The USA market is undergoing dynamic shifts in how the smartphones are being sold and bought as devices are unbundled from the plans. As a result, the sales channels which have been traditionally dominated by carriers has begun to open up.
According to the latest research from Counterpoint’s Market Monitor program, in Q4 2015 (Oct-Dec), USA’s overall handset market grew 2% annually whereas the smartphone segment grew a modest 4% annually during the holiday season quarter, thanks to an uptick from demand in open channel and strong performance from T-Mobile.
Apple led the smartphone market with 36% share (-4% YoY) followed by Samsung (-1% YoY) at 24% share in Q4 2015. LG (+10% YoY) at 13% share, ZTE (+60% YoY) at 8% and Motorola (-7% YoY) at 5% share captured the next three spots respectively. The top five brands captured more than three-fourth of the smartphone market during the quarter. Other notable performances were, Huawei (+330% YoY), Blu (+610% YoY), Asus (+480% YoY) and Alcatel One Touch (+54% YoY) in overall handsets.
Jeff Fieldhack, Research Director at Counterpoint Research, comments, “The US market remains positive but decelerating. Carriers confirmed their full commitments to EIPs and competitive forces remain extremely fierce. There are still some feature phone subscribers to be converted. But, the bulk of the growth will come from carriers attempting to squeeze out revenue growth from connected cars, upcoming video services, connected wearables and tablets.
The open channel witnessed a massive 164% YoY growth in Q4 2015. EIPs and leasing programs have had an educating effect on consumers who are now becoming aware of the true costs of devices without subsidies. There is a growing market of affordable, large display, LTE devices being purchased online which has been the growth driver for the open channel.”
Neil Shah, Research Director at Counterpoint Research, adds, “OEMs such as Blu, Asus and Huawei are riding high on this shift to “direct-to-consumer” sales channel model with their highly affordable LTE smartphones, Nexus series and expanding distribution not only online but now also offline. Expect players such as Xiaomi, LeTV and others to disrupt the market and increase the open channels market size in second half of this year further. Best Buy & Amazon have been the key open channel players driving this trend.
Furthermore, most carriers have moved towards an all LTE portfolio, with blanket coverage and homogenous bands, and, with chipset solutions such as Qualcomm “All mode”, we estimate OEMs to gravitate towards lesser SKUs which can unanimously or seamlessly work on any carrier in USA. This will further drive adoption of sales through open channels in the USA market to drive scale and efficiencies”
Exhibit 1: USA Handset Market Share by Channels
Exhibit 2: Annual Growth Rates % for OEM Handset Shipments in Open Channels in Q4 2015