Oppo, Xiaomi and Vivo Reached Their Highest Ever Shipments in a Single Quarter, Despite a Global Slowdown

  • iPhone helps Apple to record 3rd quarter revenue even as shipments remain flat YoY
  • Huawei  holds on to 2nd position for the second consecutive quarter
  • Emerging market growth could not offset the decline in China & other developed markets

New Delhi, Mumbai, Hong Kong, Seoul, London, Buenos Aires – November 1st, 2018

According to the latest research from Counterpoint’s Market Monitor service, global smartphone shipments declined 3% annually, recording 386.8 million units in 3Q 2018. The top 10 players now capture 79% of the market leaving 600+ brands to compete for the remaining 21% of the market. Samsung continued to lead the smartphone market with 19% market share in the quarter. Smartphone shipments for Samsung declined for the fourth consecutive quarter, even though the company recorded its highest smartphone shipments ever in India. Chinese players continue their growth trajectory with strong performances in markets outside China. While Apple iPhone shipments remained flat annually, revenues for the devices grew 29% with a record average selling price of $793.

Exhibit 1: Global Smartphone Shipments Ranking and Market Share – Q3 2018

Source: Counterpoint Research: Quarterly Market Monitor Q3 2018

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 declined for three consecutive quarters. It can be attributed to a weakening demand in developed markets like China, USA and Western Europe which account for almost half of smartphone sales globally. The lack of meaningful innovation and improvement in smartphone build quality is leading to lengthening replacement cycles.”

Mr. Pathak commenting on the strong performance of the Chinese brands added, “Despite the decline in its home market, Chinese brands OPPO, vivo and Xiaomi reached new highs in smartphone shipments in a quarter. Huawei was also able to maintain its 50+ million smartphone shipments and retain its 2nd position in 3Q 2018. This suggests that the companies are reducing their dependence on their home country. The brands will further expand outside China as they push into Asia Pacific countries and Europe.”

Exhibit 2: Huawei, Oppo, Vivo and Xiaomi (HOVX) growth (China vs Rest of World) – Q3 2018

Although some emerging markets, like India, showed double digit growth, it was not enough to compensate for the volume decline in developed markets. Since emerging markets are under-penetrated, they have a smaller smartphone base and are not able to offset the global decline. However, this also presents long-term growth opportunities for OEMs with many entering such markets to grow their sales.

Commenting on this market trend, Research Analyst Shobhit Srivastava noted, “The growth in the emerging markets is led by Chinese smartphone players that are venturing out of China to capture sales. The offerings from these OEMs have intensified competition and many features and capabilities common among flagship models are now progressively diffusing through to the lower price bands. This is also affecting local smartphone players in the emerging economies, which are struggling to maintain a foothold.”

Exhibit 3: Smartphone Shipment Penetration by Region – Q3 2018

Source: Counterpoint Research: Quarterly Market Monitor Q3 2018

Mr. Srivastava added, “Chinese OEMs are driving up the ASP in the low to mid-tier price segments in emerging markets by offering competitive specifications at affordable prices. These OEMs have also carved out an “affordable premium” segment targeting users that cannot afford flagship devices. However, considering the macro economic factors in many of these emerging markets, many challenges still lie ahead. It will take more than an affordable smartphone offering to make users switch from their feature phone to a smartphone in the short-term.”

By offering additional features like AI, dual camera, full-screen display and higher memory configurations, smartphone OEMs are subtly increasing the average selling price of devices. This is helping the brands maintain revenue despite declining shipments. The next growth cycle in developed markets will likely be driven by the emergence of commercially available 5G, which is still some quarters away.

*Lenovo includes Motorola

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Shobhit Srivastava

+91 900-083-1117


Varun Mishra
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5 Lessons from Today's Apple Q3 2018 Earnings Call

Apple just completed its Q3 2018 earnings call. Here are my five key thoughts on the quarter:

  1. Even Apple isn’t immune to the growing trend of longer replacement cycles. iPhone shipments were flat YoY indicating that their sales growth is slowing. However, iPhones still make up more than 50% of product revenues. How is Apple doing that?
  2. Because consumers are still buying their newest and most expensive iPhones, even ten days of XS series sales were a success. The whopping $793 ASP is a major jump from $606 in Q3 2017. Compare that to the minor $11 jump from $595 in Q3 2016. The company simply is doing a better job than any other OEM in keeping its user-base tied to their products. Smartphone innovations have been weak over recent years, and 5G phones will likely only be fully viable around 2020 at scale. This all indicates that iPhone’s won’t be the growth driver that it used to in the past and something has to change.
  3. A year ago, the worry was Apple was in for a decline in China. There was also hand ringing that Europe was potentially in trouble of slowing. Today the company’s key regions were very close in revenue growth. Americas are seeing 19% growth, Europe 18%, and China 16%. This means the iPhone brand has held up nicely vs. Huawei, Oppo, vivo, Samsung and others while pushing the limits on higher ASPs. However, we are seeing strong growth by these companies in developing markets.
  4. Even Apple knows that it’s unsustainable to keep raising their ASP like this YoY. The next big move for the company will be to refocus their offerings to their ecosystem and services and away from its devices. An indicator for this is their announcement that iPad, Mac and iPhone sales unit numbers will not be broken out in the future. The company will now focus on better weaving a story not build on shipments but one of revenues, ecosystem, services, and customer satisfaction.
  5. Speaking of services, the company saw a 17% YoY increase to almost $10 billion, well on its way to the $14 billion target by 2020. We are already seeing Apple going deeper into the TV service market with their announcement to launch a TV streaming service in the near future. Apple will continue to innovate outside of their products as they realize that their growth can only be substantiated by bolstering their service offerings. They now have the user base and device buy-in and are looking towards growth opportunities in TV, health, and mobile payments.

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