Q1 2016: Top Ten Chinese Brands Capture 33% of Global Smartphone Market

Counterpoint Research team of Analysts have completed preliminary sizing of the global mobile phone market as major OEMs have already released their Q1 2016 (Jan-Mar) performances. Following are our preliminary market share and rankings according to our quarterly Market Monitor service.

Market Summary

  • Smartphone shipments reached 344 million units in Q1 2016 with flat growth compared to last year as the market slowed down considerably
  • 3 out of 4 mobile phones shipped on the planet now is a smartphone
  • The slowdown can be attributed to higher sell-in during 4Q 2015 and weaker demand in markets such as Brazil, China, Indonesia and parts of Europe.
  • This is the first time ever since the launch of smartphone, the segment has seen 0% growth, signaling the key global scale players need to invigorate sales with more exciting products and pricing schemes
  • Rise of Chinese brands (e.g. Huawei, Oppo, Vivo) at global scale outside of domestic markets also could help in stimulating demand with beautiful designs at aggressive price points

Exhibit 1: Global Smartphone Shipments Annual Growth Rates

Global Smartphone Shipments Annual Growth Rates

Source: Counterpoint Research: Quarterly Market Monitor

Summary:

Smartphone Shipment Volume Share:

  • Samsung led the smartphone market by volume with a market share of 23%. However, its smartphone shipments declined 6% YoY.
  • However its latest Galaxy S7 series gave it a strong momentum in premium flagship segment during the month of its launch.
  • Apple reported its first-ever quarter of negative corporate revenue as well as iPhone unit shipments growth decline after 35 quarters of straight positive growth
  • Apple shipments declined by 16% YoY to reach 51.2 Mn units during the quarter.
  • Huawei continues to be among top three smartphone brands globally and with its smartphone market share remaining flat at 8% as compared to the last quarter.
  • Xiaomi and LG captured fourth and fifth spot in the Global smartphone market.
  • Huawei was the only smartphone brand among Top five to show positive YoY growth.
  • Oppo was the sixth largest player in terms of volume during the quarter with an impressive YoY growth of 93%.

Exhibit 2: Global Smartphone Shipments Volume Share (%)

Global-Smartphone-Shipments-Volume-Share
Smartphone Shipment Revenue Share:

  • Apple led the smartphone market with a healthy 40% revenue share in spite of 18% YoY dip.
  • Samsung followed Apple with 23% revenue share down just 2% annually and increasing it share by 1%
  • Apple and Samsung together now control almost two-thirds of the smartphone industry revenues with 850 brands competing at the same time.
  • Huawei and Oppo were the star performers with revenues growing 44% and 85% annually with strong performance in domestic market where bulk of the revenues come from.
  • Xiaomi was the fifth largest brand in terms of revenue though slipping 18% YoY due to 5% decline in volumes and mix shift towards low-priced smartphone volumes

Exhibit 3: Global Smartphone Shipments Revenue Share (%)

 

Global Smartphone Shipments Revenue Share (%)

Samsung

  • Samsung shipped 78.6 million smartphones in Q1 2016 with a YoY decline of 6% and sequential decrease of 4%.
  • However, it remains the leader in smartphone segment with a market share of 23%.
  • The overall smartphone shipments were driven by J Series in Asia, A series in Europe and China.
  • With Apple going through seasonality and muted response to iPhone SE, Samsung is estimated to take lead in global premium smartphone segment with Galaxy S7 driving strong sales globally.
  • Compared to the Galaxy S6 series performance last year, the S7 series has shown as much as 25% higher sales in its launch month.
  • The US remained a key market for Samsung. Sales of Galaxy S7 in the US were up by 30%, Western Europe up by 20% and China by 10% higher than the S6 during its launch month. Such sales boost in “Premium category” of smartphone can help Samsung to remain on market leading position in coming quarter.
  • Emerging countries such as India, South East Asian markets are on radar of Samsung for scaling up its volume. In order to strengthen its presence in entry to mid-level segment, Samsung is expected to launch new mid to low end smartphones in this year.
  • Samsung’s growth in China will be a challenge with intense competition in Android flagship segment such as Xiaomi Mi5, Oppo’s R9, R9 plus, Vivo’s Xplay5 Elite and Huawei’s Ascend P9 and Mate 8.

