Q2 2021: Apple Updates

Apple Marches Forward With Record FY Q3 2021 iPhone Sales

July 27, 2021

Apple continues to break records for iPhone sales, with FY Q3 2021 expected to be another banner quarter. According to Counterpoint Research’s Monthly Market Pulse Model Sales, July 2021 Edition, iPhone sales for Apple’s FY third quarter will come in at 49.6m units. Q3 sales saw continued strong demand for the iPhone 12 series, and to a lesser extent the iPhone 11, which continued to surprise with its longevity.

Source: Counterpoint Monthly Market Pulse, July 2021

According to Counterpoint’s North America Research Director Jeff Fieldhack, “iPhone sales did really well during the quarter for a number of reasons. First, the iPhone 12 saw a late launch so we’re actually a month behind in the cycle. Second, we’re seeing really strong performance in the US, which is coming from a combination of aggressive subsidies from carriers trying to secure new postpaid 5G subs with the 12, and prepaid players offering up attractive iPhone 11 promotions. Third, China again delivered, with its share of sales continuing to increase month over month.”

Apple has supported its sales efforts with strong supply chain management, avoiding issues from component shortages. Dale Gai, Research Director of Counterpoint’s Semiconductor and Components team, commented, “Apple is well protected from the component crunch as it has very strong relationships with its suppliers. Everyone wants a piece of the Apple pie, but to get a seat at the table you have to be able to deliver, hence, iPhone supply will always take priority.”

With demand and supply aligned once again, Jeff Fieldhack is calling for another Apple beat this quarter. “In terms of iPhone shipments, we’re actually ahead compared to some of the more bullish Wall Street analysts. FY Q1 – Q3 2021, we’re at 187m units, which means that a good Q4 will result in full year iPhone shipments in the range of 131m to 136m units.” Tempering his bullish comments Mr. Fieldhack concedes, “There are clearly risks we have not seen in the past. The Delta variant is obviously something we’re keeping an eye on, and we’ll continue to assess data coming from the supply chain. But for now, Apple is managing all fronts well and if there are any surprises this year, my bet is it will be to the upside.”

Apple Takes the Cake with Latest Results

April 28, 2021

Apple had a record-setting quarter with the highest revenues and earnings ever during the Jan-Mar period. All product segments saw record revenue highs. The Mac had an all-time record revenue quarter. All product segments hit record installed bases.

Keys takeaways from the quarter:

iPhone revenues were up a whopping 66%. Our Global Model Sales Tracker shows record high market share in the US and China. The iPhone 12 family is a tremendous success and it maintained momentum through the quarter. Only in March did supply meet demand.
Our numbers show record high iPhone ASPs. This is on the strength of the iPhone 12 family and in particular the iPhone Pro Max—a top seller in the US market. Globally, the higher priced Pro Max and Pro models accounted for over half of all iPhone 12 series devices sold.

Source: Counterpoint Research Q1 2021 Global Mobile Sales Tracker

*Preliminary numbers for Q1.

All segment growth. iPad and Mac revenues increased 79% and 70% year-over-year. Of course, the pandemic caused work-from-home and school-from-home tailwinds. The school-from-home requirements will eventually return to in-school learning. However, the education installed base has dramatically increased. On the work-from-home side, there will be a high percentage of companies offering a continuation or part-time work-from-home scenario. This will not give iPad and Mac the bump it saw during the pandemic, but it will be higher than pre-COVID. In addition, the in-house M1 engine is impressive and helping with both upgrades and pulling in new consumers. Two-thirds of iPads purchasers were new to iPad.

Source: Apple, quarter ending March.

Wearables saw double digit growth. Apple Watch Series 6 and Apple Watch SE had large quarters. 75% of sales were first-time buyers and new health apps and health services helped with stickiness of the hardware.
Services grew 27% year-over-year. Apple added 40mn paying subscribers sequentially and 140mn annually. There are now 660mn paying subscribers. Counterpoint Research believes Apple TV+ saw high growth.

Source: Apple, quarter ending March.

As many OEMs struggle with margins, Apple saw a blended gross margin of 42.5%. 36% for hardware products and over 70% for services.
Regional growth across the board. Rarely do all regions see growth in an individual quarter. All regions saw tremendous growth with Americas being the smallest growth at an admirable 35%.

Recently announced AirTags will give some incremental revenues in coming quarters—especially Q4 2021.
Apple is also being hit by chip shortages. It warned that chip shortages will reduce the June quarter’s revenues by $3 billion to $4 billion, mainly within the Mac and iPad lineup. Because of the uncertainty of the chip shortage, Apple did not give revenue guidance for the June quarter.
In 2019, there was a lot of angst about the China market. The latest March quarter allays those concerns with China revenues growing 88% on strong iPhone, iPad and Mac sales.
Apple has some nice corporate boasts. This is timely as there is political pressure on many technology names (Google, Amazon, Facebook etc):
- The new OS update will give users options to opt out of app tracking.
- Over $200 million in new, green investments are being made.
- The company is investing $430 billion and creating 20,000 new jobs in the US.
- Although there has been some controversy on the Google-Apple COVID contact tracing tech, it has been rolled out in some states. There are also useful vaccine and test tracking apps.
- More on these brags here.

The outlook for 2021 remains strong for iPhones as more countries and regions roll out 5G. iPad, Mac, TWS, and wearables all have good outlooks. With the growing installed base of Apple products, services will also see solid growth in 2021.

Apple’s October – November iPhone Sales Signal Record Quarter and 2021

December 23, 2020

Apple is likely to break previous iPhone sales records during its FY first quarter, according to Counterpoint Research’s Global Monthly Sell-Through Tracker, setting up the company for what could be the biggest year ever for the iPhone.

Although Oct-Nov 2020 global sell-through was down YoY, it declined by only low single digits. That is positive considering the four to six-week launch delay of the iPhone 12 versus the iPhone 11. There is now the possibility of a December sales surge, driven by the new iPhone 12, which would bring the quarter’s sell-through number into record territory.

