Apple (NASDAQ: AAPL) delivered explosive results for the first fiscal quarter of 2021, which ended on December 26, 2020, thanks to the great success of its iPhone 12 line enabled for 5G.
The smartphone giant recorded its first quarter with more than $ 100 billion in revenue, as its revenue increased 21% over the previous year to $ 111 billion. Apple’s iPhone revenue increased 17% over the same period last year, to almost $ 66 billion.
The success of the iPhone 12 is not surprising. Apple’s attractive price gave its huge installed user base a solid reason to upgrade. Most importantly, the company can sustain its incredible growth momentum on the iPhone and looks set to dominate the growing 5G smartphone market.
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The iPhone 12 has made waves in the 5G market
The launch of the iPhone 12 models took Apple to the top of the 5G smartphone sales charts just a few weeks after the launch. The devices built on their initial success and helped Apple expand its leadership at the top of the smartphone sales chart in the fourth quarter of 2020.
IDC estimates that Apple sold 90.1 million iPhones globally in the fourth quarter of last year, an increase of 22.2% over the same period last year. This helped Apple control 23.4% of the global smartphone space during the quarter, compared to 19.9% of the market it had in the same period last year.
Second place SamsungThe company’s remittances grew at a much slower rate of 6.2% over the previous year. The South Korean giant ended the quarter with shipments of 73.9 million units, and its market share expanded by just 30 basis points year on year to 19.1%.
Counterpoint Research estimates that 5G devices accounted for 34% of global smartphone shipments of 396 million units in the fourth quarter of 2020. This was a major improvement over 5G smartphone shipments of only 24.1 million units in the first quarter of 2020, when Samsung dominated the market with just over a third of the space under its control.
Therefore, Apple surpassed its biggest rival in a quarter when sales of 5G smartphones soared. What’s more, don’t be surprised to see the iPhone maker widen the gap in 2021.
Why Apple’s 5G domain should continue
Two specific factors are helping Apple to dominate a good slice of the 5G smartphone market. First, the company priced its new devices, with the base model of the iPhone 12 starting at $ 699. The standard iPhone 12 starts at $ 799, followed by the iPhone 12 Pro at $ 999 and the Pro Max at $ 1,099 .
These prices are competitive when compared to Samsung’s latest flagship devices. The Galaxy S21 5G has a starting price of $ 799 in the United States, followed by the S21 + 5G for $ 999 and the S21 Ultra 5G for $ 1,199.
Second, Apple has a huge installed base of iPhone users waiting to upgrade to a 5G device. Daniel Ives of Wedbush Securities estimates that a third of Apple’s 1 billion iPhone installed base is in an update window, and that could take iPhone shipments to 250 million units by 2021. This would be a good jump in compared to the 206 million iPhones that Apple allegedly shipped in 2020, according to IDC estimates.
Third-party research predicts that Apple will be able to command 35% of the 5G smartphone market in 2021 thanks to these advantages. That would be a big deal, because sales of 5G smartphones are expected to take off a lot this year, with Strategy Analytics predicting a 150% growth compared to shipments of 250 million units in 2020.
Samsung, on the other hand, is expected to have difficulties in 2021, despite the increase in 5G. The company expects to ship only 26 million units of its Galaxy S21 devices this year, indicating that Apple may continue to be a leader in the 5G smartphone market.
Altogether, the iPhone maker can sustain the incredible growth it delivered in the last quarter by defeating its closest rival and capturing a larger share of a growing 5G smartphone market, making Apple one of the top 5G stocks investors should consider taking in their portfolios.