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In the global smartphone war, Apple and Samsung fear death by a thousand price cuts.
The smartphone duopoly is still strong, as the two rivals accounted for 43 percent of smartphone sales last quarter, according to the latest data, but the rapid growth of low-cost competitors is forcing them into a new struggle for customers.
China is the market that best illustrates the current state of the industry: That country has more potential smartphone customers than there are people in the US, according to Mike Morgan, senior analyst at ABI Research.
The makers of the mobile handsets are fighting for this key demographic in developing and emerging markets, where price is of paramount concern.
The dynamic already has affected Apple’s bottom line. Last quarter, the average selling price of the iPhone dipped below $600 for the first time since 2009. Samsung’s average price is a low $380, according to Morgan.
Apple represented 13.1 percent of the worldwide smartphone market last quarter, down from 16.6 percent a year ago, while Samsung accounted for 30.4 percent.
The players coming up behind them include a bevy of smaller China rivals like Huawei, Lenovo and ZTE. Lenovo grew 130 percent last quarter year over year, according to IDC.
“In a period of two years, the Chinese handset makers have come out of nowhere to do multiple millions of shipments,” Morgan said.
ABI’s data showed Apple and Samsung commanded closer to 50 percent of the smartphone market. Still, all the market data point to an Apple that is losing market share, and a Samsung that faces a similar fate.
The players in the high end are looking for market share, while those in the low end are looking for bigger profits, meeting in the middle, Morgan said.