Smartphone Market Saturation Looms Despite Record Sales

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The take-home news of the December-quarter earnings reports from Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK) is that the giants of the smartphone market sold fewer devices than expected.

That may seem surprising given that research firms Strategy Analytics and IDC both reported that global smartphone sales grew by a double-digit figure in the fourth quarter of last year, soaring 34 percent from the quarter in 2012 according to Strategy Analytics’ numbers but only 24 percent according to IDC. But smartphone sales figures from Apple and Samsung, as well as analyses from Raymond James’s Tavis McCourt and Wedge Partners’ Brian Blair and Jun Zhang suggest that the smartphone market has reached a turning point.

Apple’s first-quarter results — released Monday — showed iPhone sales set a record. The 51 million phones sold in the first fiscal quarter were the most Apple has ever sold in any quarter, surpassing the 47.8 million sold in the year-ago quarter. Those strong sales help the company post strong earning and profit numbers.

Yet even though Apple upset tradition and released two versions of its flagship smartphone — the iPhone 5S with Apple Touch ID and the low-cost iPhone 5C with the colored polycarbonate shell — sales figures missed expectations. That fact suggested to investors that the iPhone has little room to keep growing.

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