The Six Five team discusses Samsung knocks Apple off of number 1 market share.
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Transcript:
Daniel Newman: Let’s hold Apple accountable once again. Apple’s back on our radar. Apple lost the number one mark. God, what a no, good, bad, terrible, really sour couple of weeks for Apple. Now they’re not even the number one market share for handsets.
Patrick Moorhead: No, listen, historically we’ve seen Apple and Samsung go back and forth for number one market share. From a market perspective, Apple drives most of their business from premium. Samsung has premium, plus they do a lot of business in the middle of the pack. This is units not revenue. When you look at revenue, Apple would have the clear advantage here. So I guess Samsung has number one unit share. Apple has number one revenue share. It appears, and this is from the IDC data, that China is where Apple lost a considerable amount of market share.
IDC says that smartphone shipments increased about 8% year over year, but Apple shipments dropped 10%. The biggest gainer here were companies like Xiaomi that essentially blew by them. Now interestingly enough, Xiaomi is using semiconductors from folks like Qualcomm, and Qualcomm’s competitors, coming from TSMC as compared to some of these homegrown Huawei handsets, or Huawei sub-branded handsets.
So anyways, Apple’s got to pull it together. I think what we’re going to see at WWDC, potentially, is Apple’s solution to this. Samsung and the Chinese manufacturers got the jump on Apple with AI smartphones, current crop of AI smartphones do most of it from the cloud, not from on the device. But I think what we will see at WWDC is how Apple is using on-device AI to drive these experiences.
It’s interesting, I respect Ben Baharin a lot. He doesn’t believe that there’s going to be a super cycle for AI smartphones, and I find that interesting. I respect him a lot. We can agree to disagree. I believe that Android and iOS will come to the table and put on-device capabilities, that essentially will, all things equal on model size, be a lot faster of AI you can do versus the cloud. It’s going to be a lot more private, because doing that on the device itself, and I think you could even make the case that it’s safer.
Daniel Newman: I’ll lean into the private. I don’t know if the latency… It’s going to have to be pretty noticeable for people to really push hard on.
Patrick Moorhead: Here, Moot Point agrees! There we go.
Daniel Newman: That’s a moot point. So this is the same conversation, Pat, we’re having about the PCs. It’s very exciting. I think we’re going to sell more. I think there’s a pent-up demand between the initial cycle that came with the 2020 and what went on with stay at home and everything. And then the whole, now we’re into AI, but I still think we’re fighting. You and I are on a lot of the same calls. “Tell us what the app is.” And then of course the whole idea of what’s local and what goes to the cloud. What data are you giving to the big cloud providers, to the big search providers? What data do you want to keep on your device, and keep private, and is it ever truly, fully on your device and private to you? Because it’s always at least going back to Apple or Android. It’s there, but who you share your data with.
But I do think privacy on-device, local, that could be a selling point. Apple’s leaned in hard over the years to being the more privacy-centric company. So that’s a potential, too. I’ve tracked what they’re doing with Realm or Realm or whatever, and they’re certainly showing at Apple the ability to drive these models on-device, smaller parameters. I think 250 million-ish parameters up to about a billion rather than these multi, multi-billion, or trillion, parameter models. I think that’s going to be important if you can condense these model sizes down, but still get a very high performance outcome without the latency. So that’s going to be something to keep an eye on as well.
As for Samsung, congratulations. As for Xiaomi, look, you can build phones and cars. So apparently that makes one of these companies is able to pull that off. And Huawei had, I guess their death was premature. They have found a little bit of traction back. It looked like it was maybe over, Rover, but they’re coming back. I think Apple’s problem in China is not just Apple’s problem, it’s a political problem. Apple is US-based, the US and China have tension that probably won’t be resolved. And AI is going to be the battleground in which we’re going to fight for economic strength and dominance. If the US continues to make China’s life miserable as it comes to getting the leading edge innovations from US-based companies, this is one thread that China can pull on to create challenges.
Patrick Moorhead: Hey, I’m wondering with this Xiaomi market share increase, wondering what that means for Qualcomm.
Daniel Newman: The premium-tier handsets, that’s always been a strength for Qualcomm. If they start to get momentum, who’s it going to be going to? Either Qualcomm or it’s going to be MediaTek. And of course Qualcomm is the undisputed leader at the premium level. What do you think?
Patrick Moorhead: No, I think we’re going to see some surprise action on Qualcomm. A hundred percent.
Daniel Newman: You think the numbers are going to be rich?
Patrick Moorhead: And, listen, Qualcomm wins regardless. It either gets the modem in Apple, but with things like Xiaomi, you’re getting modem, and the AP, and the margins I’m sure are just freaking incredible.
Daniel Newman: I’ve said the same thing. One, Qualcomm tends to be grossly undervalued. It’s seen some market momentum. They’re in every handset. There’s content in every handset. And of course strength in China within its own brands, it’s not a bad thing for that company.
Patrick Moorhead: And by the way, I did the double click on every one of, maybe the website that I’m looking on, every one of the phones that Xiaomi had up there was Qualcomm. I don’t know if they’re just hiding the other processor makers or something like that. But I think we’re going to see some really good stuff from Qualcomm. Oh, by the way, Samsung coming in and taking the roost from Apple is going to help as well.
Daniel Newman: Well they charge extra for that. So it’s all ad placement, Pat. That’s why I put my name on the Red Bull car. What can I say?
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
