IDC: iOS Challenged By Cutthroat Android Device Price Points

Though Apple has been celebrating long-standing success in the high-end smartphone market, its iOS operating system has a long road ahead in challenging Android's market share, according to market research firm IDC.

According to a mobile phone forecast released Tuesday by IDC, Apple's higher costs will spur a struggle for the Cupertino, Calif.-based company's war against Android, due to price sensitivity in vital markets with the biggest growth opportunities.

"Apple’s biggest challenge with regards to Android is price point," Ryan Reith, program director with IDC's worldwide quarterly mobile phone tracker, told CRN. "The cutthroat low-price competition within the Android space has driven smartphone margins to next to nothing, and, as a result, I believe we’ll see many of these OEMs come and go over the next couple of years. So it is in Apple’s best interest to not chase these low-cost markets and focus on maintaining its share within markets with an appetite for more expensive smartphones. The challenge with this ... is that most of these markets have slowed to single-digit growth."

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According to IDC, Android devices are expected to top the smartphone market with 81.1 percent share, on the heels of 9.9 percent year-over-year growth.

While iOS is expected to grow 16.1 percent year over year, it will still lag behind Android in sales by a significant margin, taking only 15.6 percent of the share.

And looking far ahead to 2019, IDC expects that gap to stay the same. According to IDC, Android is expected to retain 81.1 percent market share in 2019, while iOS will only retain 14.2 percent.

While Apple's iPhone devices typically range from $600 to $800 without a contract, Android OEMs present a challenge with their low-cost portfolios, with devices at price points ranging from $200 or less.

From a partner perspective, businesses will favor operating systems that prioritize security, such as Apple's Mac OS X operating system, and mobile-device-management services.

"Samsung, Apple and BlackBerry are strong players, each in their own right, of course," said Douglas Grosfield, president and CEO of Xylotek Solutions, a Cambridge, Ontario-based solution provider. "It is economic-induced short-sightedness to think that handset sales are the most important component in the enterprise space, shareholders’ desires aside. [It is] necessary, but not the only litmus test for success in this space. Security is, and must continue to be, of the utmost importance in the manufacturers' road map."

IDC's Reith added that, in the enterprise, price also will play a factor in the success of Apple smartphone sales. However, he added, companies still supporting enterprise-purchased devices are typically less price-conscious than companies with bring-your-own-device policies where the employees own and manage their own devices.

Overall, smartphone shipments are expected to slow from IDC's previous smartphone forecast of 11.3 percent growth in 2015 down to 10.4 percent, as China adopts a more mature smartphone market growth pattern in the coming year.

"[Overall], trends will likely continue to see some right-setting as the overall percentage of the consumer market who do not already own a smartphone continues to shrink," Grosfield said. "Eventually, less saturated markets will see adoption rates approaching those of established markets, and then the true competition begins for manufacturers."

Windows Phone will continue to be the third-place OS in 2015, with 2.6 percent of the market share, according to IDC, while other operating systems will make up a sliver of the market with 0.8 percent share.

In terms of devices, IDC noted that phablets, or large-screened smartphones between 5.5 to 7 inches, will continue to drive shipments.

Apple and Samsung have both pushed their own phablets in the market over the past year, with the 5.5-inch iPhone 6 Plus and Samsung's recent 5.7-inch Galaxy 6 Edge+.

PUBLISHED AUG. 25, 2015