Source: Counterpoint Research, Weekly Sales Tracker, USA

The popularity of the new model is evident when comparing iPhone 12 and iPhone 11 post-launch sales in the US market on a YoY, week-for-week basis.

Jeff Fieldhack, Counterpoint Research’s Director of US Mobile Devices and Carrier Strategies, commented, “The iPhone 12 consistently outperformed its predecessor during the first six weeks from launch – with the exception of week two, when strong early demand and ample supply delivered an exceptional sales week for the iPhone 11.”

He also noted, “Double and triple-digit weekly sales increases for the iPhone 12 over the iPhone 11 – despite 12 Pro and 12 Pro Max shortages – is sending a strong signal, and we believe the iPhone 12 will bolster global quarterly shipment growth for all iPhones to 21% YoY.”

US out-performance bodes well globally, and Counterpoint Research expects record iPhone shipments for the quarter to be driven not only by North America, but also China, Japan, India and Europe.

“What we’re seeing is a combination of things driving iPhone growth globally,” stated Peter Richardson, Global Head of Research. “These include pent up demand for a new 5G iPhone with both operators and consumers hungry for the new iPhone products, attractive prices on the iPhone 12 aided by bountiful promotional offers. iPhone SE sales also helped momentum together with iPhone 11 longevity, and solid Singles Day, Black Friday and Cyber Monday performance.”

Acknowledging that Apple faces issues, especially around supply, Mr. Richardson stated the company “is well positioned to mitigate the risks. The iPhone Pro and Pro Max are on backorder in the US, but lead times have dropped significantly over the past three weeks. Power management ICs remain constrained, but Apple is likely a favored customer going to the head of the line. The India Wistron controversy is not material and Apple is managing the situation. And in terms of their output capability globally, it is better than last year on increased hiring, overtime incentives and factories running more hours.”

Apple’s October – November iPhone Sales Signal Record Quarter and 2021

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

December 23, 2020

Source: Counterpoint Research, Weekly Sales Tracker, USA

The popularity of the new model is evident when comparing iPhone 12 and iPhone 11 post-launch sales in the US market on a YoY, week-for-week basis.

US out-performance bodes well globally, and Counterpoint Research expects record iPhone shipments for the quarter to be driven not only by North America, but also China, Japan, India and Europe.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Jeff Fieldhack

Charles Moon

Counterpoint Research

Apple: Thinking Inside the Box

Apple removes chargers and earphones from the boxes

In a unique and courageous move, Apple has disrupted the legacy packaging of smartphones by removing chargers and earphones from the boxes for its new iPhone 12 series along with the iPhone XR, iPhone 11 and iPhone SE. Most of the other OEMs provide fast chargers as a standard offering inside the box.

Apple’s Reason for Removing In-Box Accessories

Apple says the above-mentioned decision has been taken to meet its environmental goals. The company wants to become carbon-neutral by 2030. Removing chargers and earphones would mean smaller and lighter packaging, allowing “70% more boxes to be shipped on a pallet. Taken altogether, these changes will cut over 2 million metric tons of carbon emissions annually, equivalent to removing nearly 450,000 cars from the road per year”, according to Apple. This is great from logistics and environmental standpoint and probably makes sense for Apple users who are going to upgrade and already have older iPhone accessories that work well with the current models. However, there are a few other aspects to be considered here.

Cutting Corners to Maintain Reasonable Pricing

Apple has added 5G, mmWave and OLED screens across the iPhone 12 line-up. There are improved cameras as well. This is an added cost, which normally translates into an increase in price to maintain margins. However, any big increase in the latest iPhones’ prices would have negatively impacted the demand, especially in these COVID-19 times. By removing chargers and earphones, Apple was able to price the devices reasonably, increasing the price by just $100 for the iPhone 12 as compared to the iPhone 11 last year. It also launched the iPhone 12 mini at the iPhone 11 launch price. Stacking of 70% more boxes in a single pallet would likely also lead to a reduction in logistical costs, thus helping margins. Reasonable pricing and a significant pent-up demand for 5G will help Apple’s October-December 2020 line-up sales exceed the iPhone 11 family’s September-December 2019 sales by 1% (Source: Counterpoint Market Outlook). Reducing the iPhone 11 price has also strategically placed Apple at another price point while maintaining some margins after the removal of accessories.

A Cost Burden on Users in the Emerging Markets

The removal of accessories makes more sense in regions like the US,UK where the installed base of Apple is high (Source: Counterpoint Installed Base Tracker) and over time these accessories have become redundant. However, this might not be the case in emerging economies like India and LATAM. Apple devices are already priced higher in a lot of countries outside the US due to complicated distribution and higher taxes. Removal of accessories will be an added cost for users, especially if they are switching from Android.

Another factor to consider here is the mode of the upgrade. The advanced economies are operator-driven with a mature refurb ecosystem in place. Users generally upgrade their devices by trading in their older ones. These trade-ins generally do not provide extra value for chargers or earphones, and a user ends up keeping them. However, in the emerging economies, according to Counterpoint Research Refurbished Handset Tracker, the “sold as is” is much higher than the trade-ins. Users generally sell their devices consumer-to-consumer. In the “sold as is” scenario, the buyers in some cases expect the accessories along with the device, especially if the buyer is coming from Android. In this case, one of the parties will have to bear the cost of accessories.

Encouraging More Users to Go Wireless?

If we delve into each of the accessories separately, in terms of earbuds, Airpods have been leading the TWS category, according to Counterpoint Global Hearables Tracker. Apple pioneered the segment and now it is gaining popularity, which, unlike the smartphone market, is likely to grow in 2020. The removal of the headphone jack by Apple was probably more of a decision to increase the development of the TWS and earbud ecosystem, which is led by Apple.

Source: Apple

Removing Charger – A Step Closer to Increasing Adoption of Wireless Charging?

A charger is a more critical need for a smartphone user. Removal of the charger means these premium devices are now not capable of functioning out of the box. Apple is providing a USB C t0 lightning cable with the 12-series. Only the iPhone 11 Pro and Pro Max are the ones that have shipped with the supporting charger. For all other devices, the user’s charging brick will not support the cable. Removal of the charger could also be potentially a move of Apple to develop a wireless charging ecosystem of its own.

