The global smartphone market declined 1% year-on-year (YoY) in the 2019 calendar year, according to the latest research from Counterpoint’s Market Monitor service, marking the first time that the smartphone market has declined for two consecutive years. However, the decline was slower than in 2018 (4% YoY). The smartphone market actually grew by 3% YoY in the fourth quarter of 2019, indicating signs of a recovery and is expected in 2020.
2019 brought both innovations, 5G, folding displays, but also an uncertain trade and political climate. Commenting on the global market dynamics, Varun Mishra, Research Analyst at Counterpoint Research noted: “There have been growing tensions among several countries that have impacted the smartphone market. For example, the US pressure on Huawei, and tensions between Japan-Korea that led to uncertainties in the memory market. Supply chains have been upset, causing various companies to rethink their strategies and reduce dependence on single markets. 2020 will likely see efforts to further diversify investments across geographies to mitigate risks. The current coronavirus outbreak in China is the latest issue to threaten supply chains.”
Despite the sanctions, Huawei surpassed Apple to become the second-largest brand in 2019, the result of an aggressive push from Huawei in the Chinese market, where the brand achieved almost 40% market share. China accounted for over 60% of Huawei’s total shipments. Outside China, Huawei is trying to continue selling its older devices. But with rising competition, its value proposition is being gradually undermined and while Huawei is working on its own operating system, it will almost be impossible for it to compete with Android anywhere outside China.
Within the quarter however, after two-years, Apple gained the top spot in the global smartphone market, driven by the iPhone 11 series beating expectations. iPhone revenues were up year-on-year for the first time since September 2018.
Exhibit: Smartphone Shipment Market Share CY 2018 and CY 2019
Source: Counterpoint Research: Quarterly Market Monitor 2019 Q4
The market also saw smartphone brands changing their strategies in 2019 to gain market share. For example, Samsung revamped its A series, giving a push to the mid-segment while Apple launched its iPhone 11, with multiple cameras, at a lower price than its predecessor. At the same time, Apple increased its focus on services. Chinese OEMs expanded into new markets in 2019, especially Europe. 5G provided an opportunity for OEMs to gain mindshare by launching industry-first “5G-capable” devices in markets that were early to launch 5G services.
Smartphone makers also brought several innovations in 2019 paving the way for what will be mainstream in future. Foldable displays, punch hole displays, higher megapixel cameras, higher refresh rate displays, in-display sensors, optical zoom, and super-fast charging to name a few. Some features were quickly adopted across the price range, giving consumers a variety of capable smartphones to choose from at affordable prices.
Commenting on the adoption of 5G and the market outlook Research Analyst, Abhilash Kumar added: “2019 also saw the deployment and initial adoption of 5G, especially in the US, Europe, China, and Korea. With chipset players, operators and OEMs all preparing aggressively for 2020 and working towards bringing the prices of 5G down, the foundation for the 2020 growth has already been laid. The transition from 4G to 5G in the developed markets and the continued transition from 3G to 4G, feature phones to smartphones and upgrades will lead the smartphone market to grow in the coming year”.
Exhibit: Smartphone Shipment Market Share Q4 2018 and Q4 2019
Source: Counterpoint Research: Quarterly Market Monitor 2019 Q4
Key takeaways:
- The increasing competition in the smartphone market is also leading to a gradual consolidation. The top five brands captured 66% of the market in 2019 compared to 65% in 2018 and 62% in 2017.
- Samsung remained flat during the fourth quarter of 2019 while growing by 2% YoY for the 2019 calendar year. Samsung has been one of the leading players in 5G in 2019, shipping over 6.5 million 5G capable devices in 2019.
- Apple’s iPhone shipments grew by 11% YoY during the fourth quarter of 2019, even without a 5G variant. The iPhone 11 series received an excellent consumer response in all regions. The dual-camera, and lower pricing of iPhone 11 than the XR at the same point last year, helped propel sales.
- Apple’s Service revenue grew 17% YoY in the fourth quarter of 2019, reaching a record high in many categories including music, cloud and Apple Care. Apple has set itself new targets for services as it has already surpassed many it set for 2020. It will focus on new areas and services to generate new revenue streams.
- realme continued its growth streak and remained the fastest growing brand during the quarter (163% YoY) as well as the year (453% YoY). The brand entered the top five in the Indian market for the full year, which contributed to its strong growth.
- Xiaomi grew fast in the fourth quarter (28% YoY), remaining the top player in the Indian smartphone market for the full year in 2019.
- 5G smartphones contributed to 1% of global smartphone shipments in 2019. 2020 is expected to be the breakout year, with 5G smartphones poised to grow to around 18% of total global smartphone shipment volumes in 2020.
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