china smartphone market share Archives

China Smartphone Market $250-$399 Price Band Share Grows 10% YoY in Q1 2022, vivo Takes Top Spot

Beijing, Hong Kong, New Delhi, Seoul, London, San Jose, Buenos Aires – May 16, 2022

China’s smartphone market saw its $250-$399 (wholesale price) mid-to-high segment growing nearly 10% YoY in Q1 2022 to account for 25.5% of overall sales, a marked expansion from the segment’s 16.9% share just two years ago, according to Counterpoint Research’s China Handset Model Sales Tracker.

Leading smartphone brands have taken note of this by increasing the number of models to address the rising demand for features within the segment, which has been especially popular among consumers aged 24 and below.

Senior Analyst Ivan Lam said, “China’s Gen Z buyers are extremely savvy when shopping for smartphones and demand exceptional value. Leveraging online reviews and resources, this generation is making its renminbi punch above its weight, often comparing mid-to-high-end device features with more premium models. They are looking for solid CPU performance for activities like gaming, very good camera experience and great design.”

* Wholesale prices in $
Source: Counterpoint Research China Handset Model Sales Tracker, Q1 2022

The market shift is being driven by the following factors:

Continued growth of 5G: Our China Smartphone Market Pulse report shows 5G smartphone sales accounting for 75% of the overall sales last year, compared to 42% in 2020.
Upgrade cycles: Many consumers are replacing older 4G phones with 5G devices as they move up into the $250-$399 segment.
Post-COVID rules and regulations: Utility of smartphones has increased, especially with regard to vaccine certificates, testing procedures and quarantine rules.
Push from leading OEMs: To minimize the impact of shrinking margins at the low end, caused by shortages, especially of 4G SoCs and other mature node components, leading OEMs are nudging average selling prices (ASPs) higher.

* Wholesale prices in $
Source: Counterpoint Research China Handset Model Sales Tracker, Q1 2022

Research Analyst Archie Zhang said, “In the past, the big domestic players were marketing-driven, but what we are now seeing is a focus on advanced technologies and features. Marketing is obviously still an important piece, but vendors are now really looking to differentiate further at the hardware level too.”

Within the segment, vivo led the pack in the first quarter with a 28.2% share, according to Counterpoint’s China Handset Model Sales Tracker. Of the 145 models in the segment, vivo’s S12 came out on top, accounting for nearly 9% of total unit sales. Following closely behind were the Redmi K40, HONOR 60, OPPO A93s and Huawei’s Nova 9.

Competition is clearly intensifying at the upper end of the market with the balance of sales shifting from the under-$250 price band in Q1 2020 to the over-$250 band starting with Q4 2020.

Research Analyst Mengmeng Zhang said, “A good example of this market transition to higher-end devices is what is happening at vivo. The company has successfully shifted its X-series devices from the mid-high segment to position them as high-end flagships. This can be seen in the recent launches of the X80 series, X Note and, in particular, the X Fold. The S series has done very well as a replacement in the mid-to-high segment. And of course, we expect vivo to continue addressing the important sub-$250 segment with its popular Y-series devices.”

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Ivan Lam

Mengmeng Zhang

Archie Zhang

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press(at)counterpointresearch.com

vivo’s Strategy Paying off as China Consumers Upgrade Phones

Beijing, Hong Kong, Seoul, Taipei, London, Boston, Toronto, New Delhi – December 10, 2021

The mid-to-high-end segment is increasingly becoming more important for Chinese OEMs as consumers continue to upgrade their smartphones. Higher-value phones also offer more profitability for OEMs, which are witnessing a decline in shipments due to the shrinking of China’s smartphone market.

Over the past year, vivo has made significant progress in China’s mid-to-high-end segment. Its market share in the $500-$599 price band (wholesale price) has risen from 10% in September 2020 to 20% in September 2021. This was driven by the strong performance of the vivo X70 Pro, launched in September. vivo continues to move up the value chain with relentless efforts in research and innovation in camera technology, including entering a strategic partnership with optical technology leader ZEISS.

Counterpoint Research expects China’s smartphone market to see flattish growth in 2021. It is a challenging market for all OEMs, especially given the hardware situation. With a slow market size growth rate, leading OEMs tend to move into the game of revenue and average selling price (ASP).