Source: Apple

How Soon Will Android OEMs Start Following Apple?

Now, another important question here, which is probably the most important one, is whether the other OEMs will follow Apple in removing the charger. We have seen this before when Apple removed the headphone jack and others followed. However, removing earphones and especially charger is a much trickier decision. While removal of the headphone jack was a modification of an existing product feature, with the functionality and earphones being retained, this is not the case with the removal of chargers and earphones. This is straight out taking away the accessories from consumers, which had become an industry standard.

Key growth markets such as India and the MEA are Android-dominated. There is also a large base of feature phone users who will eventually upgrade to smartphones. Removing the chargers across the portfolio will be an extra added cost which will impact the entry- and mid-level segments in particular. These markets are also very price sensitive. If OEMs decide to remove accessories, it will only make sense if they reduce the device cost, especially in the lower price bands. Price sensitive users would also probably start buying cheaper third-party chargers if the chargers are removed.

Then there is product differentiation. While the specs have become standardized across the industry, we have seen Android OEMs launching large marketing campaigns to promote various competing fast-charging standards to differentiate their products. Different models from different OEMs are packed with chargers having different charging speeds. Therefore, it will be harder for the Android ecosystem to remove the chargers. A charger from one OEM might not be optimized to perform well on a device from other OEM. On the other hand, everything is optimized in the Apple ecosystem.

Overall, it will be a more challenging task for Android OEMs to remove these accessories from the box even if there are cost reductions to be gained.

iOS 14 to macOS Big Sur and Apple Silicon, Top Announcements from WWDC 2020

Last week, Apple held its annual developer conference, WWDC, which was different than the past few years. Instead of having developers and journalists from across the globe in the auditorium, Apple went ahead with a virtual keynote, as this is becoming a new normal in this COVID-19 pandemic situation.

The WWDC 2020 conference saw Apple executives announce software updates and new features coming to iPhones, Macs, iPads, and Apple Watch devices. Apple also announced software updates for Apple TV, AirPods Pro, and HomeKit.

And, as expected, the much-rumored, but potentially game-changing ARM-based Apple Silicon was also announced. Future Macs will cut their reliance on Intel, and run on Apple-made custom chips instead.

Here’s a quick summary of announcements made at WWDC 2020, and what it means if you are an Apple user.

iOS 14 Brings Improved Siri, Widget Customization and More

App Library and Widgets

As iOS does not come with an app drawer, all the installed apps go on the home screen and other pages. And as the number of apps that we use increases, organizing them was becoming a nightmare for some. Apple has taken that into account when working on iOS 14.

Apps are now automatically organized in the App Library, which is a new space at the end of your home screen. It offers a simple and easy-to-navigate view. The folders are now categorized based on Entertainment, Social, Game, Productivity, and other apps. This also allows you to hide other pages that you do not want. On the top, you also get newly added apps, suggestions and search bar too.

Widgets have been a part of iOS for a while now, and they offer information at a glance, without having to open the app. Apple has added the ability to have widgets in different sizes, and now you can add them to the home screen and other pages too. There is another interesting addition called Smart Stack, which will display a widget based on the time of the day – like top news in the morning, upcoming meetings in the afternoon, and activity information in the evening.

Picture-in-Picture For Uninterrupted Viewing

Similar to the iPad experience, the picture-in-picture feature is now making its way to the iPhone with iOS 14. When you are watching a video, and swipe up for the home screen, the video screen will minimize and you can continue watching even when you move around the apps. It will be in the form of a small overlay on top of apps.

Siri Gets a New Visual Interface and Improvements

Currently, when using Siri, the iPhone switches to a full screen. With iOS 14, Apple is introducing a new compact design where the Siri icon appears at the bottom while it carries out the task. So, say you are in the Notes app or browsing through your Instagram feed, and you want to know about the weather. Just say, “Hey Siri, how’s the weather?” and the result will pop-up on the top of the screen as a notification, rather than taking up the whole screen. You can now even ask Siri to send audio messages.

Apple is also introducing a new translate app, which allows for on-device translation in 11 different languages. These include Mandarin Chinese, German, Arabic, Russian, and more. Turning the phone to landscape view brings up conversation mode with a side-by-side view for two people to follow the conversation. The best part here is that the app will intelligently detect the language you are speaking and translate in the other language.

Credit – Apple

iMessage Gets New Features

iMessage has been a big part of iOS, and the new update now lets you pin messages on top of the list. This way all your important conversations are always on top. What’s more, you also get a nice animation when you get messages from these pinned users.

Credit – Apple

For group conversations, there is a new in-line replies feature. It allows you to reply to a specific conversation. Apple has also added a mentions feature, so you can direct the message to a specific user. And as group messages can get chaotic, you can mute it, and only get a notification when someone mentions you.

Maps and CarPlay

Apple has been working on improving its Maps app and brought new features over the years. Now, the improved maps will also be rolling out in UK, Ireland, and Canada. Maps will also offer guides with suggestions for great places to eat, city-explore, and even shop.

Credit – Apple

You can also get cycling directions across the city. It will alert about elevation, quiet or busy roads. This feature will be available in New York, Los Angeles, San Francisco, Shanghai, and Beijing. There is also EV routing feature, which will help electric car users to easily route to charging points of compatible vehicles from BMW and Ford.

Credit – Apple

CarPlay now gets new wallpaper options and new categories which include parking, charging, and food ordering. The surprise announcement was the digital version of car keys – allowing you to leave your keys at home, unlock and start your car with your iPhone. It relies on NFC to unlock your car. There is also a security element attached to it, enabling you to disable the digital-key unlock feature via iCloud. The feature will work on BMW’s 5-series from 2021, with support for more car models to come later.

App Clips – Instant Apps for Quick Use

App Clips on iOS 14 is similar to Instant Apps on Android. The feature will let you use an app without downloading it. It will also take away the hassle of signing up to create an account. App Clips will load a lightweight version, allow you to use Sign In with Apple or Apple Pay to carry out the transaction.

