Why Apple and Samsung Face Market Share Losses

We have already noted that China’s Xiaomi has overtaken Samsung as the leading smartphone vendor in China. Fitch noted the same data and added:

The [global] decline will be due largely to rising competition in emerging markets, where lower-priced handset models from local competitors should continue to gain market share at the expense of the big two. In these markets, where cost is relatively more important than global brand strength or cutting-edge technology, competitors’ devices retailing at USD100-300 can offer most of the key features of more expensive phones from Samsung and Apple.

Fitch estimates that global smartphone sales for Apple and Samsung will be relatively stagnant in 2014 at around 450 to 460 million units, down from a total of 467 million units sold in 2013. The ratings firm believes that total 2014 smartphone sales will rise 20% year-over-year to 1.2 billion units.

As Fitch also noted:

[D]eveloped markets’ smartphone profitability should also continue to decline, as market saturation and the lower incremental benefits of new models has lengthened the replacement cycle and slowed growth. Competition has also intensified as more manufacturers have been able to produce devices which exceed most consumers’ design and technical requirements.

The ratings agency does not expect the sales slip to affect Samsung’s credit rating of A+ with a stable outlook.

ALSO READ: New Tablet Competition for Samsung and Apple — Xiaomi