Further, Chinese OEMs are no longer pleased to be crowned as the “king of affordable”, which means domination in the $157-$314 (CNY 999-CNY 1,999) retail price bands. They are hungry to grab more share in the $470 (CNY 3,000) and above segment. We can call the $470-$630 (CNY 3,000-CNY 4,000) retail price segment the entry premium segment and a strategic territory for all Chinese OEMs.

In Q3 2021, vivo, with all the efforts of strategic portfolio planning and continuous channel evolution, took the leading place in the $500-$599 segment, driven by the outstanding performance of X series.

vivo launched its S series in April 2021, aiming to free the X series from the $470 (CNY 3,000) and below segment. Before that, the X series had blurring boundaries. While it was supposed to be a higher segment series, it was still present in the $470 (CNY 3,000) and below segment. To the market, the X series was meant to increase vivo’s ASP but failed. The S series came at the right time because it was not only different from the Y series, which had already impressed the market with its entry-level products, but also let the X series focus on the premium segment. The restructuring strategy has proved to be a success.

As we may recall, the $500-$599 entry premium segment used to be dominated by Huawei. HONOR, which has been carved out of Huawei as a separate company, sees Apple as a role model, which its CEO George Zhao has admitted publicly a few times, and will definitely launch products in this segment. Xiaomi’s Q3 2021 earnings brief also states that the company is performing well in the premium segment. Therefore, the $500 and above segment will be the next battlefield for all Chinese OEMs.

With the ASP of the Chinese mass market expected to continuously increase in the coming two years, the mid-tier S series holds great strategic importance for vivo.

Please reach out to press (at) counterpointresearch.com for press comments and enquiries.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, USA, China and India.

Background

Analyst Contacts:

Ivan Lam

Mengmeng Zhang

Follow Counterpoint Research
press(at)counterpointresearch.com

One in Three Smartphones Sold was a 5G Phone in China in Q2 2020

Huawei captured a massive 60% share of the 5G smartphone market.
Huawei reached its highest ever share in China capturing 46% of sales volumes.
Apple was the fastest-growing OEM (32% YoY) during the quarter.

New Delhi, Hong Kong, Seoul, London, Beijing, San Diego, Buenos Aires – Jul 24^th, 2020

Smartphone sales in China declined 17% YoY in Q2 2020, according to Counterpoint’s Market Pulse – Monthly Smartphone Sales Tracking service. However, the sales increased 9% QoQ indicating some signs of recovery. COVID-19 has been mostly contained in China but the demand for smartphones is yet to recover to pre-COVID levels.

Commenting on the overall Chinese smartphone market growth, Mengmeng Zhang, Research Analyst at Counterpoint Research, said, “Although China’s commercial activities have resumed since the pandemic has subsided, consumer confidence remains low. Both OEMs and Chinese operators are actively pushing 5G smartphones through lowering prices of 5G devices as well as 5G plans. This has increased the adoption of 5G, with one-third of the total smartphone sales during the quarter were 5G devices, the highest adoption in the world. However, this was still not able to offset the overall market decline.”

Exhibit 1: Smartphone Sales Volumes Share (%) of Key OEMs in China

Source: Monthly Smartphone Market Pulse, July 2020

Highlighting the fiercely competitive landscape, Flora Tang, Research Analyst at Counterpoint, said, “Huawei continues to be the best performer in the China market, grabbing 46% market share in the quarter. Huawei achieved 14% YoY growth despite the overall market slowdown. China has become the most important market for Huawei as its overseas shipments saw a sharp decline after it lost the ability to use GMS in its latest smartphones. Huawei’s hefty investment in expanding distribution networks both online and offline has paid off. Also, Huawei’s 5G portfolio grew quickly with the help of the high-end Mate 30 and P40 series, as well as mid-tier Nova 7 series.

In terms of growth, Apple was the fastest-growing key OEM during the quarter. Despite the market decline, Apple grew an impressive 32% YoY due to the continued popularity of the iPhone 11 series and price cuts. iPhone SE 2020 also quickly entered among the top 3 best-selling iPhones in Q2 2020. June was the best month in terms of smartphone sales so far this year after COVID-19 outbreak driven by surge in sales by Xiaomi (+42% MoM), Huawei (+11%) ”