Credit – Apple

Improved Security and Privacy

Apple announced three new security features coming to iPhones with the iOS 14 update. Unlike Google, Apple’s business model is to sell hardware and services, so it does not have to rely on advertisers. And privacy has been one of the unique selling points for Apple iPhones. With the new iOS 14, Apple will now let you know when an app is using the microphone or camera. A small orange dot will appear above the network bar as an indicator. In such challenging times when everyone is using more of voice and video calls, this is an important feature to have.

Credit – Apple

While not many users are aware of this, apps can track your activity in the background. With the new OS, you will get control over the data that is bring shared. Whenever apps try to track you across services, you will now be able to choose between “Allow Tracking” or “Ask Not to Track.” This can definitely help in limiting the Ad Tracking so as to reduce getting targeted ads. What’s more, app developers will also need to declare the data they collect. This will help you have more clarity over information that apps collect.

Credit – Apple

List of iOS 14 Compatible Devices

iOS 14 is compatible with a total of 16 devices. These include the iPhone 6s and 6s Plus, iPhone 7 and 7 Plus, iPhone 8, and 8 Plus. It is also compatible with the first-gen and second-gen iPhone SE, iPhone X, XR, iPhone Xs, and Xs Max, and the iPhone 11-series. iPod touch (seventh-generation) will also get the iOS 14 update. It is good to see that the iPhone 6s-series and iPhone SE first-gen models are also a part of the list, and most of these features will make it to them.

The Developer Beta version is already out, while the iOS 14 Public Beta is expected sometime in July. The official version will be rolled out later this year in the fall, right after the new iPhones are launched.

iPadOS 14 New Refinements

There is no denying that the iPad is getting as powerful as many computers, and can do most tasks that you can on a laptop. The latest iPad Pro also comes with an add-on full-size keyboard with a trackpad. With the new iPad OS 14, Apple is bringing redesigned widgets to the iPad, like what we have seen for iPhone with iOS 14.

Compact Call Screen

Today, when you get calls on an iPad, it takes up the entire screen, and that changes with the new OS. Now, the call window is compact on the top, displaying the name, number, and call answer and reject button. As it doesn’t take up the whole screen, you can continue using the app after you accept the call.

Handwriting Recognition

Apple has introduced a new feature called Scribble. When using the Apple Pencil, you can start writing in a free form anywhere in the Notes app, copy and paste in the other app. It will automatically convert handwriting to text. You can also write in your handwriting using the Apple Pencil on the Search Bar or in the To-Do List, and it will automatically convert that into text. There is also a Smart Select feature where you can select the handwritten text and make it bold, change color, and so on. Besides handwriting, it can also detect shapes as you draw and snap them into an ideal form.

iPadOS 14 Compatible Devices

The iPadOS 14 is compatible with iPad Mini fourth-generation and upwards, iPad Air second and third generation, iPad fifth generation and upwards, and iPad Pro models. Similar to iOS 14, the iPadOS 14 developer preview is rolling out, Public Beta coming soon, and final version on the fall. Users who have iPad Pro models along with Apple Pencil are the ones who will benefit most from the new features.

AirPods Pro Get Spatial Audio

The AirPods Pro already offer a great audio experience with a noise-cancellation feature. With the latest update announced at WWDC 2020, Apple is bringing spatial audio via a software update. Apple says it will help deliver theatre-like audio listening experience. That’s not all, a new automatic device switching feature will let you switch between iPhone to iPad and MacBook with ease. Say you are listening to podcasts while the AirPods are connected to the MacBook, and you get a call on your iPhone, the AirPods will automatically switch to the phone, and once the call is complete, it will then switch back to the Mac.

Apple Watch gets Sleep Tracking and More

The WatchOS 7 brings a bunch of new features, such as the ability to share Watch Faces, Cycling Directions with the Maps App, and more. And along with tracking workouts such as cycling, running, jogging, and more, it can also track your dance workout. But two of the most exciting features for me would be the Sleep Tracking and Hand Washing modes.

Yes, Sleep Tracking is finally here. The Apple Watch will now be able to use the accelerometer to notice the movements and differentiate between walking and sleeping. When you go to sleep, the Do Not Disturb mode will be activated and dim the Watch display. In the morning, you will get sleep analysis and average bedtime for the past few days.

Credit – Apple

With the COVID-19 pandemic, washing hands frequently with soap has become more important than ever. Using the microphone (to determine water sound) and motion sensors, the Apple Watch can detect handwashing and start a 20-second timer, helping you wash your hands properly.

Siri on Apple Watch can translate 10 languages and has on-device dictation too. The new features will make way to Apple Watch Series 3, 4, and 5. Though, not all features will make it to older devices. The developer beta is already out, with Public Beta coming out next month, and the final version in the fall.

macOS Update Brings Improved Safari Features and More

The macOS is also getting a big update, and the new version is called Big Sur. The new update brings a refreshed dock with a sleek design and new icons. Apple has also brought the control center to the Mac, giving you quick access to Wi-Fi and Bluetooth controls among others. There are other design retouches and performance improvements too.

Credit – Apple

But the one update I am looking forward to is the new Safari browser. You now get a customizable start page, giving the ability to add background images, iCloud tabs, and reading lists. Along with improved tab design, Apple has also added support for extensions from your favorite developers. For instance, you can get Grammarly, Duck Duck Go search engine, Pockets, and a lot more.

The Safari browser can also intelligently track websites you browse and offer a weekly Privacy Report. In case of a data breach or so, the browser will also let you know if your passwords have been compromised. Improvements also bring 50% faster loading time, and up to 3 hours more battery life.

Compatible devices include MacBook Air and Mac Pro models from 2013 and later. MacBooks from 2015 and later, iMac Pro from 2017 and later, iMac and Mac Mini from 2014 and later will also be compatible with macOS Big Sur.