Apple 

  • Apple reported its first-ever quarter of negative corporate revenue as well as iPhone unit shipments growth decline after 35 quarters of straight positive growth.
  • iPhone shipments declined by 16% YoY to reach 51.2 Mn units during the quarter.
  • iPhone contribution to the total revenue was 65% during the quarter.
  • Apple’s total active device installed base has crossed a billion mark recently and is now seeing broader ecosystem level top-line benefits.
  • Apple’s Software & Services (S&S) revenues have now surpassed iPad as well as Macs revenues respectively which signals that the potential of next revenue growth will come from cashing on the ecosystem of S&S.
  • Greater China contributes to roughly a fourth of the revenues whereas USA+China+Japan contributes to combined 60% of Apple revenues.
  • Apple’s iPhone marketshare according to our preliminary Q1’16 (Jan-Mar) estimates for China has plunged to 12% from 18% a year ago. iPhone shipments are down 32% YoY whereas its rival Huawei’s shipments are up 47% YoY.
  • This shows overdependence on these three markets for Apple which is the reason Apple is betting on markets such as India to drive growth for the next five years
  • However, the India market consumer is almost four times less wealthy than Chinese consumer and not a mature device user as a Chinese or American consumer.
  • The launch of a 4-inch iPhone SE was unnecessary in its attempt to stimulate unit growth though might make sense from Apple’s profit or operational mindset if it clicks and stimulates upgrades, which currently looks unlikely.

Huawei

  • Huawei continues to be among top three smartphone brands globally and with its smartphone market share remaining flat at 8% as compared to the last quarter.
  • Huawei’s smartphone shipment grew a healthy 62% annually in 1Q 2016 however, shipments dipped 15% as compared to the last quarter of 4Q 2015.
  • Huawei smartphone shipments stood at 28.4 million units for the quarter 1Q 2016.
  • Huawei continue to be expand its presence in flagship segment and with the launch of P9 and P9 plus recently it is backing its ambition to be a premium handset maker
  • The Chinese smartphone maker aims to sell over 10 million alone, recently launched P9 smartphone in the year 2016.
  • With strategic pricing of P9 and spend on marketing Huawei will easily achieve this goal.

Xiaomi

  • Xiaomi shipped a total of 14.5 million smartphones during the quarter
  • While Xiaomi continues to be among top 5 smartphone brands, it is facing challenges to sustain growth because of saturated home market which is still contributing to almost 90% of its sales.
  • As a result, Xiaomi’s smartphones shipments declined 5% annually and 27% sequentially.
  • The company’s smartphone market share stood flat at 4% as compared to an earlier quarter.
  • However, the recent quarter also saw some of the fastest international launches ever with the launch of Redmi Note 3 and Mi5 in India. This helped it to sustain its growth in India, one of its key international market.
  • It latest flagship Mi5 has been doing well and received positive response among the end users especially the design change.

LG

  • LG  shipped 13.5 Million smartphones during the quarter with YoY decline of 12 % .
  • LG’s low to mid level smartphone portfolio continue to face pressure from chinese and local brands due to availability of substitutes at competitive prices which hampered the  growth of LG in mid smartphone segment.
  • In Q2 2016 LG’s performance in smartphones will depend on performance of G5 in key regions which starts off with a positive product response.However, LG needs to chase volumes in mid segment by lowering ASPs as brand loyalty is slowly fading in that segment. On flagship strategy it need to go for dual more flagships to enrich its current smartphone portfolio
  • LG is facing tough competition from Apple,Samsung and Huawei  in premium segment whereas the launch of affordable flagships by  Xiaomi, Vivo and Oppo are giving tough time to LG in mid segment.

Oppo

  • Oppo was the sixth largest smartphone brand during the quarter and grew a healthy 93% annually reaching 13.3 million units
  • The Chinese brand gained market share to reach 4% of total smartphone share in 1Q 2016.
  • The company has been spending aggressively in marketing to strengthen its reach by building strong distribution channels in countries outside China as competition in home market intensifies.
  • South East Asian countries are driving most of the growth for Oppo beyond China.
  • Not only the marketing spends but also relevant partnerships and tie-ups in respective countries has managed to grab the eye balls in respective countries. E.g. Its four-year deal with International Cricket Council as their Global partner and subsequent sponsorship of ICC World T20 helped it to gain mind share among cricket loving nations.

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