Exhibit 2: Q2 2020: Smartphone ÓEMs Sales annual Volume Growth Trends

Source: Monthly Smartphone Market Pulse, July 2020

Discussing the development of 5G smartphones in China, Ethan Qi, Senior Analyst at Counterpoint, highlighted, “Despite a slowdown in the smartphone market in China, Chinese OEMs have picked up the pace in 5G developments that were hampered by COVID-19 disruptions in Q1 2020. In Q2, 33% of smartphones sold were 5G enabled compared to just 16% in Q1. The proportion was even higher in June, where more than 40% of smartphones sold were 5G capable. China’s 5G smartphone market is quite consolidated with HOVX grabbing 96% of the market. Huawei leads in 5G smartphone sales accounting for 60% of the market, followed by Vivo, OPPO, and Xiaomi. 5G smartphones in China are still priced in the mid-to-high price range of USD$400 and above, however, 5G smartphone prices are quickly moving towards lower-tier price bands. High-end 5G smartphones are predominantly from Huawei, while Huawei, OPPO, Xiaomi, and Vivo all have various offerings in the mid-tier.”

You can also visit our Data Section (updated quarterly) to view the smartphone market share Globally and from the USA, China, and India.

Analyst Contacts:

Flora Tang

Mengmeng Zhang

Ethan Qi

Tarun Pathak

Follow Counterpoint Research
press(at)counterpointresearch.com

Global Smartphone Shipments Plummet Below 300Mn

The global smartphone market declined the fastest ever, -13% YoY, during the quarter
5G smartphone shipment share increased to 8% in Q1 2020 from 1% in Q4 2019
Xiaomi (7%) YoY, and realme (157% YoY) were the only major brands to achieve growth
Apple remained resilient even during the COVID-19 as iPhone shipments declined only 5% YoY Q1 2020

New Delhi, Mumbai, Hong Kong, Seoul, San Diego, London, Buenos Aires – April 30^th, 2020

The global smartphone market declined its fastest ever, down 13% YoY in Q1 2020, according to the latest research from Counterpoint’s Market Monitor service. This is the first time since Q1 2014, that the smartphone market has fallen below 300Mn units in a quarter. The COVID-19 pandemic has disrupted the signs of any recovery that the market started showing in Q4 2019.

The first quarter decline was mainly driven by a 27% YoY shipment decline in China, the initial epicenter of the pandemic. Some of the decline was offset by sales shifting to online channels. Overall, the market share of China in the global smartphone market, in Q1 2020 reduced to 22% from 26% a year ago. The disruption in China also impacted the supply side of handsets and components for some OEMs, which in turn, affected global shipments. In the long run, this could lead to OEMs diversifying their supply chain across regions. This could be a silver lining for countries like India and Vietnam.

By the end of the quarter, as COVID-19 started to spread to other regions, and lockdowns of varying severity were imposed, the pendulum of disruption started to swing from supply to demand.

Commenting on the impact of COVID 19 on smartphone demand, Tarun Pathak, Associate Director at Counterpoint Research noted, “From the consumer standpoint, unless replacing a broken phone, smartphones are mostly a discretionary purchase. Consumers, under these uncertain times, are likely to withhold making many significant discretionary purchases. This means the replacement cycles are likely to become longer. Lockdowns in most parts of the world will be lifted in a staggered way, which will mean it could take time before the retail activity completely resumes. Even after the lockdown ends, there will likely be changes consumer spending patterns. Online channels are likely to be preferred and there will likely be shifts in the price band distribution with some consumers opting for a cheaper device, which could lead to a decrease in overall ASPs. OEMs will have to embrace a more omnichannel strategy. Retailers will also have to find ways to reach their consumers digitally. This could increase the adoption of O2O channels and hyper-local delivery services in smartphones. However, users staying at home are engaging on their smartphone more than ever. This provides opportunities for services like mobile gaming and OTT services. This will likely lead to operators being able to upsell to larger data packages with higher ARPUs.”

COVID 19 has also impacted the pace of 5G rollouts in some countries. Commenting on this, Varun Mishra, Research Analyst at Counterpoint Research noted, “COVID-19 has disrupted the implementation plans of 5G in some countries, with auctions being postponed in markets like Spain and India. However, led by Huawei, the growth of 5G in China remains as expected. As the situation returns to normal, the 5G sales will be further driven by OEMs including Samsung, Oppo, Vivo, Xiaomi and realme launching devices in the sub $300 price band. This is likely to be complemented by SoC players launching cheaper 5G-capable chipsets. The share of 5G smartphones increased to 8% in Q1 2020, compared to 1% in Q4 2019. 5G is likely to help rate of recovery during the second half of 2020.”

