Just in time for the upcoming holiday season, Apple has scheduled a big media announcement for September 9, when it is expected to introduce an upgraded iPhone, along with possibly a second phone and perhaps the highly anticipated iWatch. While internet rumors abound relating to the look and feel of these products, one thing is for sure, Apple’s supply chain continues to provide fodder for those of us in the logistics and transport industry. For example, reminiscent to the 1990s, Apple appears to have acquired quite a bit of air cargo space to deliver these new products – so much in fact that it is causing delays for other manufacturers.
According to news reports, FedEx and UPS shipments are described as “incredibly high” for this quarter and have pointed to Apple as the culprit which is apparently flooding its channels with devices. This should be welcomed news for the two integrators who have experienced air cargo declines because of economic shifts and modal changes. In fact, improving conditions appear to be on the rise as indicated in its recent earnings call for the period ending June 30, 2014, in which UPS noted growth in Asia remained relatively stable with Asian exports up about 6%.
As Apple’s transportation aspect of the supply chain is covered by such partners as FedEx and UPS, other parts of its supply chain is facing challenges such as product redesign and solving battery concerns. While such technology tends to include bugs, how these are handled is what makes Apple’s supply chain successful. The company is heavily involved in every part of its processes right up to the retail store and its customer service, an often-time overlooked component to the supply chain, is among the reasons for such loyalty among its customer-base.
So, is all of this enough to give Apple the edge this holiday season? Indeed, excitement seems to follow whenever Apple has a ‘big announcement’ but if second quarter smartphone shipments are any indication, it may be facing some interesting competition and not just from Samsung.
Global smartphone shipments were up 25.3% year-over-year for second quarter. While Samsung and Apple maintained the first and second place positions in market share with 25.2% and 11.7% respectively, compared to second quarter 2013, these two companies have actually seen their global market share decline from 32.3% and 13.0% respectively in 2013. What’s the cause of this decline? Emerging Markets. While in distant 3rd and 4th places for global market share, smartphone manufacturers such as Huawei and Lenovo are producing low-cost smartphones for developing regions, such as China. As a result, these two manufacturers, in particular, noted second quarter market share increases of 4.3% year-on-year for Huawei and a 4.7% year-on-year gain for Lenovo.
An interesting survey conducted by marketing firm Upstream and researcher Ovum, found that Apple is the most desirable mobile-phone brand in emerging markets. However, while Apple has a strong hold on the developed world, it will need to adapt to a lower cost option to match the success it has had in the US and Europe. This adaptation of a lower cost option will mean a retooling of its famed supply chain. Can it be successful? Most importantly, is Apple willing to produce such low-cost products? The growth is in emerging markets and if it wants to grow, it must consider its options. As such perhaps the race to be ‘the first’ for the holiday season within the developed world may not be quite as important to its bottom line if it does decide to focus on emerging markets.