Mobile Handset Market Overview – April 2015

The global handset market returned to growth in April after a difficult March. Sell-in is still suffering though as channels that have been carrying stock throughout 1Q15 work to clear down the excess inventory. Sell-through exceeded sell-in in April by our estimation.

Samsung’s new flagship models – Galaxy S6 and S6 Edge have sold in well and are selling through the channels – especially the S6 Edge, despite its high price. Samsung is benefiting from being out of phase with Apple’s iPhone launch cycle. Momentum looks positive for the S6 Edge but standard S6 is likely to suffer from a shorter period of strong demand.

The market for other brands is mixed with Chinese vendors Xiaomi, Huawei, ZTE and Alcatel OneTouch growing faster than the market. Microsoft has also managed this feat thanks to traction for its recently launched mid and low-end smartphones. Some local vendors are also growing fast in their local markets.

The outlook for coming months remains challenging however with few obvious catalysts to drive a positive uptick in the market. We expect to see sell-in remain muted with sell through holding steady as channels continue to clear inventory.

Highlights in April 2015

• Sell through has improved slightly, Europe has continued the recovery seen in March, but many other markets are below where they should be seasonally.• The US has been on a declining trend since strong January

• The US has been on a declining trend since strong January demand, though April was a little better. China’s low demand continues as operators are pulling back marketing resources and currency (RMB) strength dampens the export ambitions of domestic players. • In other emerging

• In other emerging markets we have seen a recovery from a sharp drop in demand but at a lower than expected demand level – a trend that has continued since mid-February. • Sell-in is also adjusting to this low demand in the market. Only Europe has cleared all its excess inventory.

• Sell-in is also adjusting to this low demand in the market. Only Europe has cleared all its excess inventory.• Overall handsets sales increased by 5% sequentially, recovering from last month’s slowdown. Overall smartphone sales also grew by 5% sequentially.

• Overall handsets sales increased by 5% sequentially, recovering from last month’s slowdown. Overall smartphone sales also grew by 5% sequentially. • There was a mixed performance for the key global brands with Samsung growing in line with the market while Apple fell. Xiaomi, Microsoft, ZTE, Huawei and Alcatel OneTouch grew faster than the market

• There was a mixed performance for the key global brands with Samsung growing in line with the market while Apple fell. Xiaomi, Microsoft, ZTE, Huawei and Alcatel OneTouch grew faster than the market• Samsung’s Galaxy S6 and especially S6 Edge have supported the premium price segment lifting the segment’s share of the market and squeezing down on other price bands.

• Samsung’s Galaxy S6 and especially S6 Edge have supported the premium price segment lifting the segment’s share of the market and squeezing down on other price bands.• Conversely sales of mid-range Samsung Galaxy products have struggled.

• Conversely sales of mid-range Samsung Galaxy products have struggled.

Chart 1: Handset Market Volume by Price band – April 2015

Price Band Analysis
• Entry level sales are weak. This is partly due to the simultaneous transition to new models for a number of brands, for example Motorola’s Moto E 2nd Gen. These new models at are often in a higher price band at launch. So where the outgoing product is below US$100 its replacement will come into the $100-200 price band. • Huawei is continuing to perform well across the price tiers. The newly launched P8 is yet to make a significant

• Huawei is continuing to perform well across the price tiers. The newly launched P8 is yet to make a significant impact however.•

• Local player like Micromax (20% sequential growth), Qmobile (29% seq), Intex are all growing faster than the global average – relying on low cost smartphones sales and strong local presence.• All the major players follow

• All the major players follow same path although Samsung is benefiting from strong initial demand for Galaxy S6 and S6 Edge, while Apple’s strength diminishes as iPhone 6 demand naturally wanes due to seasonality and product cycle.

Chart 2: Total Handset market share in the US – April 2015

US Marketshare
• Overall USA market shipment increased by 5% in April after a difficult March.• However, Samsung gained back all the share lost to Apple after iPhone 6 launch. Its shipment share increased by 10 ppt over the month dominated by premium tier Galaxy S6 and especially Galaxy S6 Edge.

• However, Samsung gained back all the share lost to Apple after iPhone 6 launch. Its shipment share increased by 10 ppt over the month dominated by premium tier Galaxy S6 and especially Galaxy S6 Edge.• China shipment dominated by local brands. Following the global trend, overall shipment increased 3% sequentially.

• China shipment dominated by local brands. Following the global trend, overall shipment increased 3% sequentially.• Huawei gains share with a good mix of Ascend & Mate series smartphones as well as strong demand for its Honor branded products. Xiaomi also regains ground lost in March.

• Huawei gains share with a good mix of Ascend & Mate series smartphones as well as strong demand for its Honor branded products. Xiaomi also regains ground lost in March.• The market remains hampered by subsidy issues, but Samsung becomes more dominant gaining

• The market remains hampered by subsidy issues, but Samsung becomes more dominant gaining two thirds of the entire market and growing share by 9ppt after the GS6 series launch.• iPhone 6 and 6+ are still the

• iPhone 6 and 6+ are still the best selling smartphone models in the Korean market but the overall downward trend continues for Apple.• Apple is still dominating

• Apple is still dominating Japanese market, followed at some distance by Sony.

Chart 3: Flagship model trajectories

Galaxy Lifecycle
• After a long time Samsung is mounting a recovery with its Galaxy S6 series. However overall shipments are still low compared to iPhone.• The new Galaxy S6 is showing good growth, around 305K units per day since its launch which is better than the previous GS5 and even the record holding bestseller GS4.

• The new Galaxy S6 is showing good growth, around 305K units per day since its launch which is better than the previous GS5 and even the record holding bestseller GS4.

• Considering the production constraints (curved glass and metal casing) and conservative marketing (low marketing expenditure) we believe GS6 is going to break records this year, 50+ million units by the end of this year (sell in).