The combined market share of the top 10 brands has increased to 83%, from 80% in Q1 2019. The consolidation trend is likely to continue, as smaller brands, with a higher offline distribution, are likely to be affected more by the pandemic. As expected, due to the pandemic, all the major OEMs declined during the quarter, except Xioami (7% YoY) and realme (157% YoY). This is partly because, India, which is the largest market for both these brands, implemented a severe lockdown in the last week of March.

Exhibit: Smartphone Shipment Market Share Q1 2019 and Q1 2020

Source: Counterpoint Research: Quarterly Market Monitor Q1 2020

The ongoing effect of the pandemic on the smartphone market is likely to be worse in the second quarter. The impact on the OEMs will depend on the markets, channels, and price bands they operate in with some OEMs affected more than others.

Market Exposure:
- Demand Side: The China market is recovering, while the many other major markets are under lockdown. Depending on the severity of the pandemic, the recovery in some of these markets could also take longer. Going forward, brands with a larger share in China, like Huawei, are in a better position than brands like Samsung, for which almost all its major markets remain under lockdown.
- Supply Side: In Q1 2020, OEMs with components and factories in the worst hit areas of China were exposed the most, for example, Lenovo. In the second quarter, the trend will be reversed, as China’s manufacturing recovers, but many other manufacturing centers are closed.
Sales Channel: The brands with higher online presence are likely to remain more immune than offline ones. Some offline demand is shifting to online.
Price Band Exposure:
- The entry level segment is likely to hit the most, especially in the emerging economies, driven by impact on the people’s income in the unorganized labor sector and higher offline purchase tendency. The mid segment will continue to drive volumes.
- The premium segment is least likely to be directly affected by the economic meltdown. As the consumers would adjust to the new normal, the sales in the segment are likely to rebound.

Key Takeaways:

Samsung led the smartphone market during the quarter capturing one-fifth of the global smartphone shipments. The OEM declined 18% YoY during the quarter and is expected to see a steeper decline in Q2 2020.
Huawei continued its push in China and surpassed Apple again during the quarter. The OEM declined 17% YoY during the quarter. Over half of the smartphone shipments for Huawei are now in China.
Apple remained resilient even during the COVID-19 as iPhone shipments declined only 5% YoY during the quarter. The iPhone revenues were down 7% YoY for the same period. The impact on some European and Asian countries was mild.
Xiaomi grew 7% YoY during the quarter. The OEM continued to lead the India smartphone market reaching its highest ever market share (30%) since Q1 2018.
Compared to other major OEMs, Vivo declined less (10% YoY) during the quarter. A strong performance in the Indian Smartphone Market partially offset declines in other markets.

Analyst Contacts:

Tarun Pathak

Shobhit Srivastava

Varun Mishra

Abhilash Kumar

Follow Counterpoint Research
press(at)counterpointresearch.com

The Top 10 Best-Selling Smartphones in China and the World in 2018

The global economy was in turmoil in 2018. Both the global and the Chinese manufacturing industry were suffering, and trade growth slowed down. Not surprisingly, even the smartphone market underwent a series of fluctuations. A surge in the prices of storage components came back to normal at the end of the year. Similarly, sales slowed down drastically in the second half of the year. In the meantime, the newly launched iPhone products gave up on innovation to chase greater value. Affected by the overall economic downturn and the declining attractiveness of products, consumers decided to delay upgrading their mobile phones. As a global third-party technology research company, Counterpoint has closely observed the developments and changes in the smartphone market in 2018. So, what how did smartphones fare in such a harsh environment? Which are the brands/products that stood out in China and the global market and won the hearts of consumers? Which flagship products joined the top 10 best-selling list? How are they performing? The following are the takeaways and insights based on Counterpoint’s Market Pulse service which will answer these questions.

Let us start with China first. It is the largest smartphone market in the world, and 2018 was a tough year. Here’s a detailed analysis of the top 10 best-selling models list for 2018 in China:Data source: Counterpoint Market Pulse 2018

Although Huawei (including HONOR) led the smartphone market by sales in 2018, five models from OPPO made it to the top 10 best-selling list, indicating its strength. In fact, the best-selling smartphone in China during 2018 was OPPO’s R15 series mainly due to its sales cycle running from its launch in March 2018 to the end of 2018. Features such as the notch display, dual-camera, and a slim look also helped its popularity.
The OPPO A5 only debuted in the second half of 2018 but still entered the top three with average monthly sales of nearly two million units. According to Counterpoint’s research, as the Chinese economy continued to slow down in H2 2018, consumers were more pragmatic on upgrading their mobile phones. Their desire to buy smartphones below RMB 1,500 (roughly US$220) became even stronger. For them, the OPPO A5 with notch screen was worth the money.
Apple’s performance was similar to that of 2017, and two of its models entered the top 10. The models rank in the top 10 list was also similar to 2017. The iPhone X was still the absolute leader in the premium segment. Although its notch display faced criticism, iPhone X remained popular among consumers due to the overall experience and brand value. The iPhone 8 Plus ranked sixth and was a good interpretation of the Apple brand and system experience.
Vivo invested huge resources and efforts into marketing in 2018, such as sponsoring the World Cup soccer event. Two of its models secured a position in the top 10. The X21 entered the top five by sales. With an outstanding and larger screen-to-body ratio, the intelligent optimization of the camera, gaming, and tools by Jovi AI, the X21 brought a superior product experience. The Vivo Y85’s positioning is similar to the OPPO A5.
Xiaomi’s presence on the list was also the same as in 2017. Instead of Note 4X, only Redmi 5 Plus entered the top 10 and ranked the same as 2017. Although the Xiaomi models didn’t secure a position in the top 10, Xiaomi 8 series shipments reached nearly four million units and entered the top 30 with improvement in its camera.
Huawei and HONOR: Although they didn’t make into the top 10, six models ranked just outside the top 10. These products aimed at the low-, mid- and high-tier segments to form a group advantage. Huawei and HONOR had models such as the high-end P20 series, mid-end Huawei Nova2s, HONOR V10, and HONOR 10, as well as low-end HONOR 7X, HONOR 9 Youth Edition, and more.

In the global list of best-selling smartphones, Apple dominated the top 10. Here’s a closer look at how Apple and the devices from its competitors performed over the year:

Data source: Counterpoint Market Pulse 2018

Apple dominated the best-selling list capturing with six out of 10 spots. The iPhone X, the iPhone 8 and the iPhone 8 Plus, unveiled in 2017, together sold nearly 100 million units, while the newly launched iPhone XS Max and iPhone XR, each sold more than 16 million units. On the contrary, the new iPhone XS was in an awkward position in some markets and didn’t make into the top 10 list. Instead, the low-end Apple iPhone 7 was widely recognized in some countries as a good value proposition and saw strong performance.
Samsung‘s S9 and S9 Plus continued to gain traction in mature countries, especially in North America and Europe and entered the top 10 list. The Galaxy J6, priced at only around RMB 1,300 (roughly US$190), is still a hot selling model in emerging markets such as India and South East Asia.
For Xiaomi, Redmi is the biggest contributor to sales. As a core model, the Redmi 5A sold nearly 20 million units in 2018. It is capturing the low-end market like Indonesia and India with an affordable price (equivalent to only US$70). Although it didn’t enter the top 10, the Redmi Note 5 performed quite well.
Huawei has several best-selling models, such as P20 lite, which shipped more than 13 million units. However, it ranked just outside the top 10.

Q3 2018: The Chinese Smartphone Market Continues to Decline, Driving Market Consolidation

Huawei (including Honor) was the fastest growing brand and No. 1 in China, and OPPO and vivo’s rankings are neck and neck, with a combined market share of 42%.

Beijing, Hong Kong, Seoul, San Diego, Buenos Aires, London, New Delhi –

Nov 1^st, 2018

According to the latest research from Counterpoint’s Market Pulse service, sales of smartphones in China saw no signs of recovery in Q3 2018, ending the quarter with 8% year on year decline though the market grew by 2% compared to the last quarter.

Commenting on the performance of the overall market, James Yan, Research Director said, “The sharp YoY decline in Q3 can be attributed to the generally lengthened upgrade cycle of consumers and average price increases. Fierce competition among local players in the mid-to-affordable premium market has forced key local players to continuously improve their offering and roll out advanced features that are more akin to premium level smartphones. AI-powered processors, bezel-less screens, dual or triple cameras and faster screen-unlock are some of the key selling points that smartphone OEMs have marketed aggressively in their products across different price bands.”

