According to the latest research from Counterpoint’s Market Monitor service, global smartphone shipments declined 4% annually in CY2018. Fourth quarter smartphone shipments for 2018 recorded a decline of 7%, marking it the fifth consecutive quarter of smartphone decline.

Commenting on the decline in smartphone market, Tarun Pathak Associate Director at Counterpoint Research said, “This is the first time that the global smartphone market has witnessed decline for a whole year. The decline in smartphone shipments can be attributed to lengthening replacement cycles in developed markets like US, China and Western Europe. Smartphone OEMs tried to push sales by adding features such as AI, multiple camera assemblies, full-screen displays, in-screen fingerprint scanners etc. but consumers held on to their devices longer due to the absence of groundbreaking innovations and higher prices of devices being offered by the OEMs.”

Mr. Pathak added, “Smartphone OEMs in 2019 are looking to launch devices with innovative designs and specifications such as 5G, foldable displays, punch-hole cameras, full-screen in-display fingerprint scanners to lure consumers to upgrade. With Chinese OEMs Huawei, Oppo, vivo, Xiaomi (HOVX) improving their quality and taking the lead at launching these new features, it has become tough for both global brands and local brands alike to sustain market share.”

Exhibit 1: Global Smartphone Shipments Ranking and Market Share – CY 2018

Source: Counterpoint Research: Quarterly Market Monitor Q4 2018

Commenting on market dynamics in 2019, Research Analyst, Shobhit Srivastava, noted, “The collective smartphone shipment growth of emerging markets such as India, Indonesia, Vietnam, Russia and others was not enough to offset the decline in China, which was responsible for almost 1/3^rd of global smartphone shipments in 2018. With China showing little or no sign of recovery due to various politico-economic factors, Chinese brands are looking to expand overseas. To increase market share, Chinese brands have been aggressive in both hardware/software design and marketing. They are bringing many firsts into smartphone designs and are taking multiple brand strategies to enter new segments without making a compromise of their brand image.”

Exhibit 2: Chinese Smartphone brand (HOVX) shipment share – China vs Overseas

“The increasing competition from both Chinese and global smartphone players will make it tougher for already suffering local brands. We have been talking about consolidation in the smartphone market in the past and 2019 will bring just that — top brands will continue to eat market share of smaller and local players”

Exhibit 3: Global Smartphone Shipments Ranking and Market Share – Q4 2018

Source: Counterpoint Research: Quarterly Market Monitor Q4 2018

Key Takeaways:

• The global smartphone market declined for the first time ever as consumers held onto their devices longer, especially higher-end phones. Many did not see a need to upgrade as the available phones were too expensive without offering any groundbreaking innovation that would move them to upgrade their older device.
• For Q4 2018, Huawei, OPPO and vivo continue to dominate with strong performances in China, India, Asia and parts of Europe. The trio have multiple regions to enter and grow moving forward into 2019.
• Samsung and Apple saw a tough quarter and tough 2018 as demand for their flagship phones have waned due to competition from affordable premium and more cutting-edge phones from Chinese brands such as Huawei and OnePlus.
• Apple has already attempted to reduce prices in China to alleviate the fall. This will not have a lot of impact on China sales. A small price cut will not move the dial. More effective will be Apple’s buy-back programs and installment plans which will be rolled out into more countries.
• Xiaomi reached a record fourth position for the full year after two years of setbacks thanks to immense growth in India. It has surpassed OPPO globally to take back the fourth position.
• BBK Group (which owns OPPO, Realme, vivo and OnePlus brands) is collectively the world’s third largest manufacturer, even bigger than Huawei in terms of volume.
• Huawei continues to have its sights on Apple and should surpass Apple as the second largest brand globally in 2019 if it doesn’t face any sanctions from the US in the way ZTE was cut-off from US suppliers (e.g. Google, Qualcomm, US RF components, etc.

*Lenovo includes Motorola

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Analyst Contacts:

Tarun Pathak
+91 997-121-3665
tarun@counterpointresearch.com

Shobhit Srivastava

+91 900-083-1117

shobhit@counterpointresearch.com

Varun Mishra
+91 991-502-0142
varun@counterpointresearch.com