China mobile manufacturers gain a 50% share of the global market while 7 out of top 10 smartphone markets decline in Q3 2018
The global smartphone market had witnessed a steady decline in global shipment over the last three quarters, and from recently released stats, the Q3 of 2018 is following the same trend with a 7% decline in the global smartphone shipment. This figure is the most dismal Q3 performance stat since 2015. The smartphone market of China is no different either, having shipped only 100.4 million units which translated to a 15.2% decline year-on-year and 2.9% decline sequentially. In spite of the general weak seasonal performance, the sales figure of India in the Q3 makes it the world largest market for smartphones, overtaking the US. The continued year-on-year sales decline by seven of the top ten markets for smartphones may be attributed to the extended smartphone replacement circle, unfavorable international trade conditions and perhaps, fiercer competition from the dominant and emerging Chinese vendors.
Mo Jia, a Shanghai-based professional analyst with Canalys, the global technology analyst firm, affirmed that there is no marked improvement in smartphone sell-in within the China market; 14 out of the top 20 smartphone brands in China witnessed a decline in Q3 of 2018. Jia said the decrease in sales has mounted pressure on the manufacturers due to the recent rise in the cost of labor and the price of smartphone components in China. The focus of Chinese companies is to augment the low home sales with increasing penetration into the foreign market such as Africa, South Asia, and Europe. Unfortunately, the present geopolitical environment is not the best for international trade. In her conclusion, Jia said the winter market is tight, and it's going to be tougher for these firms to survive. The worst performing regions on the global scale are Greater China, Hong Kong, and Taiwan which have a decline of about 14.6% annually over the last few years. The Central and Eastern Europe are the hottest region with a 2.2% growth annually, closely followed by Africa which has a 0.4% annual growth.
Coming down to the vendor market, the market share of Samsung reduced to 20.4% from 22.0% in the Q3 of 2017 as a result of a 14% decline year on year. However, Samsung still has the largest market share closely followed by Huawei that shipped 52 million units after growing by 33% year on year. Apple shipped 47 million units which amount to 0.4% growth and closely followed by Xiaomi and Oppo that shipped 33 million and 31 million units respectively. From these figures, it is apparent that Chinese companies are the dominant players in the global smartphone market with a whopping share of 52%, the highest in the history of China.
Rushabh Doshi who is the research manager at Canalys said that the global smartphone market is experiencing new challenges, its dynamism is becoming more intense both at vendor’s level and also in various countries. Doshi said that the companies which are able to respond to the demands of the market fast enough gain the competitive advantage. Come to think of it, the epic rise of Huawei to dominance may be as a result of aggressive product portfolios that covers all price range. The same can be said about Xiaomi, Oppo, Vivo, OnePlus, and Transsion which are all Chinese brands that are acquiring market share on a global scale. Samsung, on the other hand, seems to be in a dilemma, at the end of the year. The brand shipments may fall below 300 million which is a far cry from its target of 320 million shipments. Samsung had put on ample efforts in upscaling its product strategy through stronger innovation across all range of its products and also more frequent launches. However, it seems the approaches are not yielding enough result as the company is still facing stiff competition in all price segments. Perhaps the structure of the company does not allow it to respond effectively to competition.
As for Apple, the transition of its products has begun. According to the Senior Analyst Ben Stanton, The release of the iPhone XS Max which has a real dual sim in China is the first instance that Apple will negate its global hardware strategy on any product in the post-Steve Jobs era of the company. This larger version is enjoying wide acceptance in China and is also driving sales in order parts of the world through private sales channels. The latest flagship model from Apple was launched on September 21 and shipped 3.3 million units of the iPhone XS and 4.7 million units of the iPhone XS Max just 10 days after its availability. The apparent advantage of the dual physical sim version over the eSIM iPhone XS version will wane as more providers start supporting eSIM on their network. China proves to be the largest market for iPhone XS Max, accounting for 47% of its shipments and closely followed by the United States with 27% of purchases.
In his statement, Analyst Tuan Anh Nguyen said that recent stats have proved that smartphones have passed its peak and that future projections have become a source of concern in the industry. However, Tuan Anh still believes that smartphones will be the most dominant computing devices for most people and will still continue to sell in large numbers. The decline in sales will likely reshuffle the industry in favor of the industry top players. But with the recent contrasting fortunes, the dynamism among the major players is also changing with Huawei and Xiaomi exceeding targets while many are in a dilemma.
On the final note, Canalys expects the market to pick up in 2019. Vendors are hoping to leverage new trends such as 5G, the introduction of new sales channel, artificial intelligence applications and local production competency to better their fortunes.Source