Xiaomi Replaces OPPO To Take the Fourth Position; iTel Entered the Top 10 Smartphone List for The First Time in Q1 2018

Global smartphone shipments declined 3% annually in Q1 2018. Top 10 players now capture 76% of the market thereby leaving 600+ brands to compete for the remaining 24% of the market. The waning smartphone demand is due to a slow-down in developed markets where replacement cycles are lengthening with overall smartphone features and design reaching its peak. However, emerging markets still offer a sizeable opportunity for OEMs to expand and grow as smartphone penetration by users in still around 45%. The average selling price of smartphones is increasing, too, in emerging markets with users upgrading from entry level to the mid smartphone segment. Hence, we expect OEMs to accelerate their go to market strategy and expansion in parts of Africa and rest of the APAC region to capture the growing demand in CY 2018.

Exhibit 1: Global Smartphone Shipments Ranking and Market Share – Q1 2018

Source: Counterpoint Research: Quarterly Market Monitor Q1 2018

The saturating China smartphone market is forcing the Chinese smartphone players to invest and expand beyond their home market. The efforts have been realized as the performance of Chinese brands in MEA, Europe and the rest of the Asian markets has been strong. The ideal smartphone market for Chinese brands are the emerging smartphone markets such as Bangladesh, Myanmar and Middle East & Africa where LTE is being launched for the first time or the network is expanding to more covered geographies. The North America market has been problematic for Chinese brands and the ban on ZTE will further decline their share in the region.

Exhibit 2: Chinese Brand Smartphone Shipment Growth by Region – Q1 2017 to Q1 2018

Source: Counterpoint Research: Quarterly Market Monitor Q1 2018

Market Summary

  • Smartphone shipments declined 3% annually reaching 360 million units in Q1 2018.
  • The China market decline in Q1 2018, affected the overall growth of some of the key Chinese brands including OPPO and vivo. Both saw a decline in the quarter as a result of the China market slowdown.
  • The brands are investing in countries and regions outside China to offset the weak demand in the home market. The key markets for Chinese brands expansion so far has been India, South East Asia, Europe, Middle East and Africa.
  • Smartphone penetration fell to 76% of all the mobile phones shipped in the quarter. This was partly due to an increase in feature phone shipments by some key brands such as Nokia HMD and Reliance Jio who both saw YoY growth.
  • Top 10 brands accounted for 76% of the smartphone volumes in Q1 2018.
  • Nokia HMD, iTel, Xiaomi, Tecno, OnePlus and Huawei were the noted brands in the fastest growing category. OPPO, vivo, Samsung in the top 10 smartphone category reported declines in Q1 2018.
  • iTel entered the top 10 smartphone market for the first time, together the three smartphone brands of Transsion holdings (Tecno, iTel and Infinix) accounted for over 10 million smartphones shipped in Q1 2018.

OEM Performance Insights

  • Samsung led the smartphone market by volume with a market share of 22% in Q1 2018. The company regained its top spot from Apple in the quarter.
  • Sequentially, Samsung shipments grew 5% with the launch of its latest flagship, the Galaxy S9 and S9+. China remains a struggle for Samsung in Q1 2018 as shipments declined over 50% in Q1 2018. Latin America remains the most favorable market for Samsung, where the company holds over 30% market share.
  • Apple shipped 52.2 million iPhones during Q1 2018 up 3% as compared to the same quarter last year. iPhone X remains the top seller for Apple during the quarter. ASP’s fell compared to the previous quarter due to the greater mix of iPhone 8, 8 Plus, and older iPhones during the quarter.
  • Apple grew 32% YoY in China due to strong performance of its iPhone X. While the promotions were not aggressive for the iPhone X, except in operator channels, its demand remains healthy in the market.
  • Huawei shipments grew 14% YoY in Q1 2018 even though growth in China slowed down considerably.
  • Huawei’s continuous efforts to expand in markets outside China has resulted in strong growth in Europe (+46%), MEA (+38%) and in India (+146%) where it entered the top 5 smartphone brand list for the first time in Q1 2018. 
  • Xiaomi remained one of the fastest growing brands (+101%) in Q1 2018, driven by strong sales in both China (+51%) and India (+134%).
  • Xiaomi shipped 27 million smartphones, capturing 8% market share of the global smartphone market in Q1 2018. Xiaomi surpassed OPPO to become the fourth largest smartphone brand in Q1 2018. It continues to grow in the India smartphone market along with increasing efforts to enter new markets and capture more market share in Q2 2018.
  • OPPO and Vivo were the fifth and sixth largest brands during the quarter, capturing market share of 6% and 5%, respectively. Both of the brands recorded annual declines in Q1 2018 for the first time. The aggressive expansion of these brands in markets outside mainland China will be the key to growth as the home market reaches saturation levels in 2018.
  • LG registered 11.4 million smartphone shipments in Q1 2018.  LG’s smartphone shipments declined both annually (-23%) and sequentially (-18%) due to a revised smartphone launch strategy that led to no flagship launch in Q1 2018.
  • Lenovo (including Motorola) captured the 8th spot with a market share of 2%. While the Motorola brand did well, it was Lenovo smartphones that registered decline during the quarter. The Lenovo brand declined in India and in rest of APAC while Motorola continued to do well in LATAM and US smartphone markets.
  • ZTE continues to face tough competition in high growth markets which led to declining market share during the quarter. The US component ban from the US government will take a toll on the company’s smartphone shipments in the coming quarters.
  • iTel entered the top 10 smartphone brand list for the first time. The company is also doing well in the feature phone market.
  • iTel’s strategy of concentrating on the emerging markets in the Middle East, Africa and Asia is paying off as smartphone shipments grew over 200% in Q1 2018.
  • Transsion Holdings the group company for iTel, Tecno and Infinix brands together accounted for over 10 million smartphones shipped during the quarter.
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