The smartphone market in the United States basically comes down to three companies – Apple, Samsung and all the others. And everyone may be about to shrink.
A report recently stated that LG may exit the smartphone business, citing years of losses for this division of the electronics giant. That the report came to light shortly after LG made a noise at this year’s CES showing off a rollable phone suggests how difficult it is for unnamed smartphone makers Apple and Samsung to capture the sustained interest of U.S. 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 best phone out there. Who cares if Phone Maker X is struggling to stand out, as long as I can buy a new iPhone or Galaxy S model every now and then?
But even companies with a history of Apple and Samsung need rivals to move them forward. And you can argue that the two-horse show that is the U.S. smartphone market today is allowing a sense of sameness to creep into the latest devices.
Consider Apple’s decision a few years ago to stop putting a headset on its new iPhones. Samsung resisted this movement with its own flagships – until it didn’t. Now, you won’t find a Galaxy S or Galaxy Note model with a headset. The recent Galaxy S21 all models come without microSD card slots, something that Apple always leaves out of its iPhones. And after mocking Apple’s decision not to include a charger with the iPhone 12, Samsung did exactly the same thing with the Galaxy S21.
To be sure, you won’t confuse the iPhone 12 with the Galaxy S21 anytime soon. But some of the differentiating factors between the two smartphone brands are starting to disappear.
The Apple-Samsung duopoly in numbers
No one would dispute the fact that Apple and Samsung are the leading phone manufacturers in the United States. According to figures from the Counterpoint research, in the third quarter of 2020, Apple enjoyed a 40% market share against Samsung’s 30%. The next big player was LG, with a 13% share, while other phone makers accounted for 11% of the market.
We still don’t have the fourth quarter figures, but you can imagine that Apple’s share would only increase, since the company liked record phone sales 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 chief analyst at Techsponential. “This is not ideal for consumers, but both companies are under considerable competitive pressure in markets outside the United States and it helps to protect consumers from stagnation.”
Device OEMs compete on a global scale and the competition remains healthy.
– Tuong Nguyen, Gartner
In fact, when you take the whole world into account, Huawei is the second largest phone maker, positioned between Samsung and Apple. And other companies combine to hold the largest share of the global market, according to figures from research firm IDC. “The big picture is that device OEMs compete on a global scale, and the competition remains healthy,” said Tuong Nguyen, senior analyst at Gartner.
There is another factor hanging over the phone market in the United States, where many people still buy their devices through the phone operators that provide their wireless service, instead of choosing the best unlocked phones. “American operators also play a strong role as guardians; however much they want alternatives to Apple and Samsung, they are also unwilling to open their shelves to the turmoil of Chinese suppliers,” said Greengart.
Competition between cheap phones
Apple and Samsung can command most of the attention of people looking for flagship phones, but there is a segment of the market where they are overshadowed by other players. Mid-range phones have been excited in recent years, as phone makers try to attract budget-conscious buyers.
“We are seeing more options with lower prices,” said Greengart. The iPhone SE is Apple’s cheapest device at $ 399, but Apple has not lowered prices, Greengart added, while “vendors like TCL, OnePlus and Google are trying to expand the intermediary device market.”
Motorola and Google have been particularly successful in making waves. Motorola’s affordable G-Series phones have attracted a lot of consumer interest, focusing on specific features, such as battery life, in the case of Moto G Power. The flagships of Google’s Pixel failed to attract much public until the company launched the A series phones – first the Pixel 3a, then the Pixel 4a – which provided state-of-the-art 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 insert into a phone while keeping the overall price competitive from what market leaders charge? The entire OnePlus business model seems designed around this whole point, both with its flagships, but especially with the affordable OnePlus Nord phones it started rolling out last year.
Can phone manufacturers still innovate?
This is a sign that there is room for phone makers to establish their own devices, even though the flagships of the iPhone and Galaxy consume a lot of oxygen in the smartphone space. And that could lead Apple and Samsung to continue to find new features and enhancements to their phones, even though the smartphone market is quite mature right now.
None of the companies want to be labeled as showing incremental improvements over previous models, nor be one or two steps behind the competition.
– Ramon Llamas, IDC
“Both [Apple and Samsung] repeatedly highlight how their processors are faster, how bigger and brighter their screens are and how much more developed their cameras are, ”said Ramon Llamas, research director for mobile and AR / VR at IDC. labeled as showing incremental improvements over previous models, not a step or two behind the competition. “
The phone screens are a good example of how market leaders continually try to improve the user experience, especially in the case of Samsung. Last years Galaxy S20 introduced refresh rates of 120 Hz on Samsung’s main line and subsequent releases saw the company add dynamic update that adjusts depending on the task you are performing.
Faster update screens mean smoother scrolling and a better overall experience, which is pushing Apple to respond in kind. In fact, quick update views are supposed to be on the list of features for the iPhone 13 scheduled for launch later this year.
Phone makers have also been trying to make their mark with cameras. Recent Galaxy phones have seen Samsung move up the megapixel rating on its primary sensor – the Galaxy S21 Ultra has a 108MP camera as its primary sniper – while increasing the zoom capabilities of its camera phones. Apple, for its part, put an emphasis on software improvements, introducing and enhancing features such as Smart HDR, which enhances photos taken even in challenging lighting conditions, and Deep Fusion, which highlights the finer details of the photos.
Of course, you can argue that the improvements to the cameras on iPhones and Galaxy devices may not have happened so quickly without Google putting pressure on Apple and Samsung. Although Pixel phones may not enjoy a large share of the market, they have undoubtedly introduced many new features for mobile photography, with the latest pixel ranking among best camera phones. Apple and Samsung would certainly be motivated to update their cameras every year without the Pixel, but the extra competition certainly doesn’t hurt.
The prospects for smartphone competition
That’s why consumers can be forgiven if they’re a little concerned that the dominance of Apple and Samsung could slow the pace of innovation in the smartphone market. Advances are yet to come, 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 are gradually taking place,” said Nguyen of Gartner. “The next big use case / application is what will change that dynamic – just as smartphones have changed the mobile phone market substantially. The million dollar question is what will be the application or application combination.”