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Apple’s iPhone Market Share Tumbled During Critical Holiday Season

A customer buys the new iPhone 7 smartphone inside an Apple Inc. store in Los AngelesA customer buys the new iPhone 7 smartphone inside an Apple Inc. store in Los Angeles
A customer buys the new iPhone 7 smartphone inside an Apple Inc. store in Los Angeles, California, U.S., September 16, 2016. Lucy Nicholson — Reuters

Apple’s iPhone had a strong end to 2016, but it wasn’t all good news for the company.

The iPhone accounted for 34% of all smartphone activations in the U.S. last quarter, leading all other smartphone brands, research firm Consumer Intelligence Research Partners said on Tuesday. Samsung was just behind the iPhone at 33%, followed by LG at 14% share of activations. All other brands, including Motorola and HTC, accounted for 19% of all smartphone activations nationwide.

While Apple led the market, it was actually a down quarter for the company. In the fourth quarter of 2015, for instance, Apple’s iPhone was the handset of choice for more than 40% of American consumers. The same was true in the first quarter of 2016. At that time, the most popular iPhone was the iPhone 6s, which hit store shelves in 2015.

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“Despite the comparison to an ‘S’ launch last year, iOS share was down over the September-December 2015 quarter,” CIRP partner and co-founder Josh Lowitz said in the report. “This likely resulted from a strong portfolio of competing Android phones introduced throughout 2016.”

Apple (AAPL) still generated billions of dollars during the fourth quarter, and the iPhone 7 has been largely regarded as a success. However, Apple’s iPhone has generally performed better at retail in non-“S” years. The S years are those when Apple makes small updates to previous handsets. The last “S” device, the iPhone 6s, was a minor upgrade over the previous year’s big update, the iPhone 6.

However, Apple changed its tack with the iPhone last year. Instead of delivering a major update in the iPhone 7 as many had expected, Apple only offered minor upgrades compared to the iPhone 6s. The new iPhone has a better processor and display, but closely resembles the iPhone 6s design. It also lacks a headphone jack—the first of any iPhone not to offer that port.

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Apple is believed to be preparing a bigger iPhone update for 2017 to commemorate its iPhone’s 10th anniversary.

The CIRP findings will do little to quell unrest over Apple’s business. For the first time in years, Apple in 2016 posted a year-over-year fiscal year revenue decline. The trouble was due in part to softness in the iPhone business. Shareholders have been hoping that the iPhone 7 would revitalize Apple’s smartphone division. And while it might have done enough to boost sales, if CIRP’s data is correct, the iPhone is still facing headwinds at least in the U.S. smartphone market.

Beyond Apple, CIRP said that Samsung also saw its market share fall in the fourth quarter. But Apple’s iPhone wasn’t necessarily to blame for that. In fact, other Android devices are growing in popularity, putting pressure on both Apple and Samsung.

“The Android leader, Samsung, saw market share declines compared to last quarter and last year, as the broader array of new, mostly low-priced, Android brands gained share,” CIRP partner and co-founder Mike Levin said in a statement. “In fact, these ‘other’ brands accounted for 14% of U.S. mobile phone sales in the quarter, which is the highest level we have seen.”