Samsung’s earnings guidance for the second quarter, 2014 generally disappointed analysts and stimulated some broad downward revisions in likely global market consumption of high end smart phones and tablets. Some of the downward direction indicated by Samsung’s guidance was also attributed to stiffer competition for the low end of these markets from Chinese manufacturers.
Regardless of how one reacts to this guidance announcement, it should be clear global market appetite for smart phones, and, perhaps, tablets, has been generally satisfied. In the opinion of this writer, the slowdown can be attributed to feature exhaustion for the current form factor and chip sets. Consumers have bought up what they need. When hardware OEMs and their ISV partners finally come to market with solutions for the remaining areas of burning need — richer voice feature sets enabling more utility for mobile consumers, and true integration within mobile transportation beyond a peripheral to be plugged in, to name but two of these — then high velocity sales can be assumed to occur.
But for now these features are not available. Apple looks poised to perform the best in these kind of conditions. iOS devices sit at the very top of the smart phone heap. As many analysts have written, despite a much smaller market share than the combined reach of Google’s Android partners, including Samsung, Apple just makes much more money in the market and enjoys much higher margins than its competitors.
Two recent hires: Angela Ahrendts (late of Burberrys) to head the Apple Store operation, and Patrick Pruniaux (formerly the Vice President of sales at Tag Heuer) provide solid support for the notion Cupertino plans on protecting its position as the name brand at the very top of the smart phone market.
Once a commodity technology market plateaus, in this writer’s opinion, brand recognition, price, and reputation all trump technical features for the top cut of consumers. Apple does not look to be giving back any territory in this arena anytime soon.
On the other hand, Microsoft has demonstrated some of the voice features likely to stir up consumer demand (“Cortana”). But the expected release of Windows Phone 8.1 has gotten off track, so consumers have yet to experience, first hand, the improvements Cortana appears capable of delivering. In the meantime, other analysts claim Windows Phone is losing market share globally. As to the Surface Pro 3, this device is positioned as a better solution for the laptop market, rather than a tablet killer.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved