Apple, Samsung Lose Their Mojo As Chinese Trio Gains Smartphone Market Share [REPORT]

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The past decade has been the era of the smartphone. From novelty luxuries to ubiquitous necessity, smartphones have become an essential feature of the modern lifestyle. However, after years of explosive growth, the worldwide smartphone shipments have been steadily slowing down for some time now. Saturation of key markets such as the United States has played a key role in this trend.

Now, new data from an IDC report suggests that things may finally be turning around for the smartphone industry. With smartphone shipment numbers picking up, does this mean that we are about to experience the second smartphone revolution? And what future growth can we expect?

Worldwide Smartphone Shipments Q1 2017: Expectations Exceeded

With the threat of Augmented Reality looming large, the smartphone industry has fought back and registered impressive growth. The worldwide smartphone shipments in Q1 2017 reached to a high 347.4 million. This represents an impressive 4.3% YoY growth compared to Q1 2016, higher than previous growth forecasts of 3.6%. This is especially impressive if we put it in context with Q1 2016. The total smartphone shipments for Q1 2016 clocked in at 334.9 million. At the time, this represented a mere 0.2% YoY growth compared to Q1 2015, with industry titans like Apple and Samsung both experiencing a decline in shipments. However, this impressive comeback is not driven by the usual suspects like Apple and Samsung, nor is it driven by the elite markets like the US and Europe.

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Apple And Samsung Have Hit Saturation Limits

A very notable feature of the report was the fact that both Apple and Samsung both experienced negligible growth. Smartphone shipment growth was in large part due to the Chinese big three of Huawei, OPPO and Vivo. However, this is not necessarily bad news for Apple or Samsung. In fact, the findings of the report are optimistic for both.

Despite experiencing 0% YoY growth, Q1 2017 was a good quarter for Samsung. They managed to displace Apple at the top of the smartphone shipments chart again. Samsung shipped 79.2 million smartphones during this period arresting the trend of declining shipments in Q4, Q3, Q2 2016 when they shipped 77.5 million, 76.1 million and 78.6 million units respectively. This is especially impressive since Samsung’s new flagship Galaxy S8 and S8+ were only announced late Q1 2017. Growth was primarily driven by sales of older S7 and S7 Edge smartphones, as well as refreshed A7, A5, A3 models and the J series. This not only shows the staying power of Samsung’s flagship models but also their diverse portfolio across budget ranges. Expect shipments to grow in Q2 2017 primarily driven by the Galaxy S8 and S8+.

Top smartphone vendors globally Q1 2017

Similarly to Samsung, Apple experienced nearly flat growth in handset shipments by shipping 51.6 million units, registering 0.8% YoY growth. Shipments were mostly driven by the larger iPhone 7 Plus, refreshed iPhone SE with higher storage capacity and the new red painted iPhone. Due to Apple’s limited portfolio and seasonal releases, shipments throughout 2016 have been wildly inconsistent. In Q1, Q2, Q3, Q4 2016, Apple shipped 51.2 million, 40.4 million, 45.5 million and 78.3 million units respectively. Following previous trends, we can expect Apple shipments to decline in Q2 and Q3 2017, followed by an explosion of shipments in Q4 corresponding to the generational refresh and iPhone 8.

Smartphone Shipments: Growth Driven By Alternate Avenues

While Samsung and Apple shipment growths were nearly flat, the Chinese trio of Huawei, OPPO and Vivo registered massive growth. Huawei shipped 34.2 million units in Q1 2017, putting them firmly as the third largest manufacturer in the world. They registered an impressive YoY growth of 21.7%. Shipments were primarily driven by the Chinese market, where Huawei currently occupy number 1 position. Huawei has maintained a strong presence in both the premium segment with the P and Mate flagships and Y and Honor series in the mid/budget segment. However, Huawei suffered disappointing performance in the US market and are yet to pose any threat to Apple and Samsung there. Expect shipments to grow in Q2 led by the newly released P10 and P10 Plus flagships.

OPPO shipped an impressive 25.6 million units in Q1 2017, registering YoY growth of 29.8%. This makes OPPO the fastest growing smartphone company in the top 5 currently. OPPO have employed a different strategy for growth, targeting Asian, Middle Eastern and African markets. Sales in China have also been strong. Mid-range, camera-focused smartphones have driven sales. In accordance with the typical smartphone release and demand trends, OPPO shipped 19.7 million, 22.7 million, 25.8 million, 31.6 million units in Q1, Q2, Q3 and Q4 2016. If the trend holds, we can expect a steady increase in shipments as the year progresses.

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Similar to OPPO, Vivo experienced massive growth with a 23.6% YoY growth in shipments. They shipped 18.1 million units in Q1 2017, driven primarily by the x9 model and its selfie camera features. Like OPPO, Vivo is targeting the mid/budget segment. Once again, this also emphasises the importance of the selfie camera in south-east Asian markets like India. Vivo is expressly targeting the younger crowd in countries like India, Indonesia and China and providing enhanced customer care to fuel their growth. Shipments have followed a similar trend to OPPO, and as a result, we can expect similar increases in shipments in Q2, Q3 and Q4.

Actionable Insights

  • After a period of stagnation, the smartphone industry has sprung back into life. However, this time growth is fueled by the mid-range and budget segments in emerging markets. Countries like China and India provide the largest avenues for growth.
  • Samsung and Apple are back on track after a disappointing year previously. Both companies are set for decent growth fueled by the launch of new flagships.
  • If current growth rates hold, we can expect Huawei to overtake Apple within the next few years and even pose a threat to Samsung. However, to do so, they must capture the European and US markets.
  • OPPO and Vivo seemed to have cracked the formula to capture southeastern markets. They are doing so by going after the mid/budget segment and focusing on desired features like the camera and better customer care as they are a priority in these markets.

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