James Yan further added, “China is a mature market with over 95% smartphone penetration, thus it is natural that YoY growth in smartphone sales is slowing. However, China continues to see rapid growth in technology innovation. In Q3 2018, we’ve seen the smartphone market evolve to the ‘full-screen-3.0’ era with a higher penetration of bezel-less models than the global average level. Chinese OEMs are investing significant R&D resources to develop products with a ‘true infinite screen’. Innovative solutions such as pop-up cameras, under-display fingerprint sensors and 3D face recognition technologies, have been widely adopted by Chinese OEMs in their latest flagship models. Driven by the efforts of OEMs to launch products with leading technologies, the Chinese market in Q3 was slightly up compared to the second quarter. It is a positive sign for the Q4 outlook when annual ‘spotlights’ such as the Huawei Mate 20 series and the new iPhones will see sales ramp-up.”

Exhibit 1: Chinese Smartphone Market Share Q3 2018

Source: Counterpoint Research Market Monitor Q3 2018

Commenting on the competitive landscape, Mengmeng Zhang, Research Analyst at Counterpoint, said, “The Chinese smartphone market is saturated with accelerated market consolidation. The competition in 2018 is almost a zero-sum game for the top five players. It is challenging however, even for the leading brands to create clear product differentiation. In Q3, only Huawei (including Honor) and vivo managed to achieve positive YoY growth among the top 5 brands.”

Commenting on the reasons behind the growth of Huawei and vivo, Flora Tang, Research Analyst at Counterpoint, highlighted, “The long-term R&D efforts of Huawei in developing and integrating cutting-edge technologies across its product portfolio have paid off. Huawei is successfully winning trust among Chinese consumers based on the quality of Huawei and Honor smartphones over its Android competitors, especially in the premium market where consumers are less sensitive to price. The YoY growth of vivo was due to its successful marketing strategy. Its flagship models have benefited from the brand’s exposure as the official sponsor for the FIFA World Cup, which helped elevate its brand image among sports fans both in China and abroad.”

Key Takeaways from Chinese Market in Q3 2018:

The Chinese smartphone market declined by 8% YoY while going up by 2% sequentially in Q3 2018.
The QoQ market growth was driven by heavy promotions offered by OEMs during summer holiday seasonal sales, to clear stock of older models and to make space for new product launches in Sep.
As new technologies such as, bezel-less displays, AI-powered processors and dual cameras have penetrated into lower-tier models, the competition in China is getting increasingly fierce.
Market consolidation is apparent in China, with the top five OEMs capturing 86% of smartphone share in Q3, increasing from less than 80% in the same period last year.
Huawei (including Honor) was the market leader in terms of both sales volume and growth momentum in Q3, with its leadership position fixed in China, capturing 23% market share.
Success of Huawei was not only reflected in the premium market, but also in the mid-tier market with the growth of Nova series and strong sales momentum of various models under Honor brand (e.g. Honor 10, Honor 8X, Honor Play).
vivo with 4% YoY growth was the second best-selling brand in Q3 capturing 21% market share. Growth of vivo was driven by the continued popularity of flagship models vivo X21 and vivo NEX in the wake of the FIFA World Cup event. In addition, the sales performance of budget models under vivo Y and Z series was also strong in China.
Smartphones sales of OPPO were flat YoY but grew 15% sequentially. The Q/Q uptick in shipments of OPPO was due to the continued sales momentum of the flagship model OPPO R15 and the popularity of budget models under the OPPO A series.
OPPO A5, a bezel-less model with 6.2-inch notched display, 19:9 screen ratio, dual SIM slots and 4230 mAh battery, was the best-selling model in Q3 in the Chinese market, thanks to its flagship-like product design and the affordable price ticket (CNY 1,500 or US$200).
Xiaomi smartphone sales were flat compared to last quarter but declined 6% YoY. Xiaomi was aggressive in promoting its flagship model, Mi 8, by offering various discounts during the quarter. However, due to fierce competition from Huawei, Honor, OPPO and vivo, the sales volume of Xiaomi Mi 8 fell short of expectations.
As Xiaomi has launched the less expensive version of Mi8 (Mi 8 Lite) in September, we expect performance of Xiaomi Mi 8 Lite to surpass Mi 8 during the coming quarter.
iPhones sales were down 17% YoY in Q3 but up 14% sequentially driven by growing demand for the new iPhones after their launch in September. The super-premium model iPhone Xs Max, the gold-colored variant especially, got immediate traction among iOS fans in China, despite the high price. This is due to the attractive design language and form factor of the new iPhones compared to the previous generation.
We expect that the iPhone XR will stimulate upgrade demand of iPhone fans in China. iPhone XR is expected to capture a larger share of sales volume of iPhones in Q4, followed by the iPhone Xs Max and iPhone Xs.

