China Mobile Ltd. (ADR) (NYSE:CHL)’s one of the earliest major Chinese carriers to begin the transition to faster 4G networks, which also bodes well for high-end smartphone manufacturers.
With Apple Inc. (NASDAQ:AAPL)’s margins already under pressure, the expected boost in global high-end smartphone sales in 2013 (and beyond) may have some Apple fans wanting to ditch those oft-rumored plans for a cheap iPhone. But don’t let the IDC data sway you. Apple Inc. (NASDAQ:AAPL) still needs a low-end mobile solution.
Samsung leads the world in mobile-phone sales, having overtaken longtime leader Nokia. Though the companies are headquartered in different parts of the world, they share a common theme: Both offer a slew of mobile-phone alternatives in an effort to serve all markets and price points, rather than catering only to high-end users. Nokia wasted no time sharing that its Asha phone was voted the best low-end feature phone at the recently completed Mobile World Congress. Clearly, Nokia’s embraced emerging opportunities, just as world-leading Google Inc (NASDAQ:GOOG), with its nearly 70% worldwide Android OS market share, has.
You can bet that per-unit profits for Nokia’s Asha, Google’s Nexus, or any number of Samsung’s mobile offerings don’t even remotely compare with Apple Inc. (NASDAQ:AAPL)’s iPhone. But growing revenues, and, just as importantly, market share, are rarely a bad thing, even if they come at the expense of margins. As users continue switching from feature phones to smartphones in the coming years, selling existing customers on an upgrade is easier than encouraging them to jump ship from another provider.
Continued growth in high-end, global smartphone market share should hearten Apple Inc. (NASDAQ:AAPL) shareholders, even as the company’s stock hovers in the $430 range. Apple Inc. (NASDAQ:AAPL) does top-flight smartphones as well as, or better than, nearly anyone on the planet. As the majority of the billions of mobile-phone users make the switch from feature phones to smart devices, Apple Inc. (NASDAQ:AAPL) will benefit.
But less than half of 6 billion — the number of old-school feature-phone users not making the jump to high-end smartphones — is still a huge opportunity for phone manufacturers willing and able to serve them. And that’s something Samsung, Nokia, and OS leader Google fully appreciate. The IDC smartphone market share data is good news for Apple Inc. (NASDAQ:AAPL), but it doesn’t change the company’s need to expand its product line.
The article Does This Mean Apple Doesn’t Need a Low-End Phone? originally appeared on Fool.com and is written by Tim Brugger.
Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple and Google and owns shares of Apple, China Mobile, and Google.
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