Why Lenovo could be a far bigger threat to Samsung than Apple
It's no secret that both the iPhone 6 and the Galaxy S5 will be battling it out later this year, but the two most popular phone makers on the planet, Apple and Samsung, have already shown markedly different trends as of late. Both sold a ton of phones, none more than Samsung. However, while Apple's average selling price rose by nearly $60 quarter-over-quarter, Samsung's fell by $30. Likewise, while Apple's 0% share of the under $400 phone market remained unchanged and their share of the over $400 market rose to 65%, Samsung's under $400 share dropped to 21% and they were left precious little space on the top end. Ben Thompson writes on Stratechery:
The iPhone as a platform is in fine shape: the iPhone is increasing its dominance of high end customers, and its those high end customers who dominate usage. More importantly, they aren't going anywhere. User experience is a sustainable differentiator in consumer markets, and any analysis that ignores iOS and Apple's integrated approach as a differentiator is as useless as a Macbook review that ignores OS X.
Samsung is a different story. They have no meaningful software-based differentiation, and have seen the iPhone's increased distribution eat into their high-end sales. A larger-screen iPhone would likely erode these sales further. Meanwhile, Samsung has to deal with Chinese Android-based manufacturers driving down prices not only in China, but, particularly now in the form of Lenovo, globally. Lenovo is crushing the traditional PC OEMs with both superior cost structures and superior R&D; at first glance there's no reason to expect any different result in smartphones.
Read the rest of Thompson's piece and then let me know — will Apple's strategy of avoiding the low end not only insulate them against race-to-the-bottom competition, but make them the most money at the top?