How SmartPhone Purchase Cycle Volatility has shifted towards First Quarter of Launch ?

Changing Perception in SmartPhone Purchase CycleIn July 2013, we highlighted the impact of saturation of smartphones in developed markets, asserting high-end handset sales were apt to decelerate in coming quarters. As a supplement to this report, we next looked at product life cycles, where we showed that lifecycles for progressive new product types are increasingly short, limiting the profit period. In this further supplement, we will look at the Volatility in the Purchases of High End SmartPhones by Consumers.

Analysis of smartphone launches reveals that since the iPhone 4S & Galaxy Note 1, peak quarterly sales have happened in the first full quarter of a new smartphone’s sales with sales falling off thereafter. This contrasts with earlier phone launches where sales climbed steadily upward for 2-4 quarters after launch. Meanwhile, not only do sales fall-off in the second quarter from launch, but the rate of decline is worsening with each successive launch, a point evident in both Apple and Samsung data.

For example, Apple’s introduction of the iPhone 5S & 5C incorporated 11 countries at launch (including China) and 62 countries beginning November 1, 2013. When compared with the iPhone 5 launch in (9 countries at launch and 47 by November 1, 2012), it stands to reason that more sales are apt to be concentrated early in the model life, followed by a steeper fall-off thereafter.

To be sure, this may be attributable to broader geographic reach at each successive launch (China was included in the initial launch of the iPhone 5S/5C for example), making sequential comparisons more difficult. Nonetheless, the pattern is increasingly evident from the data below.
iPhone 5 Sep-12 78%(First Full Quarter Sequential Growth) -22%(Second Full Quarter Growth)
iPhone 5S (est) Sep-13 66%First Full Quarter Sequential Growth) -23%(Second Full Quarter Growth)
Interestingly, the same analysis for Samsung reveals a similar pattern and thus we can easily conclude that these two Brands have won enormous Brand loyalty where consumers make the shift to stand out in their social circle.

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