Australia's love affair with the iPhone continues but dramatic falls in Sony and HTC's Australian sales show lower cost rivals will soon threaten the dominance of Apple and Samsung
Kantar Worldpanel ComTech tracks smartphone sales globally and its second-quarter breakdown, showed that Apple's iPhone 6 is still by far the biggest selling handset locally, despite having been available for nine months. In the quarter, 34.6 per cent of phones bought in Australia were iPhones, a market share which was up from 25.5 per cent a year earlier.
Phones running Google's Android operating system made up 57.6 per cent of Australian sales in the quarter, a fall of 10.6 per cent, which was largely accounted for by Apple's iOS gaining 9.1 per cent. Samsung achieved 40.2 per cent of the whole Australian smartphone market, but when just compared with other Android phones, it registered a dominant 69.5 per cent share, up from 61 per cent last June.
The market for Android phones is increasingly fragmented, with many lower cost options of higher standard hitting the market. Reports last week showed Samsung is being hit by players like Xiaomi and Huawei in China, and it is also suffering in the face of cheaper alternatives in markets in Europe and elsewhere.
Cheaper rivals
However the rise of cheaper Android phones has yet to register in Australia, and Kantar's numbers show Samsung's strength is coming at the detriment of big name rivals.
Sony, which sells the Xperia phones and HTC, which has its One brand, are both suffering nightmare sales slumps. Meanwhile LG, which is picking up market share in the United States, is falling away in Australia.
Sony's Australian market share fell from 7.7 per cent in June 2014 to just 2.9 per cent in the most recent numbers, whereas HTC dropped from 7.2 per cent to 4.4 per cent and LG slipped from 2.7 per cent to 1.7 per cent.
Phones running Microsoft's Windows operating system increased by 1.3 per cent to secure 6.4 per cent, but strategic insight director at Kantar Worldpanel ComTech Asia Tamsin Timpson, said it was too early to judge what impact the new Windows 10 operating system would have in the local market.
Ms Timpson said Apple and Samsung remained notably strong in the Australian market compared with other regions because the price of handsets was relatively well subsidised by carriers. That means consumers get the handset as part of a plan, rather than stumping up the hefty price for top-of-the-range devices.
However, she said subsidies were lessening and Australian consumers were showing signs of being willing to dabble with lower-cost options, which did essentially the same thing.
"The differentiation now is becoming less and less and all of the smartphone brands are struggling with that ... the cheaper phones will start to take off here, it will just come to this country later than we have seen in Europe," Ms Timpson said.
"What we have seen in Europe is real commoditisation of the smartphone. Several-time repeat smartphone buyers are now prepared to pay less, but in the present Apple is so strong here compared to some other countries – we are an iPhone-centric population."
Ms Timpson said Sony and HTC were suffering in Australia, despite their flagship phones the Xperia Z3 and HTC One M9 getting positive reviews. Both are priced similarly to Samsung's Galaxy S6 but have failed to register similar brand recognition.
Customer experience
Kantar collects data on customers' purchasing experience, which goes some way to explaining the problems faced by smartphone makers in a crowded market. It found consumers were being offered less appealing bundles for Sony phones on telco plans than they had been in 2014, and that the phones were struggling to impress important sales staff in stores.
A monthly breakdown of the brands recommended by shop assistants shows that in June 2014, Sony and HTC's recommendation rate was 11 per cent and 21 per cent respectively. However, June 2015 figures show the recommendation rate at 2 per cent for Sony and 11 per cent for HTC.
Ms Timpson said the smartphone market in China gave an indication of tough times ahead for the dominant smartphone players, with Samsung particularly vulnerable. She said Xiaomi and Huawei were taking big chunks out of its sales in the low- and mid-market, whereas Apple had successfully installed itself at the luxury end.
The future of the Australian market would depend on telcos being willing to continue to subsidise expensive handsets, she said.
"Globally, the lower cost Android handsets succeed where the subsidies are really low in the market," Ms Timpson said.
"Even though the level of subsidy has come down in Australia over the last few years, it still has about 20 per cent of contract handsets being basically nothing to pay upfront. If you haven't got the subsidy any more then the lower end naturally does better, and it also means that it is easier for these other entrants to come into the Android market."