‘Find My’ Network to Help Track Lost Items

We have been hearing rumors about Apple working on a Bluetooth-enabled item tracker like Tile, but there has been no product in sight yet. However, Apple did announce something that could be setting the state for a product launch later this year. The “Find My” app has been baked into iPhones since 2017, allowing users to locate lost devices on a map. It uses signals like Bluetooth, GPS-powered location services, and internet connectivity to locate devices.

Apple is now extending the Find My network capabilities for compatible devices. Even devices without internet connectivity, such as popular Bluetooth tracker Tile, will be able to sync to the network and become locatable. You can attach these trackers to your keys, wallets or bags, making them trackable. Developer preview of the same is out now, and official announcement could be expected in September along with the iPhone 12 series.

The Rumored Apple Silicon Goes Official

For more than a year, the rumor mill has been abuzz about Apple ditching Intel to bring its own custom chipsets. And it is finally happening. At WWDC 2020 the new Apple Silicon, based on an ARM architecture, was announced. While Apple did not reveal many details about the chipset, it did demo a Mac running on Apple Silicon called A12Z Bionic.

Apple is promising better performance and lower power consumption with the new ARM-based chipsets. It will allow Apple to have a common architecture across iPhone, iPad, and Mac, which will also help developers in writing a single code, to make their apps available across devices. For instance, an app designed for the iPhone, will also be scalable to be used on iPad and Mac.

The Apple Silicon will also bring HDR display support, high-performance video editing and GPU performance, high-quality camera processor, machine learning, neural engine, among others. The new chips also mean Apple will have tighter software and hardware integration; something that has been at the heart of the iPhone’s impressive performance.

Apple mentioned that the first Mac devices powered by the new chipsets will arrive at the end of 2020, and the transition from Intel to the new silicon will take two to three years. In the meantime, new Macs with Intel chipsets will arrive later this year.

WWDC 2020: Apple Ecosystem Stats in Numbers

Siri now has 25 billion monthly requests
iMessage sees 40% growth over last year, 2x growth in group messages
Apple CarPlay now available on 97% of new cars sold in the US
Outside US, CarPlay is available on 80% of new cars that are being sold
Sign in with Apple now has 200 million accounts since launch
In 10 years, Apple has shipped 2 billion SoCs

Key Takeaways from WWDC 2020

As I mentioned above, this year’s developer conference was different than the usual. The new features introduced look functional and meaningful. Even the demos were shot well to give an idea of how the features will benefit the users. Here are some of my concluding thoughts:

The ability to use your iPhone as a digital key to unlock your car and even start it shows how deep Apple is invested in the connected future. It is something that will help Apple differentiate from the competition.
Pinned conversations and new features in group chats shows how serious Apple is in giving competitor platforms like WhatsApp, WeChat and Telegram a tough fight. The ability to receive and respond to iMessages from across Apple devices makes it stickier still.
A lot of iPad Pro users use Apple Pencil to jot down Notes and draw rough sketches. The handwriting recognition and other features will make using the iPad Pro more productive for creators.
New features like Sleep Tracking and Dance Activity trackers will make the Apple Watch an even better fitness-focused device. Features like ECG and Heart Rate Sensor already make it a great activity tracker.
Apple also demoed face recognition and activity zones for HomeKit accessories, which will let users make the most of these connected devices.
For me, the Apple Silicon announcement was the star of the keynote. It shows how Apple is putting a lot of its focus and efforts towards supporting the ARM transition. It ends Apple’s longstanding partnership with Intel, but Apple Silicon will help Apple design a powerful and energy-efficient device ecosystem, offering a smooth app continuity experience from iPhone to iPad to Mac.

Samsung Recaptures Top Spot in India Premium Smartphone Segment During Q1 2020

India’s smartphone shipments in the premium segment (>₹30,000 or roughly >US$400) grew 21% YoY with the market-driven by new launches and aggressive offers. Although Q1 witnessed the launch of 5G phones and the entry of new players in the premium smartphone segment, growth was less than expected due to lockdowns, resulting in zero shipments in the last week of March.

Samsung’s premium shipment volume market share of 34% helped it recapture the top spot in the segment, just nudging out Apple. New launches in affordable premium like the Galaxy S10 Lite, Galaxy Note 10 Lite, and the ultra-premium Galaxy S20 series were the main drivers for its growth over the quarter. The company marked its lead in premium by becoming the first vendor in India to launch a 108MP camera with hybrid zoom capability. Price discounts, a favorable exchange rate, and S20 cashback offers all contributed to Samsung’s growth in the segment. As well, its revamped affordable premium offering (₹30,000 – ₹45000 or roughly US$400-$600) with lite variants of flagships Galaxy 10 and Note 10 series were well received. Despite Q1 success, Samsung is unlikely to carry forward this momentum due to shutdown of all retail activities through the first half of Q2.

Though Apple fell to second in premium shipment share during the quarter, the iPhone 11 remained the best-selling model in the segment, contributing almost 17% to total shipments. Apple kept the top spot in ultra-premium (>₹45000 or roughly >$600) with a 55% share, registering 326% YoY growth. Overall, the company had a strong Q1, growing 78% YoY. One of the reasons for growth same from a surge in online sales of iPhones on platforms like Flipkart and Amazon. Share of online sales reached 40%, the highest level during a non-holiday season. This bodes well looking beyond lockdown, as Apple’s online platform was granted approval a few months ago.

The iPhone XR model was replaced by the iPhone 11 as premium’s best-seller due to no-cost EMI and banking offers bundled with the device; these were Apple-specific promotions given during Flipkart Apple Days and Amazon Apple Day sale.

Other things which Apple did well to leave prices of the 11, 7 and XR unchanged even after hikes in basic customs duty while increasing prices on the rest of its portfolio. Apple’s aspirational status coupled with a strong 2020 product portfolio, including the highly anticipated SE, should see the company continue to hover at the top of the premium segment.

OnePlus fell to third in the premium segment with share declining to 8% in ultra-premium, partly due to seasonal factors with some consumers holding off on purchases while waiting for the upcoming 8-series launch. The 7T continued to be the top-selling model in affordable premium, and we expect the 7 series to become even more important for the vendor in targeting affordable premium buyers after introduction of the 8-series.

