Our Q4-2017 Market Monitor report has been published. We release one Infographic in each quarter to summarize the handset and smartphone market activities in a single page.
Some quick observations from this edition:
Global smartphone shipments declined a modest 3% YoY but grew 6% QoQ
Top 10 smartphone brands contributed to three fourth of the total smartphone market
Apple’s global sales declined a modest 1% but it had the biggest revenue quarter owing to the high increased product mix of iPhone X
Xiaomi once again emerged as the fastest growing smartphone brand, and grew by 83% YoY
Intense competition in the respective home markets for local brands is forcing them to expand overseas and in neighboring markets to sustain growth
For Q4 2017 handset shipment performance in different markets please refer to link below:
Global smartphone shipments grew 2% annually in CY 2017 but declined 5% in Q4 2017. Top 10 players now capture 77% of the market thereby leaving just below a quarter of segment for over 600+ brands to compete.
For the first time in Q4 2017, shipments of seven out of the top ten brands declined YoY signaling a tough quarter for most of the OEMs. Xiaomi, OPPO and Vivo were the only brands among top ten which grew YoY–mostly due to strong performances outside of China. Apple shipped 77.3 million smartphones into the market during the final quarter of 2017, which is down 1% annually. The quarter was a week shorter than last year and the company was able to increase ASP’s by over $100 to $796 with the launch of the X, 8, and 8 Plus—a trade-off the company is content to make. The challenge for Apple going forward will be its ability to continue to grow its base of 1.3 billion devices.
Exhibit 1: Global Smartphone Shipments Ranking and Market Share – Q4 2017
Out of all the regions, only MEA and India grew in double digits during the quarter. However, decline in shipments in China and Europe impacted the overall smartphone market leading to a decline of 5% for the first time ever in Q4 2017. Going forward, the global smartphone market growth will be linked to the upgrade rate of users across different regions. A longer replacement cycle will mean handset brands might need to tweak their products and go to market strategy. This will eventually mean that handset brands will need to adopt a regional specific strategy to push users to upgrade faster than their current cycle.
Exhibit 2: Fastest Growing Regions in Smartphone Shipment – Q4 2016 vs Q4 2017
Smartphone shipments grew 3% annually to reach 1550 million units in CY 2017. In Q4 2017, 415 million smartphones were shipped, down 5% from a year ago.
Even though the China market declined in Q4 2017, Chinese brands remained the fastest growing brands as they quickly expanded operations outside of China—investing in India, South-East Asia, and Europe. This offset the weak demand in the home market.
Smartphone penetration remained over 80% of all the mobile phones shipped in the quarter.
Top 10 brands account for 77% of the smartphone volumes in CY 2017.
Chinese brands Xiaomi, Vivo, OPPO & Huawei remained the fastest growing smartphone brands. Samsung, Apple and LG also showed growth during the year.
OEM Performance Insights
Samsung led the smartphone market by volume with a market share of 21% in CY 2017. However, it lost the top spot to Apple in the fourth quarter of 2017.
Sequentially, Samsung shipments declined 11% due to decline in India, China and Western Europe. Samsung is the absolute leader in the Latin American market. Its strong foothold in Brazil and Argentina, both very protective market, had facilitated it to more than triple its share from its closest competitor.
Apple shipments declined 1% annually in Q4 2017, falling to 77.3 million units. However, the company became the number one smartphone brand during the quarter. Apple remained number two in CY 2017, capturing 14% market share.
Despite the 1% volume drop of iPhones during the quarter, the company grew ASP’s a massive $100 to $796.
Apple’s market share in China dropped during the first half of 2017 but started picking up during the second half of 2017. Apple’s strategy to sell competitively priced older iPhone models such as customized iPhone 6 32GB for the China market drove some uptick for Apple. In addition, sales of the new iPhone X and 8 series models began to gain some traction during Q4 despite the high-ticket prices.
The Chinese holiday season in Q1 2018 will be a critical period setting the tone for the Apple’s full-year outlook. All eyes are on Apple to see if the new iPhone X can drive the “super cycle” Apple has been looking for in one of its most important markets–China.
In the US, Apple posted one of its best quarters ever during fourth quarter holiday season. Apple sold a record 22 million iPhone during Q4 2017, taking significant market share away from Samsung in the premium segment even as promotions during the quarter were not nearly as aggressive as compared to previous years.
The bulk of the growth for Huawei in China was driven by its sub-brand, Honor, which contributed to more than 60% of its shipments during the year. This made Huawei’s Honor brand the number one smartphone brand in online channels in China, ahead of Xiaomi, during the full year. However, globally fourth quarter shipments for Huawei were down 9% annually due to the brand’s slow performance in Latin America and MEA markets.
OPPO and Vivo were the fourth and fifth largest brands during the year, capturing market share of 8% and 7%, respectively. 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.
Xiaomi emerged as the fastest growing brand (+56%) in CY 2017, driven by strong sales in both China and India. Even as it posts strong performances in key markets, the brand is fast expanding and has now reached over 60 countries as compared to its presence in 40 countries just a quarter ago.
Xiaomi shipped 96 million smartphones, capturing 6.1% market share of the global smartphone market in CY 2017. The company became the fifth largest smartphone brand in Q4 2017 with shipments of 31 million smartphones and a market share of 6.9%, recording a growth of 83% annually.
