phone sales fueled the last three months of the year by the release of the iPhone 12.
“Smartphones are a mature product category, and the U.S. market has been in a duopoly with Apple and Samsung for years,” said Avi Greengart, founder and chief analyst at Techsponential. “It’s not ideal for consumers, but both companies are under significant competitive pressure in markets outside the US, and it helps protect consumers from stagnation.”
Mobile phone manufacturers are competing on a global scale and competition remains healthy.
– Tuong Nguyen, Gartner
Indeed, if you take the whole world into account, Huawei is the second largest phone maker, between Samsung and Apple. And other companies together hold the bulk of the global market, according to numbers from research firm IDC. “The bigger picture is that cell phone OEMs are competing worldwide, and the competition remains healthy,” said Tuong Nguyen, a senior chief analyst at Gartner.
There is another factor that hangs over the US phone market, where many people still buy their devices through the phone carriers that provide their cordless service, as opposed to the best unlocked phones. “U.S. carriers are also playing a strong gatekeeper role; just as much as they want alternatives to Apple and Samsung, they were also unwilling to open their shelves to the fate of Chinese retailers,” Greengart said.
Competition between budget phones
Apple and Samsung may be asking for the bulk of the attention for people looking for flagship phones, but there is one segment of the market where they are overshadowed by other players. Midrange phones have been alive for the past few years as phone manufacturers try to attract budget-minded buyers.
“We’re seeing more options at lower price points,” Greengart said. The iPhone SE is Apple’s cheapest device at $ 399, but Apple has not fallen in price, Greengart added as “vendors such as TCL, OnePlus and Google try to expand the mid-range devices market.”
Motorola and Google in particular have succeeded in making waves. Motorola’s affordable G-series phones have attracted a lot of interest from consumers by focusing on specific features such as battery life in the case of Moto G Power. Google’s Pixel flagships could not attract much of the public until the company introduced A-series phones – first the Pixel 3a, Then the Pixel 4a – which delivered the best camera performance at a lower price.
This was the secret for phone makers who want to escape the long shadow of Apple and Samsung. How many premium features can you push into a phone while keeping the overall price competitive with what the market leaders are asking for? OnePlus’ entire business model seems to be designed around this whole point, both with its flagships, but especially with the affordable OnePlus Nord phones started rolling it out last year.
Can Telephone Manufacturers Still Innovate?
This is a sign that there is room for phone makers to set up their own devices, even though the flagships of iPhone and Galaxy consume a lot of oxygen in the smartphone space. And that might just encourage Apple and Samsung to keep on finding new features and enhancements for their phones, even though the smartphone market is quite mature at this point.
None of the companies want to show an increase in their previous models as a step or two behind the competition.
– Ramon Llamas, IDC
‘Both [Apple and Samsung] repeatedly emphasizes how much faster their processors are, how much bigger and brighter their screens are and how many more cameras they develop, “said Ramon Llamas, research director for mobile devices and AR / VR at IDC. None of the companies want to be listed as increasingly improving their previous models, and also not be a step or two behind the competition. ‘
Phone screens are a good example of where the market leaders have tried to enhance the user experience, especially in the case of Samsung. Last few years Galaxy S20 120Hz refresh rates were introduced in Samsung’s flagship range, and subsequent versions have the company adding dynamic refreshes, depending on the task you are performing.
Faster refreshing performances mean smoother browsing and a better overall experience, which puts Apple under pressure to respond in kind. Indeed, fast-refreshing exhibits are reportedly on the feature list for the iPhone 13 released later this year.
Telephone manufacturers also tried to imprint their tracks with cameras. Recent Galaxy phones have Samsung the megapixel rating on its main sensor – the Galaxy S21 Ultra features a 108MP camera as its primary shooter – while also enhancing the zoom capabilities of its camera phones. Apple, in turn, has focused on software enhancements, the introduction and enhancement of features such as Smart HDR, which enhances photos you take in even more challenging lighting, and Deep Fusion, which evokes the finer details of photos.
Of course, you could argue that the camera enhancements in the iPhones and Galaxy devices might not have come so quickly without Google applying the pressure on Apple and Samsung. While the Pixel phones may not enjoy a large share of the market share, they have undoubtedly introduced many new features to mobile photography, with the latest Pixels ranking among the best camera phones. Apple and Samsung will certainly be motivated to upgrade their cameras every year without the Pixel, but the extra competition certainly does not hurt.
The prospect of smartphone competition
Therefore, consumers can be forgiven if they are a little worried that the dominance of Apple and Samsung may slow down the pace of innovation in the smartphone market. Progress will still be made, but it is the question of how fast it will come without the threat of expanded competition.
“We have reached a point in this market where innovations are increasingly increasing,” said Gguner’s Nguyen. “The next big use case / application is what will change these dynamics – just as the smartphone has changed the market for mobile phones in a significant way. The million dollar question is what the application or combination of applications will be.”