The premium smartphone segment (wholesale price >US$ 400) sell-through declined 13% YoY globally during the first quarter of 2020, according to Counterpoint’s Market Pulse service. The contraction was part of the general smartphone market slowdown due to the COVID-19 pandemic. The segment remains key as it contributed close to 57% of total global smartphone revenue during the quarter.
Apple led the premium segment with a 57% market share, followed by Samsung and Huawei. While most of the brands declined, OPPO grew 67% YoY (from a low base) driven by its Reno 3 and Reno 3 Pro 5G series, and Xiaomi also grew 10% from a small base driven by the Mi 10 5G and Mi Note 10 series. This is the first time since Q3 2018 that Xiaomi has entered the top 5 players in the Premium segment, globally. Compared to the other price bands, the premium segment remains the most consolidated. The top 3 players together captured 88% of the segment during the quarter.
Within regions, Apple and Samsung remained in the top 2 spots in all the regions except China, where Huawei was the market leader in the premium segment. Notably, over 90% of Huawei’s premium segment sell-through in Q1 2020 were in China. Driven by the popularity of OnePlus 7 series, OnePlus also featured in top 5 players in the premium segment in all the regions except LATAM and China.
Exhibit 1: Premium segment market share (sell-through) by OEMs and Regional Rankings, Q1 2020
Within Models, iPhone 11 continued to do well and was the highest-selling model in the premium segment for 2020 Q1. Top four out of five highest selling models in the premium segment were from Apple. This was also the first time that a 5G device entered the top 5 bestselling models in the segment.
Exhibit 2: Best Selling Models in the Premium segment, Q1 2020
5G devices cornered one-fifth of the total premium segment during the quarter. Huawei with its strong push in China captured close to 42% of the total 5G device sell-through in the premium segment. The 5G portfolio is also trickling down the price bands, which is helping to drive growth. 39% of all 5G device sales are now in 400 to 600 USD price band, up from 35% in the previous quarter. Within the regions, 63% of all 5G devices in the premium segment were in China.
The overall premium segment declined but within the price bands that make up the premium segment: the 600 to 799 USD grew 47% YoY capturing over 42% of the premium price band sell-through. This was driven by the iPhone 11 series, which captured three-quarters of this price tier. The price segment has been growing steadily since 2Q 2019, first driven by the popularity of iPhone XR and now iPhone 11. This is now the strongest price band for Apple. Apple has tested its price elasticity and realized that marginally aggressive pricing can potentially generate a much higher “customer lifetime value (CLV)” over 24-30 months
Exhibit 3: Premium segment share by wholesale price (US$) tiers and YoY Growth, Q1 2020
Going forward, the launch of 5G devices by Apple will play a key role in the growth of the premium segment. We also think the premium segment is likely to remain the most resilient from the COVID-19 impact.