With the 8 series launching in Q2, a quarter already heavily impacted by lockdowns, OnePlus will need to aggressively scale up 2H efforts, where demand is likely to be shifted. Given the company’s positive brand image – supported by the introduction of services like community programs, experience stores, and doorstep service for repairs – and its strong online presence, OnePlus can look at different ways to push sales, especially those related to upgrades from its loyal userbase.

India’s premium smartphone segment, which was the fastest in terms of growth last year, is the only segment expected to grow in 2020 as lockdowns and GST hikes have hit the broader market hard; with lower price sensitivities, the premium segment will be least impacted.

Competition is intensifying as more OEMs enter the fray. After realme and Vivo, Xiaomi is now set to launch a premium device. Key segment features will include 5G, higher screen refresh rates (180 Hz), faster charging (>55W), super-high resolution cameras and hybrid zoom capabilities to name a few.

Apple Regains Popularity in China With iPhone 11 Series

According to Counterpoint’s latest Market Monitor data, Apple’s market share in China in Q4 2019 rose to 14%, the highest level since 2018. Apple’s new iPhone 11 series have helped Apple regain its popularity among Chinese customers.

During the same time period, iPhone 11 / iPhone 11 Pro/ iPhone 11 Pro Max have outperformed the iPhone XR/XS/XS Max by 36%. iPhone 11 was the top performer, followed by iPhone 11 Pro Max and iPhone 11 Pro. iPhone 11 comes with many attractive features: A13 processor, dual-lens camera, 3D camera, wireless charging and six color options.

However, the most enticing feature of the iPhone 11 is its attractive price point. The launch price of RMB 5,499 for an iPhone 11 is RMB 1,000 cheaper than iPhone XR. With subsidies from platforms, pricing for iPhone 11 dropped to as low as RMB 4,999. Many iPhone 7 and 8 users who hesitated to upgrade to new iPhones due to their high price points immediately become target users for iPhone 11. Shortly after its release, iPhone 11 replaced iPhone XR as the best-selling iPhone in Q4 2019. iPhone XR was also a popular model given its cheaper price point and held the top selling spot for four consecutive quarters before the release of iPhone 11.

The new iPhone 11 series is more popular than when iPhone XR, XS series were released. Based on Counterpoint data, iPhone 11, iPhone 11 Pro and iPhone Pro Max accounted for 79% of iPhone sales in Q4 2019, while iPhone XR, XS and XS Max accounted for around 61% of iPhone sales in Q4 2018.

However, we expect that Apple’s market share in China will start to decline in Q1 2020 as Apple passes its best-selling season. In addition, Apple will face competition from major OEMs ramping up their 5G smartphones. Huawei’s 5G capable flagship models, Mate 30 5G and Mate 30 Pro 5G, have already started to gain traction and is seen as Apple’s biggest competitor. Huawei is expected to add the P40 series from April, which will add further pressure on Apple sales.

Global Smartphone Market – Apple Gained the Top Spot in Q4 2019 While Huawei Surpassed Apple to Become the Second-Largest Brand in CY 2019

Global smartphone market returns to quarterly growth (3% YoY) in Q4 2019, but declined (1% YoY) in 2019 overall
Apple iPhone shipments grew in 11% YoY during Q4 2019, even without a 5G variant
realme was the fastest-growing brand in CY 2019 (453% YoY)

New Delhi, Mumbai, Hong Kong, Seoul, San Diego, London, Buenos Aires – Jan 30^th, 2020

The global smartphone market declined 1% YoY in CY 2019, according to the latest research from Counterpoint’s Market Monitor service. This is the first time that the smartphone market has declined for two consecutive years. However, the decline was slower than in 2018 (4% YoY). The smartphone market actually grew 3% YoY in Q4 2019, indicating signs of a recovery and is expected in 2020.

2019 brought both innovations, 5G, folding displays, but also an uncertain trade and political climate. Commenting on the global market dynamics, Varun Mishra, Research Analyst at Counterpoint Research noted, “There have been growing tensions among several countries that have impacted the smartphone market. For example, the US pressure on Huawei, and tensions between Japan-Korea that led to uncertainties in the memory market. Supply chains have been upset, causing various companies to rethink their strategies and reduce dependence on single markets. 2020 will likely see efforts to further diversify investments across geographies to mitigate risks. The current coronavirus outbreak in China is the latest issue to threaten supply chains.”

Despite the sanctions, Huawei surpassed Apple to become the second-largest brand in 2019. This was the result of an aggressive push from Huawei in the Chinese market, where it achieved almost 40% market share. China accounted for over 60% of Huawei’s total shipments. Outside China, Huawei is trying to continue selling its older devices. But with rising competition, its value proposition is being gradually undermined. And while Huawei is working on its own operating system, it will almost impossible for it to compete with Android anywhere outside China.

Within the quarter however, after two-year, Apple gained the top spot in the Global Smartphone Market. This was driven by the iPhone 11 series beating expectations. iPhone revenues were up year-on-year for the first time since September 2018.

Exhibit: Smartphone Shipment Market Share CY 2018 and CY 2019

Source: Counterpoint Research: Quarterly Market Monitor 2019 Q4

We also saw smartphone brands changing their strategies in 2019 to gain market share. For example, Samsung revamped its A series, giving a push to the mid-segment. Apple launched its iPhone 11, with multiple cameras, at a lower price than its predecessor. At the same time, Apple increased its focus on services. Chinese OEMs expanded into new markets in 2019, especially Europe. 5G provided an opportunity for OEMs to gain mindshare by launching industry-first “5G-capable” devices in markets that were early to launch 5G services.

Smartphone makers also brought several innovations in 2019 paving the way for what will be mainstream in future. Foldable displays, punch hole displays, higher megapixel cameras, higher refresh rate displays, in-display sensors, optical zoom, and super-fast charging to name a few. Some features were quickly adopted across the price range, giving consumers a variety of capable smartphones to choose from at affordable prices.

