Is Apple Facing a Mid-Range Smartphone Market Showdown?

Iphone 5Will Apple’s (NASDAQ:AAPL) upcoming product launches boost its overall smartphone market share, or will the iPhone maker lose more ground to new mid-range devices from Chinese smartphone vendors? According to market research firm ABI Research, Apple may soon face more market share competition from various low-cost smartphone makers based in China.

“The second half of 2013 will be defined by fierce competition between price-aggressive OEMs moving toward the middle tiers for increased margins, while at the same time top tier OEMs are diversifying portfolios into the middle in search of continued growth,” states ABI Research senior practice director Jeff Orr.

As Apple prepares to launch its own mid-range price iPhone, low-cost smartphone makers such as Lenovo (LNVGY.PK) and Huawei are increasingly delving into the same mid-range market.

ABI Research notes that feature phone shipments declined by 20 percent year-over-year to 195 million units shipped, while smartphones accounted for over half of the total mobile phone shipments for the second quarter in a row. Smartphones accounted for 52 percent of the total number of mobile phones shipped in the last quarter.

Although the high-end smartphone market is believed to be reaching saturation, the top-two smartphone makers were still able to beat analysts’ expectations in the second quarter of 2013. “Despite concerns of premium tier smartphone saturation, both Samsung (SSNLF.PK) and Apple were able to deliver better-than-expected results in the second quarter,” notes ABI Research senior analyst Michael Morgan.

However, Apple’s share of the smartphone market dropped to 14.6 percent, according to ABI Research. This is slightly better than IDC’s estimate of 13.1 percent. ABI Research also found that the smartphone market grew by 44 percent year-over-year, while IDC found a 52.3 percent year-over-year increase.

While ABI Research cites the success of Samsung’s Galaxy S4 as a possible reason behind Apple’s market share decline, IDC believes the market share decline is primarily due to Apple buyers holding off on their next iPhone purchase, in anticipation of a new iPhone model launch this fall.

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