Is this the biggest threat to Apple?
A report from Fitch Ratings says the company could lose as much as a quarter of its smartphone market share in the next year.
The ratings firm said South Korea's Samsung Electronics (SSNLF) could lose as much as 14 percent of its smartphone market share for the same reason.
Apple and Samsung's smartphone shipment volume is expected to stagnate around 450 million to 460 million units this year despite a forecasted industrywide increase of about 20 percent to 1.2 billion units, Fitch said.
This comes as handset makers in emerging markets like China and India produce less-advanced devices that are far cheaper than those offered by industry heavyweights. Fitch says the more basic devices retail anywhere from $100 to $300, as opposed to new iPhone and Galaxy devices that run closer to $600 without subsidies.
"We believe growth will come largely from emerging markets," Fitch Ratings said in the report.
Fitch also said Apple's iPhone 6, expected to launch this fall, is "unlikely to change the trend."
However, the downward trend in market share is not affecting Samsung's single-A-plus credit rating. Fitch said its analysis has always assumed Samsung's robust smartphone margins were "unstainable in the long term."
Fitch has not released a public credit rating on Apple.
Shares of Apple were flat Tuesday. They are up about 20 percent this year.
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So! Market share is not important. It's profit per unit that's important. Just ask Lexus, or Infinity
I believe Lexus and Infinity are luxury brands of Toyota and Nissan which have huge market shares. If Apple loses 25% of their market they'll raise their iPhone to $750? Don't think so!
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