Global smartphone shipments declined by 2% annually in Q2 2018 according to the latest research from Counterpoint’s Market Monitor service. The top 10 brands now capture 79% of the market thereby leaving over 600 brands to compete for the remaining 21% of the market.
The weak smartphone demand is due to a slow-down in developed markets like China, US and Western Europe where replacement cycles are lengthening.
(TOP: The Huawei Honor sub-brand which helped the firm to achieve the second position).
Huawei became the top brand in a declining China market and captured the second spot in the global smartphone shipment rankings for the first time in a single quarter.
Commenting on Huawei’s growth, Tarun Pathak, the Associate Director at Counterpoint Research said: “Huawei had a good second quarter in 2018 as it shipped more smartphones than Apple to capture the second spot in the global smartphone rankings, after 7 years of Apple-Samsung dominance. Huawei achieved this by launching smartphones in the premium segment and capturing the mid-tier segment with its fast-growing Honor sub-brand. Huawei with its Honor brand is offering a broad and refreshed portfolio at affordable price which is driving growth in the overseas market. Honor, which is already strong in the e-commerce segment, is now adopting a multi-channel strategy through branded stores in the South East Asia market. We expect store counts to increase in the future.”
Exhibit 1: Global Smartphone Shipments Ranking and Market Share – Q2 2018
Source: Counterpoint Research: Quarterly Market Monitor Q2 2018
Commenting on the increasing trend of average selling price for major smartphone brands, Research Analyst, Shobhit Srivastava, noted, “Major Chinese brands like OPPO, vivo, Huawei are now focusing on increasing their ASPs through gradually upgrading their portfolio to higher price bands by bringing in features like Artificial Intelligence, bezel-less displays, dual cameras and with innovative industrial design and colors, materials and finishes in the affordable premium segment.Brands in the mid-tier segment now launch multiple variants of the same smartphone with different storage capacities, tempting customers to spend more on a higher spec’d device. This also helps drive sales by increasing the portfolio breadth as well increased margins by selling devices with a higher price point.”
Exhibit 2: Annual Average Selling Price (Wholesale) Growth by Major Brands – Q2 2017 – Q2 2018
Source: Counterpoint Research: Quarterly Market Monitor Q2 2018
- Smartphone shipments declined 2% annually to 360 million units in Q2 2018.
- China’s smartphone market has declined continuously for the last four quarters, affecting the shipment growth of some Chinese brands like OPPO, vivo, Meizu and Gionee.
- Chinese brands have continued investing in countries and regions outside China to offset weak demand in their home market. India, South East Asia, Europe, Middle East and Africa being the key markets for expansion.
- The top 10 brands accounted for 79% of the smartphone volumes in Q2 2018.
- Nokia HMD, OnePlus, Tecno, Xiaomi, Infinix and Huawei were the key fast-growing brands for the quarter. Lenovo, Gionee, Micromax and Sony registered the highest shipment volume declines in Q2 2018.
- Tecno entered the top 10 smartphone market for the first time. Together the three smartphone brands of Transsion Holdings (Tecno, iTel and Infinix) accounted for over 9.4 million smartphones shipped during Q2. 2018.
OEM Performance Insights
- Samsung led the smartphone market by volume with a market share of 20% in Q2 2018 even though it registered an annual decline of 11% due to weak sales of its flagship Galaxy S9 series smartphones.
- Even as Samsung smartphone shipment volumes declined globally, the brand posted a record second quarter in India, regaining its top position in India smartphone market.
- Samsung will be launching its Galaxy Note 9 flagship early to counter the string of premium segment launches by its competitors and to gain some momentum before the launch of new iPhone in September. It will also focus on launching newer models with high specs in each price segment, to counter the growing competition.
- Huawei shipments grew 41% annually in Q2 2018. The company managed to be the fastest growing (21%) smartphone brand amid a declining China smartphone market and grew fully 71% overseas.
- Huawei’s continuous efforts to expand in markets outside China has resulted in strong annual growth in Europe (+75%), Middle East and Africa (+67%), and in India (+188%), where its Honor brand retained its place in the top five smartphone rankings.
- Apple shipped 41.3 million iPhones during Q2 2018, up 1% compared to the same quarter last year. iPhone X remains the top seller for Apple during the quarter. ASP’s fell marginally compared to the previous quarter due to the greater mix of iPhone 8, 8 Plus and older iPhone models.
- Second quarter Apple shipments remain flat in China year over year. During the quarter, share of online sales for Apple grew both sequentially and annually due to comparatively higher discounts available online as compared to offline channels.
- Apple had a slow quarter in India, the third largest smartphone market globally. It underwent changes in its distribution strategy. Apart from this, its domestic assembling is yet to pick-up pace, which means the company is still relying on imports for its sales in India. Apple had 1% market share during the quarter, its lowest in recent history.
- Xiaomi shipped 33 million smartphones, capturing 9% market share of the global smartphone market in Q2 2018.
- Xiaomi remained one of the fastest growing brands (+43%) in Q2 2018, driven by record shipment in India with 112% annual growth. The brand’s shipment beyond China and India increased 186% annually in the quarter.
- OPPO and vivo were the fifth and sixth largest brands during the quarter, capturing 8% and 7% market share, respectively. OPPO recorded an annual decline of 3% while vivo registered a growth of 1%.
- During the quarter, OPPO and vivo also expanded their presence in the premium segment by launching devices like the Find X and Nex. The aggressive expansion of these brands in markets outside mainland China will be the key to growth as the home market reaches saturation levels in 2018.
- LG registered 10.2 million smartphone shipments in Q2 2018. LG’s smartphone shipments declined 23% annually due to decreasing sales of its mid and low segment smartphones in North and Latin America.
- Lenovo (including Motorola) captured the 8th spot with a market share of 3%. While the Motorola brand registered an annual growth in shipments, it was eclipsed by the decline in Lenovo-branded smartphone shipments.
- Nokia HMD captured a spot on the global top 10 smartphone shipments ranking for the first time since its re-entry into the smartphone market. Nokia HMD has expanded its smartphone portfolio with a series of launches in the recent quarters, that helped the brand increase its presence globally.
- Tecno entered the global top 10 smartphone shipments ranking for the first time. Tecno, a major brand in Middle East & Africa, is positioning itself as a smartphone-only brand in some of the key countries including India.