Xiaomi became the number one brand in India, surpassing Samsung who led the past 24 straight quarters. A broad product line-up in the right price category along with a strong go to market strategy helped Xiaomi achieve this feat.
LG registered 55.9 million smartphone shipments in CY 2017 with strong performances in domestic and North American markets. During the quarter, LG shipped 13.9 million smartphones which represented 4% market share.
Lenovo (including Motorola) captured the 8th spot with a market share of 3%. Motorola witnessed strong growth during the quarter in markets such as LATAM. Leveraged by the C series smartphones, Motorola had been aggressively growing to almost doubled its volume from same quarter last year.
ZTE (include Nubia) and Alcatel continue to face tough competition in high growth markets which led to declining market share during the quarter.
India’s overall mobile phone shipments grew 37% and smartphone shipments grew 12% with feature phones growing an astonishing 55% during 4Q 2017. Despite India’s seasonal peak normally being pre-Diwali shipments in the third quarter, the market set a volume shipment record in the fourth quarter for the first time.
This surprising annual growth can be attributed to higher demand for smartphones and more so for feature phones. The strong growth is also partly due to last year’s weak quarter due to the impact of demonetization. Feature phones have been driven by the disruptive entry of Jiophone, which expanded the feature phone segment. The quarter also saw new device launches and strong promotions from various brands looking to catalyse demand after Diwali
The competitive landscape has changed significantly in the last year, with the rise of brands such as Xiaomi, OPPO, VIVO in the smartphone segment and players such as Reliance Jio, Nokia HMD and iTel in the feature phone segment — all able to disrupt the market with high-quality and attractively-priced offerings. During the second half, players such as Xiaomi was particularly disruptive with an aggressively-priced, broad portfolio taken to market with an effective channel expansion strategy. This helped Xiaomi to surpass the long-time market leader, Samsung, for the first time ever. This performance ended Samsung’s six year market dominance.
Exhibit 1: India Smartphone Market Share Q4 2017 and CY 2017
Source: Counterpoint Research Market Monitor Q4 2017
*Lenovo Includes Motorola
Source: Counterpoint Research Market Monitor CY 2017
Reliance Jio captured a 26% share of thefeature phone segment in just one quarter with its compelling value proposition compared to the normal 2G feature phones. We expect the 4G feature phone segment will be a 200 million unit opportunity by volume, over the next five years as the hundreds of millions of current feature phone users in India are likely to upgrade to VoLTE handsets. While Jiophone saw healthy sell-in during 4Q, we believe the operator exited the quarter with some inventory, which could affect its share in coming quarters.
Exhibit 2: India Featurephone Market Share Q4 2017 and CY 2017
Source: Counterpoint Research Market Monitor Q4 2017
Source: Counterpoint Research Market Monitor CY 2017
Market Summary:
India mobile handset and smartphone market grew by 37% and 12% YoY driven by strong demand from the featurephone and smartphone segment.
Chinese brands performance remained strong throughout the year and captured 54% smartphone market share in CY 2017 up from 34% during CY 2016.
However, local brands like Micromax and Lava have done well in CY 2017 recovering from their all-time low during demonetization last year. Micromax Bharat and Lava Z series performed well in the sub $100 segment. Micromax Bharat 2 was the best-selling smartphone in the sub $75 segment during CY 2017.
Xiaomi (259%), iTel (213%), Huawei (165%), Vivo (115%) and OPPO (104%) were the fastest growing smartphone brands during CY 2017.
Affordable mid end segment (₹10,000-₹15,000 or US$150-$230) was the fastest growing segment (+52%)in CY 2017 driven by the strong performance of Xiaomi. The Chinese vendor alone, contributed to almost 37% of the shipments in this segment.
Average selling price of the overall smartphone market grew 13% YoY due to increased mix of mid segment phones.
Over ten new smartphone brands entered India during CY 2017. Players like Nokia HMD, Comio, Infinix and Tecno did well in their first year of operations in India, by expanding their distribution reach in a short span of time.
Premium segment (>₹30,000, US$465) grew 20% YoY during CY 2017 due to the strong performance of OnePlus, Apple & Samsung. OnePlus was the fastest growing brand in the premium segment during CY 2017.
Qualcomm was the leader amongst smartphone chipset suppliers. Qualcomm powered smartphones grew a healthy 53% YoY in CY 2017. The demand of its chipsets in the fastest growing (₹10,000-₹15,000) segment drove growth.
Online sales and promotions remained strong even after Diwali till the end of December 2017 as some of the brands were clearing their inventory. However, new launches by brands like OnePlus, Nokia HMD, Huawei, Micromax, Xiaomi drove shipments. Over 60 new smartphone models were launched after Diwali alone.
CY 2017 saw intense competition in the smartphone segment with over 100 brands competing in the space.
Xiaomi ended CY 2017 in India on a very strong note. Not only the brand grew 259% YoY but also saw three of its models within the top five bestselling smartphone list of CY2017. Samsung had the most number of models in the top 10 selling list of CY2017 leveraging its advantage of a strong presence across all the price bands.
Exhibit 3: India Top Smartphone Models CY 2017
Source: Counterpoint Research Market Monitor CY 2017
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