More proof, if proof were needed, that Apple needs a low cost iPhone to get its smartphone momentum mojo back: Cupertino's share of the global smartphone market fell to its lowest for three years in Q2, according to Strategy Analytics, with just 31.2 million iPhones shipped in the quarter and Apple's second place ranking declining to a 14% market share - this despite the overall smartphone market growing 47% annually to reach a record 230 million units shipped.
"The current iPhone portfolio is under-performing and Apple is at risk of being trapped in a pincer movement between rival 3-inch Android models at the low-end and 5-inch Android models at the high-end," said Neil Mawston, Executive Director at Strategy Analytics, in a statement.
Mawston told TechCrunch it's not just a low cost iPhone that Apple needs to return to growth, although he agrees that is a requirement for Apple to drive extra volume. Cupertino's top priority should be a new type of flagship to compete with Samsung's phablets, he said.
"Apple's first priority should be a premium-tier phablet with a 5-inch screen because that is where the largest new revenue pool is located," he said via email. "Apple is losing profit share to Samsung partly because of a lack of presence in the phablet segment. Apple's second priority should be a lower-cost iPhone to win back some of the customers it is losing to cheaper Android models in Asia, Africa and Latin America."
"A 5-inch iPhone would generate extra value for Apple, while a cheaper iPhone would deliver extra volume," he added.
Overall, the analyst said smartphone market growth is being driven by demand for 4G handsets in developed markets such as the U.S. and 3G devices in emerging markets such as India. Asian mobile makers, who predominately use Google's Android OS, are now clearly dominating the surging smartphone market, with Samsung still in kingpin position - shipping 76 million devices in Q2 to capture one-third of all smartphone volumes worldwide in the quarter - and LG, ZTE and Huawei in third, fourth and fifth place respectively.
The analyst described LG as a "star performer", with its global shipments doubling year-over-year to hit 12.1 million units in Q2 to take a 5% share. "The popular Optimus and Nexus models have been the main drivers of LG's success. If LG can expand its retail presence and marketing in major countries such as the US or China, LG could quietly start to challenge Apple for second position," Analyst Linda Sui added in a statement.
Chinese mobile maker ZTE also took a 5% share in the quarter, shipping a record 11.5 million smartphones to take fourth place for the first time, while Huawei shipped 11.1 million handsets to also grab 5% and take fifth.
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