Caitlin Fitzsimmons Online editor

Caitlin covers social media, marketing and technology and is BRW's social media editor. She has worked as a journalist in Sydney, London and San Francisco, writing for titles including The Guardian and The Australian Financial Review.

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Apple is losing its gloss

Published 07 November 2012 11:33, Updated 21 November 2012 07:33

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A year after Apple co-founder Steve Jobs died, the technology giant remains one of the world’s most popular consumer brands but a growing number of Apple’s customers are wavering in their devotion.

It is a trend that has implications not only for Apple but for an entire business eco-system of Apple resellers, app designers and companies that make accessories and compatible hardware.

Earlier this week, analyst firm IDC reported that Apple’s iPad was losing market share in the tablet market, down from 65.6 per cent in the second quarter of this year to 50.4 per cent in the third quarter. Samsung, Amazon, ASUS and Lenovo all gained share but Samsung was the biggest winner – the Korean manufacturer shipped 5.1 million tablets worldwide in the third quarter, a 115 per cent rise on the previous quarter and up 325 per cent year on year.

“Samsung took advantage of an opportunity in the second quarter,” says the program manager for IDC’s Mobile Device Trackers, Ryan Reith. “The company has a wide range of tablet offerings across multiple screen sizes and colours and that clearly resonated with more buyers this quarter. Its growth to 18.4 per cent of worldwide market share during the quarter represents the first time a competitor has attained this level of share since the launch of the iPad.”

Reith noted the recent release of several Windows 8 and Windows RT tablets would increase consumer choice, though Microsoft would have a tough time increasing its share with price points starting at $US500.

The tablet sales figures do not include the new iPad Mini, which launched last week - well into the fourth quarter. However, the reaction to the new, smaller iPad has been muted in Australia and around the world.

The tablet study followed last week’s IDC research on the mobile phone market, showing that Android accounted for three out of four of the 181.1 million smartphones shipped in the third quarter. The 91.5 per cent year-over-year growth for Android was nearly double the overall market growth rate of 46.4 per cent. The iPhone managed to retain share because of the launch of the iPhone 5 late in the quarter and subsequent discounting of older iPhone models. Blackberry, Symbian, Windows and Linux-based smartphones were also-rans, according to IDC.

Meanwhile, Apple apparently is losing its edge even among current iPhone users. Research by Strategy Analytics suggests that the number of iPhone users who say they definitely will or probably will stick with Apple for their next phone has declined in both the US and Western Europe – the first decline since the iPhone was released in 2007. Strategy Analytics did not cover Australia with this research.

In 2012, only 75 per cent of iPhone owners in Western Europe say they are likely to buy their next phone from Apple, down from 88 per cent in 2011. Despite this decline, Apple retains a higher repeat purchase intention level than any other major phone manufacturer in the study and the number respondents who say they probably or definitely will not buy their next phone from Apple is low.

“It is respondents in Western Europe and the US who are unsure whether they will remain with the same brand or not for their next phone that Apple should be concerned about,” the Strategy Analytics report says. “Having launched the game-changing original iPhone in 2007, Apple is no longer the innovator it once was.”

Strategy Analytics research suggests that screen size is one reason for consumers falling out of love with the iPhone – apparently existing smartphone owners want a display size of 4.3” or even 4.5”. The iPhone 5 – famously described by Wired magazine as “completely amazing and utterly boring” – has a bigger screen size than previous iPhones but the increase was only from 3.5” to 4.0”. Most of Apple’s leading competitor’s flagship devices have a considerably larger screen – the Samsung Galaxy SIII at 4.8”, the HTC One X and Motorola RAZR HD at 4.7” and the Nokia Lumia 920 at 4.5”.

Another possible reason for waning brand loyalty is Apple’s decision to change the connector for the iPhone 5, rendering thousands of existing Apple accessories obsolete. Although sales of the iPhone 5 have reportedly been strong so far, that is no surprise given that early adopters would be the most loyal brand devotees. It is the decisions that people make as they upgrade their phones over the next year or two that will really make the difference for Apple.

However, Strategy Analytics director Paul Brown says it is unlikely the new “Lightning” iPhone connector is a major issue.

Meanwhile, for companies that develop apps for Apple’s iOS system but not for Android or make accessories or hardware compatible with Apple hardware but not for other manufacturers it may be time to diversify.

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