Commenting on the adoption of 5G and the market outlook Research Analyst, Abhilash Kumar added, “2019 also saw the deployment and initial adoption of 5G, especially in the US, Europe, China, and Korea. With chipset players, operators and OEMs all preparing aggressively for 2020 and working towards bringing the prices of 5G down, the foundation for the 2020 growth has already been laid. The transition from 4G to 5G in the developed markets and the continued transition from 3G to 4G, feature phones to smartphones and upgrades will lead the smartphone market to grow in the coming year”.

Exhibit: Smartphone Shipment Market Share Q4 2018 and Q4 2019

Source: Counterpoint Research: Quarterly Market Monitor 2019 Q4

Key Takeaways:

The increasing competition in the smartphone market is also leading to a gradual consolidation. The top five brands captured 66% of the market in 2019 compared to 65% in 2018 and 62% in 2017.
Samsung remained flat during 2019 Q4 while grew 2% YoY for CY 2019. Samsung has been one of the leading players in 5G in 2019, shipping over 6.5 Million 5G capable devices in 2019.
Apple iPhone shipments grew 11% YoY during the Q4 2019, even without a 5G variant. The iPhone 11 series received an excellent consumer response in all regions. The dual-camera, and lower pricing of iPhone 11 than the XR at the same point last year, helped propel sales.
Apple’s Service revenue grew 17% YoY in 4Q 2019, reaching a record high in many categories including music, cloud and Apple Care. Apple has set itself new targets for services as it has already surpassed many it set for 2020. It will focus on new areas and services to generate new revenue streams.
realme continued its growth streak and remained the fastest growing brand during the quarter (163% YoY) as well as the year (453% YoY). The brand entered the top five in the Indian market for the full year, which contributed to its strong growth.
Xiaomi grew fast in 4Q (28% YoY). It remained the top player in the Indian smartphone market for the full year in 2019.
5G smartphones contributed to 1% of global smartphone shipments in 2019. 2020 is expected to be the breakout year, with 5G smartphones poised to grow to around 18% of total global smartphone shipment volumes in 2020.

For press comments and inquiries please reach out to press (at) counterpointresearch.com

Analyst Contacts:

Tarun Pathak

Shobhit Srivastava

Varun Mishra

Abhilash Kumar

Follow Counterpoint Research
press(at)counterpointresearch.com

Apple Quarterly Results Eclipse Expectations; iPhone Drives the Quarter

Apple results in their largest quarter of the year were above expectations. The big driver was iPhone sales. Many believed this would be a challenging quarter (and year) for Apple as the company is without a 5G flagship. This was not the case.

Apple iPhone revenues were up 7.6% to $55.96 billion during the quarter. The iPhone 11 was the top seller each week of December. The top three sellers were the three new 11-series devices all priced $700 and above. This drove the revenue growth and the huge quarter.

The key takeaways from the quarter:

1. iPhone revenues were up for the first time since September of 2018.

The iPhone 11 had a lot to do with it. The $700 price point, camera, battery and aesthetics were highlighted as driving volumes. Price was the key.

Apple sales within Apple stores grew double digits. This helps the company better control the customer, sell Apple Care, sell accessories, and sell other Apple products. This all adds to the overall stickiness of the ecosystem. This drives operators crazy, and it shows the strength of Apple.

Apple Card free financing (and discounts) on Apple products is a great driver to get subscribers onto the card and a great ‘double dip’ for the future. Another great way for Apple to control the customer and better control upgrades in the future.

2. Wearables/Home/Accessories grew 37% to over $10 billion.

This was an impressive result especially since there were Apple Watch and Airpod shortages. The watches are expected to catch up to demand in Q1. Airpods Pro may take longer. Wearables set records in every region. Other signs that the business unit is poised for more growth is 75% of Apple Watch purchases were first-time buyers. The large Series 3 promos likely helped. Active noise cancellation was pointed out as key driver of Airpod sales, which helps justify the high retail price.

3. All regions had year-over-year revenue growth with the exception of Japan.

Europe and the US’ double digit growth percentages were impressive. Between the two regions, the company added $7.3 billion in revenues year-over-year. The 3% growth of China may be the most impressive since China had four straight quarters of year-over-year declines and there was a lot of uncertainty with trade negotiations, tariffs, and potential risk of retaliation with Huawei in the US ‘penalty box’. iPhone 11 was the key driver of China’s return to revenue growth.

4. Apple easily surpassed its service revenue goals which grew by 17% to $12.7 billion.

Goal #1 was to double its service revenues by YE2020. This has already been accomplished. Goal #2 was to have 500 million paying subscribers in 2020. Apple is currently sitting at 480 million and will pass this goal in the March quarter. Apple upped the goal to 600 million paying subscribers, which means it expects to add, on average, 30 million per quarter. Apple set an App Store single day record on New Year’s Day of $386 million, a 20% year-over-year increase.

Services had record highs in many categories including music, cloud and Apple Care. Apple Pay had over 15 billion transactions during the year. On the TV front, the company is bundling Apple TV+ free for one year with customers buying premium Apple devices. We will get a better sense for Apple TV+ excitement after this ‘free’ year has expired beginning in November 2020. Note, Apple TV+ revenues were immaterial this quarter.

This could be the toughest challenge for Apple. $4.99 is an attractive starting price. But, there is tremendous competition from Netflix, Disney+, Amazon Prime Video, CBS All Access, and many others spending multiple $ billions on original content. TV consumers’ spend is finite and it will be a challenge for Apple to disrupt.

Apple Arcade remains in infancy stage. Challenges abound here, too.

5. Revenues by product category: Largest business unit’s see strong growth

By category, Mac and iPad revenues fell by 4% and 11%. Interestingly, a high percentage of sales in this group were to new to Apple. In fact, within China, 75% of Mac buyers were purchasing their first Mac. Similar story on the iPad front in China—over 70% were buying their first iPad. Globally, 50% of Mac buyers were new to Mac. Also, globally 50% of iPad buyers were new to iPad. This is not normal for mature products, and it hints that the brand has great appeal in China and globally despite the political headwinds. Product refreshes for Mac and iPad will help in 2020.