The comprehensive and in-depth Q3 2018 Market Pulse is available for subscribing clients. Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth, latest research, insights or press enquiries.

The Market Monitor research is based on sell-through estimates based on vendor’s IR results, vendor polling triangulated with supply chain checks and secondary research.

Analyst Contacts:

James Yan闫占孟

+86 15810182576
james@counterpointresearch.com

@james_a3

Tarun Pathak
+91 9971213665
tarun@counterpointresearch.com

@Tarunpathak

Mengmeng Zhang

+86 18611804269
mengmeng@counterpointresearch.com

Flora Tang

+852 5545 2529
flora@counterpointresearch.com

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Oppo & Vivo – The New Smartphone Leaders in China

As per the latest research from Counterpoint’s Market Monitor, the demand for smartphones in China grew a healthy 8% annually and 7% sequentially in Q3 2016. The world’s leading smartphone market is undergoing a shift in competitive environment with rise of local brands such as Oppo, Vivo and LeEco.

Commenting on the findings, Research Director, James Yan, highlighted, “Over the last twenty four months, there has been a close race but tough fight for the top three spots in China smartphone market.This quarter for the first time ever, we have seen new market leaders for the top two spots. Oppo and Vivo became the number one and two smartphone brands in China capturing 17% and16% share respectively. The two brands sharing the same owners BBK group, now control almost one third of the China smartphone market. This is a tremendous performance from Oppo and Vivo.”

Mr. Yan further adds, “Shipments for Oppo’s smartphones grew +82% annually whereas Vivo recorded the highest growth in China during the quarter as the demand for its shipments rose 114% annually, more than doubling its volumes. Oppo’s performance was as a result of strong demand for its flagship Oppo R9 which became the top selling model in China for the entire quarter surpassing the popular iPhones which held the top spot for years. Oppo’s low-end A59 and A37 models are also driving strong sales in tier-3/4 cities adding to the overall uptick. Vivo also saw healthy demand for its flagship X7 series across offline retail helped by aggressive outdoor promotions, official sponsorships (e.g. NBA), celebrities (K-Pop stars) and effective social media marketing.

The focus on traditional offline retail and wider distribution network which still constitutes three-fourth of smartphone demand has been key to Oppo and Vivo success”

Exhibit 1: % Smartphone Shipments By OEMs in Q3 2016

Commenting on competitive landscape, Senior Analyst MengMeng Zhang, noted, “The previous market leader Huawei saw a modest growth of 4% but still recorded a stable performance capturing 15% share. Huawei’s upcoming flagship Mate series refresh should drive some uptick in premium segment with opportunity to fill in the gap left by Galaxy Note 7 and thus should drive halo effect for the mid-tier Honor and Nova series to maintain its spot in top three rankings.

Xiaomi suffered as its shipments were down 22% annually with demand mostly skewed towards low-end models such as Redmi 3s. Xiaomi needs a hero flagship device in premium to drive mindshare to compete with much more focused R&D and manufacturing driven brands such as Oppo, Vivo, Apple and Huawei. Also, lack of presence in offline space has been one of the determinants for Xiaomi’s slowing growth as its e-commerce driven business model has hit a ceiling.”

Exhibit 2: Growth Metrics for Smartphone Brands in China

Research Director, Neil Shah adds, “The growth of Oppo and Vivo has been mostly in low to high-tier where it has been successful to take share away from Samsung, Lenovo, Coolpad and to some extent Apple (older models). However, with Samsung’s losing mindshare and marketshare, there is a big opportunity in premium segment ($600+ wholesale) where Apple has the lion share with Huawei the only formidable brand left. This is the area which Oppo and Vivo would exploit next year or so to cement their leading spots in China market building on their growing brand equity, head-turning industrial design and wider distribution network.

Apple had a slow first nine months this year but the iPhone 7 series should help it regain lost marketshare as the demand for iPhone 7 series is tracking better than iPhone 6s series according to our recent channel checks. Apple while will grow share sequentially in upcoming Q4 2016, but the full year 2016 shipment volumes is tracking below its peak and Apple needs to offer something cutting edge to appeal maturing Chinese smartphone users which are quickly warming up to local brands such as Oppo, Vivo, Huawei and LeEco”

Exhibit 3: Oppo & Vivo Outdoor Promotions and Retail Branding

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high tech industry.

Analyst Contacts:

James Yan闫占孟
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