iPhone mini "will help Apple close gap on Samsung"

Apple needs low-cost handset to prevent it losing more market share to Samsung, analysts claim

Reuters Barry Collins
4 Jan 2013

Apple will launch an iPhone mini for those who cannot afford the firm's high-end handsets, and help close the gap on runaway market leader Samsung.

Samsung is expected to widen its lead over Apple in global smartphone sales this year with 35% growth, helped by a broad product line-up, according to market researcher Strategy Analytics.

Apple, returning the offensive, could roll out a smaller, cheaper iPhone mini next year to grab market share by targeting demand from users of lower-end smartphones, the firm claims.

"We expect Samsung to slightly extend its lead over Apple this year because of its larger multitier product portfolio," said Neil Mawston, executive director at Strategy Analytics.

Global smartphone shipments will jump 27% to 875 million this year, slowing from last year's torrid 41% pace as growth is easing in many key markets such as North America, China, the developed economies of Asia, and Western Europe.

Samsung is forecast to sell 290 million smartphones this year, up from a projected 215 million in 2012, the research firm said. Apple's smartphone sales are projected to reach 180 million this year, up 33% from last year, slightly trailing Samsung's 35% increase.

This will give Samsung a 33% share of the 2013 smartphone market, up from last year's estimated 31%, while Apple will hold 21%, versus last year's 20%.

Need for a mini

Apple and Samsung have battled fiercely in the global mobile device market, which they dominate, although Samsung is also a supplier to Apple.

Samsung may launch the Galaxy S IV, a new version of its flagship smartphone, in April, the Galaxy Note III "phablet" and a series of other new smartphones over the course of this year, media reports and analysts have said recently.

"Samsung plays in more segments and this should enable it to capture more volume than Apple," Mawston said.

Brian J. White, a researcher at Topeka Capital Markets, raised the possibility that Apple may launch a smaller and lower-priced iPhone - the iPhone Mini - to further penetrate markets such as China and India.

White said in a report that he believed Apple will launch the next iPhone, the iPhone 5S, in May or June, and offer more options in screen sizes. This would eventually open up the possibility for the iPhone mini, he said.

But Mawston said the iPhone mini was not expected to hit the market until at least next year. "We think Apple will have to launch an 'iPhone Mini' at some point over the next three years to address the hundreds of millions of prepaid users worldwide that cannot afford the current iPhone," he said.

"The iPhone 5 is growing fast and profitably right now, so there is little incentive for Apple to launch an iPhone mini this year.

"We expect the iPhone mini to be more likely next year, in 2014 when... Apple will be forced to discover fresh growth streams," he said.

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