As stated previously, iPhone revenues were up 7.6% and wearables/home/accessories were up 37%. Services were up 16.9% to $12.7 billion, which saw its growth decline slightly both year-over-year and quarter-over-quarter. This is something to watch. But, with a large iPhone upgrade expected during second half of 2020 and all the services attached to iPhones, there are also positive signals ahead.

Apple never discusses future products. However, it did address the high market expectations for AR / VR. The company commented it is a unique space which will have both consumer and enterprise applications. It sure does feel like Apple has something brewing in this area.

6. Apple’s guidance has an unusually large range of $4 billion.

This large range has the potential business disruption of the coronavirus outbreak baked in. Apple stated it has contingency plans started for secondary sourcing. One thing that is more difficult to account for is keeping product development on target. The problems within China are obvious. Getting Apple employees into China is another challenge. There are hundreds of Apple employees visiting China each month working on product development. This could be difficult to keep up Apple’s tight development schedules on new products.

Apple is clearly confident entering 2020. Despite the large guidance range, consensus is at the low end of Apple’s guidance. In addition, the company repurchased $20 billion in shares, up from $18 billion last quarter. The purchases in the December quarter come as the company is flirting with an all-time high market cap. That’s confidence.

Takeaway: Apple had a very strong quarter. It’s main business unit, the iPhone, beat expectations and is set up for a strong 2020. There are risks including the coronavirus and China-US tariff disputes. The Huawei CFO US extradition could de-rail the recent Phase 1 China-US agreement, and it is something to continue to monitor. 5G / iPhones will drive the second half of 2020 for Apple. The company has an installed base now eclipsing 1.5 billion. This growing installed base is a great lever for increased service revenues and companion device sales medium-term.

Apple Grew 17% YoY in Canada Defying the Global iPhone Sales Trend

Apple’s global sales declined 6% YoY, but it grew volumes 17% YoY and 36% QoQ in Q3 2019 in Canada. This was largely driven by the introduction of Equipment Installation Plan (EIPs), and the popularity of the iPhone XR.

“Carriers have been providing device financing options through EIPs since early Q3 2019, which has made the latest premium devices more affordable and helped Apple boost its share. Furthermore, the launch of the new iPhone 11 series and in particular the iPhone 11, launched at a lower price, helped the brand grow. The coinciding price cut of the iPhone XR further increased sales”, commented, Research Analyst, Abhilash Kumar.

Canada’s smartphone sales grew 6% QoQ and remained flat YoY. According to Counterpoint Research’s finding. Apple leads the smartphone market followed by Samsung. The two brands contribute to more than 85% of the Canada smartphone market. Other top players in the market are LG, Google and Huawei.

Discussing the overall market, Research Analyst, Maurice Klaehne said, “Canada, like the US, has seen elongated holding periods combined with low carrier churn rates. In consequence, the market has stagnated. Moreover, it is a premium market where people prefer previous generation flagship devices from Apple and Samsung. But with EIPs becoming available, the latest flagship models will likely be the preference. This is why around 75% of sales are for devices above $400.”

Market Summary:

Apple grew 17% YoY and 28% QoQ in Q3 2019.
More than 85% of the market is captured by Apple and Samsung.
EIP and the new iPhone 11 series launch helped Apple grow significantly.
Affordable premium and premium devices are more popular than low-mid range phones.
KaiOS smart feature phones more popular than simple feature phones.
Lower memory variants of flagships are more popular than the higher memory variants.

Early Look Into Q3 2019 US Smartphone Sales Shows Weakness, but Apple iPhone Launch Above Expectations

The US market sold through 11.3 million smartphones in August. This is down 4% when compared with August 2018. When looking at how Q3 is shaping up, July and August 2019 volumes are down almost 10% from July and August 2018 volumes. For more details about early insights into the third quarter, please see: Smartphone Sales in Q3 2019 Looking Weak; Apple iPhone Launch Above Expectations.

September is ruled by Apple. Certainly, the handset OEM will be challenged keeping momentum without a 5G offering through H1 2020. However, the opening weeks of the iPhone 11 sales were higher than expected. Some US takeaways include:

Retail checks showed that demand for the iPhone 11 devices was stronger this year than last year.
During the opening weak and pre-sales, the iPhone Pro Max had the highest demand. The iPhone 11 Pro had the second-highest demand. The iPhone 11 had the least amount of early demand of the three new smartphones.
Availability was highest for the iPhone 11. Many shortages were seen on the iPhone 11 Pro Max and iPhone 11 Pro.
Counterpoint expects demand to shift towards the iPhone 11, similar to how demand switched to the XR last year after the XS and XS Max received the highest demand by early purchasers.

Samsung had a lot of activity including its first full month of Note 10 sales. Some insights:

The S10 remained the top seller of Android flagship smartphone within the major US carriers. However, volumes have been declining.
A10 e, A20, and A50 sales have helped fill the gap. Many variants have launched replacing J-series devices.
Checks show the Note 10 has had a softer launch this year than last year. The Note 10+ sales have been stronger than the Note 10 out the gate.
The Samsung S10 5G remains the top-selling 5G device in the US. Volumes remain muted as it is only selling in meaningful volumes in Verizon. Sprint sales and availability are lower than Verizon. AT&T is not yet offering the device to consumers outside of special case B2B customers. The carrier is only selling it to B2B customers in a very limited manner. T-Mobile is waiting on 600MHz support.

For complete OEM details here is our US Channel Share Tracker.

On the carrier side, the T-Mobile – Sprint merger hit another roadblock. The Federal Communications Commission (FCC) is investigating Lifeline subsidies given to Sprint. Lifeline is a mobile phone and broadband service provided to low-income customers.

The investigation accuses Sprint of receiving subsidies on 885,000 subscribers it did not have on Lifeline services. The FCC is looking into the abuse. This certainly has paused the approval of any merger until this is fully investigated.

With such a high installed base of iOS in the US and no 5G iOS until 2020, 5G uptake has not been spectacular. Many other moving parts affecting sales. For more details, see: State of 5G USA September 2019.

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