[ Charles Arthur ] Android OEMs had a terrible time selling high-end smartphones in the second quarter, but not Apple.
Samsung’s Galaxy S6 did not impress the punters. LG’s G4 sold less well than apparently the company hoped. Sony had a torrid time. HTC then redefined torrid. Premium Android has a real, immediate problem.
Second quarter sales for HTC, Sony, LG, and Samsung were compared. All did not do well, which is true, but what I think is happening is not that premium Android smartphone sales are stalling but that sales by these four brands are. The definition of premium Android is shifting toward high-end specs at dirt cheap prices. Just look at what Xiaomi, Huawei, ZTE, and Lenovo are doing in China. There’s also Oppo and OnePlus. All these brands offer high-end smartphones for a lot less than HTC, Sony, LG, and Samsung. Aside from Lenovo these names are not household brands in the U.S., but it will be sooner than later when we will be given the choice between a $900 iPhone and a $300 Xiaomi, both with almost identical hardware specs.
Aren’t Chinese customers given this choice today? Yes, and the Chinese customers choosing the $900 iPhone are most likely on the rich end of the spectrum. Assuming 10% of Chinese are rich and can afford a $900 iPhone that means the total market for the latest greatest iPhone is around 140 million. Quite a lot! But that also means roughly 9x that number will be choosing ‘premium’ but dirt cheap Android smartphones. When these premium Android smartphones becomes more readily available in the U.S. there’s a good chance Apple will lose market share. Not profit market share mind you, but unit sales market share, because there’s a lot more people just getting by who need a smartphone than there are those who are upper middle class and richer who can afford $900 iPhones every other year.