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The smartphone market in the US basically comes down to three companies: Apple, Samsung and all the others. And everyone else could be about to shrink.
Recently, a report stated that LG could exit the smartphone business, citing years of losses for that division of the electronics giant. That the report appeared shortly after LG caused a sensation at this year’s CES by showing a roll-up phone suggests how difficult it is for smartphone makers other than Apple and Samsung to capture sustained interest from US phone buyers.
The ups and downs of device manufacturers would normally be of little interest to those of us who just want to find the one best phone out there. Who cares if Phone Maker X is struggling to break through as long as you can pick up a new iPhone or Galaxy S model every now and then?
But even companies with the backgrounds of Apple and Samsung need rivals to drive them. And it could be argued that the two horse show that is the US smartphone market these days is allowing a sense of equality to creep into the latest flagship devices.
Let’s take Apple’s decision a few years ago to stop putting a headphone jack on its new iPhones. Samsung resisted that move with its own flagships – until it didn’t. Now, you won’t find a Galaxy S or Galaxy Note model with a headphone jack. The recent Galaxy S21 All models ship without microSD card slots, something Apple always leaves out of its iPhones. And after poking fun at Apple’s decision not to include a charger with the iPhone 12Samsung did the exact same thing with the Galaxy S21.
You certainly aren’t going to confuse the iPhone 12 with the Galaxy S21 anytime soon. But some of the differentiating factors between the two smartphone brands are starting to fade.
The Apple-Samsung duopoly in numbers
No one would question the fact that Apple and Samsung are the top US phone makers. According to figures from Counterpoint investigationIn the third quarter of 2020, Apple enjoyed a 40% market share compared to Samsung’s 30%. The next largest player was LG, with a 13% share, while other phone makers accounted for 11% of the market.
We don’t have figures for the fourth quarter yet, but imagine that Apple’s share will only grow, given that the company enjoyed phone sales record the last three months of the year driven by the launch of the iPhone 12.
“Smartphones are a mature product category, and the US market has been in duopoly with Apple and Samsung for years,” said Avi Greengart, founder and principal analyst at Techsponential. “This is not ideal for consumers, but both companies are under considerable competitive pressure in markets outside of the United States, and that helps protect consumers from stagnation.”
Telephone OEMs compete on a global scale and competition remains healthy.
– Tuong Nguyen, Gartner
In fact, when the entire world is taken into account, Huawei is the second largest phone maker, between Samsung and Apple. And other companies combine to hold most of the global market, according to figures from research firm IDC. “The big picture is that phone OEMs are competing on a global scale and competition remains healthy,” said Tuong Nguyen, senior principal analyst at Gartner.
There’s another factor looming over the US phone market, where a lot of people still buy their devices through the phone carriers that provide their wireless service rather than buying the best unlocked phones. “US carriers also play a strong gatekeeper role; as much as they would like to have alternatives to Apple and Samsung, they have also not been willing to open their shelves to Chinese supplier churn,” Greengart said.
Competition between cheap phones
Apple and Samsung may attract most of the attention of people looking for flagship phones, but there is a segment of the market where other players dwarf them. Mid-range phones have been buzzing in recent years, as phone makers try to appeal to budget-minded buyers.
“We are looking at more options at lower prices,” Greengart said. The iPhone SE is Apple’s cheapest device at $ 399, but Apple hasn’t cut prices, Greengart added, while “vendors like TCL, OnePlus and Google are trying to expand the market for mid-tier devices.”
Motorola and Google have been particularly successful in making waves. Motorola’s affordable G-series phones have attracted a lot of consumer interest by focusing on specific features like battery life in the case of the Moto G Power. The Google Pixel flagships had failed to attract much of the audience until the company launched the A-series phones, first the Pixel 3a, so he Pixel 4a – which delivered high-end camera performance at a lower price.
That has been the secret for phone makers looking to escape the long shadow cast by Apple and Samsung. How many premium features can you pack in a phone while keeping the overall price competitive with what the market leaders charge? The entire OnePlus business model seems designed around this whole point, both with its flagships and especially with the affordable OnePlus North phones that it started launching last year
Can phone makers keep innovating?
That’s a sign that there is room for phone makers to establish their own devices, even if the iPhone and Galaxy flagships consume a lot of oxygen in the smartphone space. And it can push Apple and Samsung to keep finding new features and improvements for their phones, even if the smartphone market is quite mature right now.
No company wants to be labeled as showing incremental improvement over its previous models, or to be a step or two behind the competition.
– Ramon Llamas, IDC
“Both of them [Apple and Samsung] repeatedly highlight how fast their processors are, how big and brighter their screens are, and how advanced their cameras are, “said Ramon Llamas, research director for mobile devices and AR / VR at IDC.” No company wants to be. labeled as showing incremental improvement over its previous models, not a step or two behind the competition. “
Phone screens are a good example of what market leaders have continued to try to improve the user experience, especially in the case of Samsung. Last years Galaxy S20 introduced 120Hz refresh rates to Samsung’s flagship lineup and subsequent releases have seen the company add dynamic updates that adjust based on the task you’re performing.
Faster refresh screens mean smoother scrolling and a better overall experience, which is putting pressure on Apple to respond in kind. In fact, the quick update screens are in the list of functions for the iPhone 13 scheduled for release later this year.
Phone makers have also tried to make their mark with cameras. Recent Galaxy phones have seen Samsung raise the megapixel rating on its main sensor – the Galaxy S21 Ultra it features a 108MP camera as its primary shooter, while also increasing the zoom capabilities of its camera phones. Apple, in turn, has put an emphasis on software enhancements, introducing and improving features like Smart HDR, which improves the shots you take even in challenging lighting, and Deep Fusion, which brings out the finest details in photos.
Of course, you could argue that the camera improvements on the iPhone and Galaxy devices might not have come as quickly without Google pushing Apple and Samsung. While Pixel phones may not enjoy a large chunk of market share, they have undoubtedly introduced many new capabilities for mobile photography, with the latest Pixels ranking among the best camera phones. Apple and Samsung would certainly be motivated to update their cameras every year without the Pixel, but the additional competition certainly doesn’t hurt.
The outlook for smartphone competition
That’s why consumers can be forgiven if they are a little concerned that the dominance of Apple and Samsung could slow the pace of innovation in the smartphone market. Advances will continue to occur, but it is a question of how quickly they will come without the threat of extensive competition.
“We have reached a point in this market where innovations have been coming incrementally,” said Gartner’s Nguyen. “The next big use case / application is what will change this dynamic, in the same way that smartphones changed the mobile phone market in a substantial way. The million dollar question is what will be the application or combination of Applications”.
