The Premium Smartphone Segment Q2 2018: Chinese OEMs Are Starting To Nip At Their Heels [REPORT]

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The global smartphone industry has been undergoing a sea of change over the past couple of years, but one thing that has remained constant is Apple’s domination in the premium smartphone market. A new report by Counterpoint Research suggests that this trend continues on as Apple Inc. (NASDAQ:AAPL) dominated the global premium smartphone segment in Q2 2018, capturing 43% share.

Overall the global premium segment grew +7% YoY in the second quarter of 2018. Surprisingly, the growth of the premium segment is even faster than the total global smartphone market (-1% YoY). A large credit goes to the increasing smartphone shipments of Chinese OEMs like OPPO, Huawei, OnePlus and Xiaomi.

Global Premium Smartphone Segment Q2 2018

Apple led the way with a mammoth 43% of the premium segment (>$400) share, followed by Samsung (24%), OPPO (10%), Huawei (9%), Xiaomi (3%), Oneplus (2%). These top 6 companies combined account for over 90% of sales in the premium segment, suggesting that brand recognition and trust is even more vital in the premium segment.

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The premium smartphone market is perhaps the most coveted segment in the entire industry. This segment typically has the most generous profit margins, and contribute greatly to profitability as a result. In fact, this time last year, 80% of global handset profits came from the premium segment! Apple took home a mammoth 65% share of the total global handset profit in Q2 2017!

However, in Q2 2018, despite its dominant market position, Apple’s handset profit share fell down to 62%. Chinese OEMs such as OPPO, Xiaomi, Huawei, Oneplus and Vivo helped the global handset industry achieve an impressive 4% growth rate in the second quarter of 2018.

Global Premium Smartphone Segment Price Split & OEMs Shares

In the $400-600 premium segment, OPPO managed to pip Apple to claim the top spot with a 22% market share, but the Cupertino giant followed close behind. However, the fastest growing brand in this segment was Oneplus, whose success can be attributed to their successful inroads into several key European countries (France, Germany, Italy, UK, Netherlands and Sweden) and their domination of the Indian market. In fact, Oneplus even beat out Samsung and Apple in Q2 2018, to become the top-ranked premium smartphone brand in India.

The $600-800 segment presents an entirely different story. This segment was almost entirely dominated by industry incumbents Apple and Samsung with an 85% contributing share to smartphone shipments. Once again, Apple dominated the $600-$800 segment with 44% of the market share, as Samsung lagged behind at 41%. This is in part due to sluggish sales of the Samsung Galaxy S9 series in comparison to Apple iPhone X.

At the very top of the ladder, the $800+ segment entirely dominated by Apple, with a massive 88% market share in Q2 2018. However, this is likely down to the fact that this market segment is scarcely populated, with only Apple’s top-tier flagship offerings, and a couple of flagship Samsung models commanding such an exorbitant price.

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As we can see from the data, Apple continues to dominate the premium smartphone market for now. However, as we begin to see several Chinese OEMs transition from low budget and mid-range into the premium segments, Apple could have a fight on its hands for control of the biggest slice of pie in the smartphone industry.

Takeaways:

  • The premium smartphone segment contributed to one-fifth of the total global smartphone market in Q2 2018.
  • With a 43% share, Apple is leading the global premium smartphone segment, followed by Samsung with 24% share as of Q2 2018.
  •  In Q2 2018, the $800+ premium segment was entirely dominated by Apple with a whopping 88% share.
  • Within the premium segment, the $400-$600 price-band was the sweet spot as it contributed to 45% of the total premium smartphone segment sales by volume.
  • In Q2 2018, 4 out of top 6 smartphone OEMs, dominating the $400-$600 segment, were Chinese smartphone OEMs.
  • In Q2 2018, Oppo and Apple, both captured 22% share of the $400-$600 segment, globally.
  • In Q2 2018, the top 6 smartphone OEMs dominating the $400-$600 segment were Oppo, Apple, Samsung, Huawei, Xiaomi and Oneplus.
  • In the $600-$800 segment, Apple and Samsung alone contributed to 85% of the total shipments in Q2 2018.

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