Submitted by Jon Reed on
In a note to investors on Monday, Raymond James analyst Tavis McCourt indicated that although Apple's dominance in the mobile phone market increased even further, taking a whopping 87.4% of the total industry profits, the growth of the market itself is markedly slowing down.
According to the report, Apple took 87.4% of the profits while Samsung claimed 32.2%. The fact that so many other vendors in the industry lost money allowed Apple and Samsung to account for over 100% of the industry's earnings in the Q4 2013. Apple and Samsung accounted for 77.8% and 26.1% of the mobile phone industry's profits in Q4 of the previous year. Although these two companies
continue to do well, with respect to the industry as a whole, McCourt wrote, "The great moderation of mobile device growth is upon us." According to McCourt, revenue growth among the publicly traded mobile phone vendors (which accounts for 70% of all revenue in the industry) slowed to 7.3% in Q4 2013, the lowest it has been since the recession. Judging by these companies' Q1 guidance, he added that another dip of about 1.8% can be expected.
Although Chinese based mobile phone vendors continue to grow, McCourt thinks that will slow down as well: "Chinese-based vendors now account for 30% of industry revenue and 40% of industry volumes, and although growth is still elevated at Chinese-based vendors, we suspect these vendors will slow in 2014 as well, as China's end markets for smartphones slow." As for non-Chinese vendors, the future looks somewhat bleak. McCourt believes that "it remains unclear [to Raymond James] where any non-Chinese vendor outside of Apple and Samsung will obtain the profits necessary to re-invest in the business. The mobile device market continues to look like an Apple and Samsung market in the developed world, with Chinese-based vendors continuing to take share in emerging markets."
Though the rate of growth within the mobile phone industry may be slowing down, another recent report shows that digital devices are in as great a demand as ever. According to Nielsen, the average American now owns four digital devices and spends 60 hours a week consuming content over them. Consumption habits are changing as well. People are now "using smartphones and tablets in ways that are natural extensions of the programming they watch" on TV. (i.e. looking up facts and figures while watching TV, looking up actors/actresses on IMDB while watching a movie, etc.). Along with this, people are using social media on their devices more often, with 47% using a social media service on a daily basis.