Even in the trying times of global smartphone sales, one thing that has remained constant has been the tussle between the two giants in the Mobile OS industry – Google Android and Apple iOS. According to the latest report by the Kantar World Panel, Android Smartphones have made significant strides forward in all regions across the world taking customers from Windows Mobile as well as iOS (iPhone). What’s even more interesting is that unlike previous times, the sales growth for Android Smartphones has not come off the back of one single company like Samsung, instead of multiple OEMs like Huawei, Oppo and others who have made their mark on the mid-range segments in China and across Europe.

Apple Inc. (NASDAQ:AAPL) has had a horrendous start to the year with fiscal Q2 2016 being their worst quarter in terms of growth in more than a decade. That has been reflected in the sales numbers as well, as we have seen the iOS loose ground in their stronghold of Urban China where they slipped down to 21.1% a QoQ fall of 3.9%. Can Apple bounce back with their new budget offering of the iPhone SE? Or will the much-lauded S7 and S7 Edge from Samsung help widen the gap between Android and iOS? We take an in-depth look at this quarter and offer some guidance for the next quarter in today’s analysis!

Android Firing on All Cylinders: Records Stellar Growth in Both EU5 and China

Android posted a substantial gain in the EU5 ending Q1 2016 at 75.6%, up 7.1 percent points YoY from 68.5% in Q1 last year. This growth has come at the expense of iOS and Windows, both of them have lost users to Android in this quarter. Among the new arrivals to the Android camp, 3.3% had switched over from iOS, while 6.6% jumped ship from Windows Mobile. Android also managed to strike at the heart of Windows Mobile, in Italy and France. These two countries which have shown strong Windows Phone growth in the past few quarters, flipped sides as we saw a mass exodus with nearly 10% of users abandoning Windows Mobile for Android.

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Turning our attention to the OEMs, we find that the mid-range offerings from brands like Huawei, Wiko, and Asus have found favour among those who have recently switched sides to Android. Great Britain however, stayed loyal to the tried and tested Samsung smartphones and the A5 and J5 performed admirably in the midrange price segment in the British market driving up Android sales by 5 percent points YoY.

Now let’s take a look at the two most mature markets as far as smartphones are concerned. China and the US stand at the first and the third spot by the sheer volume of smartphone owners and has forever been home to a power struggle between iOS and Android. This time, though, Android won without much of a fight as we find that iOS has lost ground in both countries while Android increased its lead with 7.3 and 5.9 percent point increases YoY in the US and China respectively.

In China, the midrange devices from Vivo, Oppo and Huawei dominated the market with Huawei taking the lead comfortably at 24.6% purchase share. With 6.5% of the market share, Oppo managed to increase its device sales as well as rebrand itself from a value to a midrange player with most of their smartphone sales coming from the ¥2,000 to ¥3,000 price range. As a result, Samsung and Xiaomi have been left behind on the Android side of things.

Turning our attention to the high-end segment, we find that the S7 has done incredibly well in the US during the few weeks of its launch before the end of this quarter, contributing 4.2% of the total smartphone sales and finding the fifth spot in the top selling phones in the quarter. At a reduced price point due to the release of the S7, Samsung’s previous flagship, the Galaxy S6 performed quite well. Motorola in partnership with Verizon did pretty well as they managed to capture 9.8% of the smartphone market, up from 6.9% in Q1 2015. Along with Samsung and Motorola, LG did quite well in the US market as well. As for the premium segment in the Chinese market, Huawei did quite well with their Mate 8 flagship.

Apple Hits Rock Bottom as iOS (iPhone) Sales Shares Plummet

The latest iPhones, the 6s, and 6s Plus have failed to catch the imagination of smartphone buyers across the world, and once the initial hype of Q4 2015 died down, we were left with dwindling number of iPhone sales across the entire world. Apple suffered a QoQ loss of 6% points from Q4 2015 to Q1 2016 in China. While there is always a drop in sales numbers from the holiday season to the beginning of the new year, this time, it was much worse than just that. With a paltry 21.1% of sales, iOS suffered a crushing 5 percent point fall YoY.

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The situation looked no better in Apple’s home market. In the US, Apple slipped 4.9 percent points YoY and ended Q1 2016 at 31.6%, down from 36.5 in Q1 2015. Turning towards the EU market, we find a similar story where iOS has yet again lost ground albeit at a much smaller rate of 1.2% YoY. Apple has been able to entice away some users from Windows Mobile as well with 2.6% of the new iOS buyers having switched over from Microsoft’s Mobile offering.

The only positive sign for Apple has been the Japanese market where they have managed to claw back into the game with a YoY increase of 1.7% YoY, finishing Q1 2016 with 46.8% of sales in the country. Looking forward, the future looks grim for Apple and till the iPhone 7 is launched in Q3 2015, all hopes rest on the iPhone SE.

“Android share could also be negatively affected by high demand for the Apple iPhone SE. iPhone SE sales will be particularly important in China, where success in the mid-tier will determine the top player in the region.”- says Lauren Guenveur, mobile analyst for Kantar Worldpanel ComTech

Will the tiny 4-inch phone be enough? We discuss in our closing segment.

Final Thoughts

Competition is always good for the end user. If any segment becomes too dominated by one party, then innovation is stifled as a sense of accomplishment and contentment begins to sink in. For that very reason alone, Apple needs to bounce back with their newer devices. While we have seen leaks of the iPhone 7, they’re nothing to write home about. The current iPhone SE is a great budget device but fails to impress on the front of technical brilliance. Combined with the fact that the budget SE had been destined for lower ASP markets like India, makes us wonder if the smaller iPhone was just a desperate attempt to get the older generation iPhone 5S users to upgrade to the latest device.

Apple seems to be at a loss for ideas and Tim Cook’s latest slew of bad decisions, from the exorbitant pricing to trying to set up a refurbished iPhone market in India, is a testimony to the fact that the CEO is now grasping at straws. As for Android, Google’s OS seems to have found its stride and is making rapid progress in markets across the world. While fragmentation and security risks remain two of the largest problems for Android, Google along with the OEMs seems to be working proactively to patch them up. One of the sore points for Android has been the falling ASP of smartphones running the OS, but the recent flagship from Samsung, the S7 has impressed thus far in the US markets, and Chinese OEMs have helped increase the ASP in markets like China and India.

Speaking on the state of mobile, Lauren Guenveur says, “As the impact of the S7 materializes, it may change the nature and path of the Android market.”

With the entire hopes of iOS battling it out against Android riding on the all-glass iPhone, scheduled to make an appearance sometime in 2017; one wonders if Apple has just left far too much for far too late.