Q3 2016: China, USA and India Now Contribute to Half of the Global Smartphone Shipments

Global smartphone shipments grew to a third quarter record of 380 million, though overall smartphone growth still remains in low single digits compared to double digit growth levels last year.

According to the latest research from Counterpoint’s Market Monitor service, global smartphone shipments grew 5% annually and 7% sequentially in Q3 2016.

Commenting on the findings, Tarun Pathak, Sr. Analyst at Counterpoint Research said, “The era of double digit growth in smartphone industry is over as most of the demand in developed markets is being driven by replacement buyers with smartphone upgrade cycles now lengthening. The only growth is now coming from emerging markets in Asia and Africa. For OEMs, performance in the China, India and US markets is becoming a determining factor in the global growth story as these three markets now account for more than half of the total smartphone shipments globally.”

Commenting on strong performance for Chinese brands, Research Analyst, Shobhit Srivastava noted, “The trio of Chinese brands Huawei, Oppo and Vivo continue to impress with demand for their smartphones in key geographies helping them generate global level scale. Expanding distribution networks and aggressive promotions coupled with a balanced and higher quality portfolio have been key success factors for these Chinese brands, which combined now control more than 20% of the global smartphone shipments. However, expanding in western markets next year will be critical to reduce over dependence on their domestic market.”

Jim Lee, Sr. Analyst, commenting on Samsung’s performance noted, “Q3 2016 was, unfortunately, an eventful period for the overall smartphone industry and Samsung in particular. The Galaxy Note 7 debacle will have implications not only for Samsung’s brand and operational performance, but also as a wake-up call for the entire supply chain to ensure better design and quality control processes and to avoid pushing the envelope in a search for differentiation and accelerating the time to market.”

Market Summary

  • Smartphone shipments reached 380 million units in Q3 2016 with annual growth of 5%.
  • Almost 80% of the mobile phones shipped are now smartphones.
  • Top 10 brands contributed almost 70% of the smartphone volumes in Q3 2016.
  • The quarter was dominated by Chinese brands which grew, not only in the highly competitive domestic market, but also in overseas markets.
  • The other key brands that drove growth during the quarter were iTel in Africa, Lava in India, LeEco in China, Symphony in Bangladesh and Innjoo in the Middle East.
  • LTE is another driving factor for smartphone growth with more than 300 million LTE-capable phones shipped in the quarter, up 28% YoY.

Exhibit 1: Global Smartphone Shipments Annual Growth Rates (%)

chart-1

Source: Counterpoint Research: Quarterly Market Monitor Q3 2016

OEM Performance Insights

  • Samsung led the smartphone market by volume with a market share of 20%. Its smartphone shipments declined 10% YoY registering 76 million units during the quarter.
  • The negative impact of the Note 7 debacle forced Samsung to recall its flagship device after a short span that led to a dip in profitability by almost $3.6 Billion. However, the mid-range J series and the flagship S7 and S7 Edge helped Samsung offset the impact on shipment volumes.
  • Apple reported its quarterly results with low fanfare as iPhone shipments registered a continued decline of 5% YoY as compared to Q3 2015. This was mainly due to soft demand for iPhone 6S series compared to the healthy upgrade cycle seen for iPhone 6 series last year.
  • Huawei continues to be among top three smartphone brands globally registering a strong 23% growth YoY as demand for its smartphones was healthy in China, LATAM, MEA and parts of Europe.
  • Huawei’s smartphone market share climbed to 9% as compared to 7% a year ago.
  • The upstart Chinese brands Oppo and Vivo continued their shipment momentum with record performances in China, grabbing the top two spots in the domestic market for the first time ever.
  • Oppo almost doubled its shipments annually to a record 26 million units, inching closer to Huawei. Oppo registered positive growth not only in China but in overseas markets India, Indonesia and Thailand during the quarter, with strong demand for its flagship R9(F1 Plus) and low-end A series.
  • Vivo was the star performer and the fastest growing smartphone brand globally with shipments up 116% YoY.
  • China and India accounted for 95% of the smartphone shipment volume for Vivo.
  • The focus on traditional offline retail and a wide and broadening distribution network, which still accounts for three-quarters of smartphone sales, has been key to Oppo’s and Vivo’s success.

Exhibit 2: Global Smartphone Shipments Volume Share (%)

chart-2

Source: Counterpoint Research: Quarterly Market Monitor Q3 2016

Smartphone Shipments Revenue Share:

  • Global smartphone hardware industry wholesale revenues for the quarter fell by 7% due to declining ASPs of smartphones, with demand shifting more towards cheaper smartphones coming from high growth but low ASP markets of Asia and Africa regions.
  • Apple captured more than a third of the total industry revenues followed by Samsung and Huawei.
  • Combined, the top three brands captured more than half of the industry revenues.
  • Huawei, Oppo and Vivo remained the star performers with revenues growing 91%, 73% and 90% respectively, annually, with strong performances in the Chinese domestic market as well as overseas market. Oppo and Vivo were successful in surpassing Huawei in China to become the number one and number two brands respectively in terms of revenue share.
  • Xiaomi was the sixth largest brand in terms of revenue, however, the Chinese brands saw its revenue decline 13% YoY as the product mix shifted towards lower ASP models such as the Redmi 3S.

    Exhibit 3: Global Smartphone Shipments Revenue Share (%)

    chart-3

    Source: Counterpoint Research: Quarterly Market Monitor Q3 2016

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