Why Apple will be the undisputed king of 5G smartphones in 2021


Apple (NASDAQ: AAPL) delivered spectacular results for the first quarter of fiscal 2021, which ended on December 26, 2020, thanks to the massive success of its 5G-capable iPhone 12 line.

The smartphone giant posted its very first quarter with revenue of over $ 100 billion, with revenue increasing 21% from the previous year period to $ 111 billion . Apple’s iPhone revenue jumped 17% from the previous year period to nearly $ 66 billion.

The success of the iPhone 12 is not surprising. Apple’s attractive pricing has given its huge installed user base a good reason to upgrade. More importantly, the company can maintain its formidable iPhone growth momentum, and it looks poised to dominate the rapidly growing 5G smartphone market.

Image source: Getty Images.

IPhone 12 makes waves in 5G market

The launch of the iPhone 12 models propelled Apple to the top of 5G smartphone sales just weeks after the launch. The devices built on their initial success and helped Apple extend its lead at the top of the smartphone sales chart in Q4 2020.

IDC estimates that Apple shipped 90.1 million iPhones globally in the fourth quarter of last year, up 22.2 percent from the previous year. This helped Apple take 23.4% of the global smartphone space in the quarter, up from 19.9% ​​of the market it held a year ago.

Second place SamsungShipments of s grew at a much slower pace of 6.2% compared to the period of the previous year. The South Korean giant ended the quarter with shipments of 73.9 million units, and its market share only increased by 30 basis points year-on-year to 19.1%.

Counterpoint Research estimates that 5G devices accounted for 34% of global smartphone shipments of 396 million units in Q4 2020. This was a huge improvement over 5G smartphone shipments of just 24.1 million. units in the first quarter of 2020, when Samsung dominated the market with just over a third of the space under its control.

Apple therefore edged out its biggest rival in a quarter in which sales of 5G smartphones took off. Plus, don’t be surprised to see the iPhone maker widening the gap in 2021.

Why Apple’s 5G Dominance Should Continue

Two specific factors are helping Apple to carve out a significant share of the 5G smartphone market. First off, the company got the right price for its new devices, with the entry-level iPhone 12 mini model starting at $ 699. The standard iPhone 12 starts at $ 799, followed by the iPhone 12 Pro at $ 999 and the Pro Max at $ 1,099.

These prices are competitive with those of the latest flagship devices recently launched by Samsung. The Galaxy S21 5G starts at $ 799 in the US, followed by the S21 + 5G at $ 999 and the S21 Ultra 5G at $ 1,199.

Second, Apple has a huge installed base of iPhone users waiting to upgrade to a 5G device. Daniel Ives of Wedbush Securities estimates that a third of Apple’s installed base of one billion iPhones is in an upgrade window, which could push iPhone shipments to 250 million units in 2021 That would be a good jump from the 206 million iPhones Apple would have shipped in 2020, according to IDC estimates.

Third-party research predicts that Apple could control 35% of the 5G smartphone market in 2021 thanks to these benefits. That would be a big deal, as 5G smartphone sales are expected to take off this year, with Strategy Analytics forecasting 150% growth over 2020 shipments of 250 million units.

Samsung, on the other hand, is expected to struggle in 2021 despite the rise of 5G. The company is only expected to ship 26 million units of its Galaxy S21 devices this year, indicating that Apple may remain the leader in the 5G smartphone space.

Overall, the iPhone maker can maintain the tremendous growth it recorded last quarter by beating its closest rival and capturing a larger share of a booming 5G smartphone market, making Apple is one of the top 5G stocks that investors should consider having in their portfolio.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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