Apple and Samsung both announced a decrease of market share yesterday, what are the consequences of this loss of market share for themselves, competitors??

The media crystal ball has spoken:

“Market leader Samsung shipped 89 million smartphones worldwide in Q1 2014 compared to 69.4 million in the same period last year, according to Strategy Analytics. Its global market share now stands at 31.2%, down from 32.4% a year earlier. Apple, meanwhile, shipped 43.7 million iPhones in Q1 2014, up from last year’s 37.4 million device total over the same period. Its total market share dropped from 17.5% to 15.3%.”

Source: http://venturebeat.com/2014/04/29/apple-samsung-losing-smartphone-market-share/

So, the twin titans of smartphones have taken a trip. Since their combined market share has fallen below the psychological mark of 50%, and if the law of gravity is to be obeyed, we can expect consequences for the loss.

Questions abound: Would the queues outside their stores get shorter? Would their Telco partners drop them in their ‘free-phone’ deals to attract subscriber for line sign-up or reactivation? Would they face stiffer competition in media buy and higher costs of raising their market voice?

The Legend of the Fall

“The report cites strong growth of “second-tier smartphone brands” such as Huwaei and Lenovo and lack of entry-level devices in markets abroad from Apple as the main contributors to slowed growth for Samsung and Apple.”

Source: http://9to5mac.com/2014/04/29/apple-samsung-slip-below-50-in-global-smartphone-marketshare-for-q1-2014/

“Research firm IDC noted that Huawei, Lenovo and LG made up the rest of the top five smartphone vendors in the market, and Strategy Analytics had Huawei and Lenovo as No. 3 and No. 4, respectively (it did not include results for LG, which reported Tuesday that it shipped 12.3 million smartphones in the first quarter).”

Source: http://www.fiercewireless.com/story/analysts-huawei-lenovo-and-lg-dig-samsung-and-apples-market-share/2014-04-30

It seems that cheaper phones and hungrier competitors have caught up with Samsung and Apple. Entering the market are multiple Chinese vendors including Coolpad, Xiaomi, and ZTE.  Now, Samsung/Apple customers have more options to switch loyalty. Why won’t they if they can enjoy the same performance and user benefits from viable alternatives as powerful as Ximi phones?

Losing Mindshare and Impact on Marketing

Exodus or not, the loss of customer loyalty is an expensive episode to recover from. Previously, users would be searching for ‘samsung’ or ‘apple’ when they trawl the web for product info and deals. Now, other brand names are jumping into their choice sets. To keep top spots in the searches, Samsung and Apple face stiffer competition in auction bids for top listings. Competition has an impact marketing budget, you need to out-spend competitors to keep a market voice loud enough to make a difference.

Entry-level phone sellers are drawing smaller margins, and carry heavier burden of marketing budget which needs to be big enough to buy a market voice. Out-spending them in search marketing strategies would probably help Samsung and Apple maintain a market leader’s visibility in the media/world wide web, but the question is how much and how long do they keep out-spending? To their competitors, if Samsung and Apple kept their resolve to outspend them, it is lose-lose situation for all the parties. Media war benefits the media owners, the likes of Murdoch who will be laughing to the bank. Higher media costs mean lower margins, and marketing war chest shrinks further if shareholders demand more pay-out.

Time to Get Creative                                                                                                                           The way out is for Samsung, Apple and all the competitors to get creative and smarter with their marketing. Go for brand differentiation rather than performance comparison, loyalty-driven promotions rather than price discounts, and even cool accessories such as a wearable watch like Samsung Galaxy Gear can be the sticky factor to retain customers before they jump ship.

For their competitors, the loss of market share demonstrates opportunities to leapfrog the giants – Samsung/Apple customers are switching, but what can they offer to stand out? Their marketing engine must crank up targeted search and if they have a wonderful product to rival Samsung/Apple, now is the time to get out and loud. Their websites must contain latest and most updated info. Product videos, demonstrations and customer reviews should be visible and available. Search engine optimisation, search engine marketing, and even social media marketing are now their must-have weapons of mass-marketing destruction of their rival brands. Rest is for the weak, time to go for Samsung/Apple's jugular!