New Delhi, Mumbai, Hong Kong, Seoul, London, Buenos Aires – July 28, 2016
Global smartphone demand returned to a modest positive growth after a flattish first quarter as the seven out of the top ten smartphone brands were Chinese, together capturing a third of the smartphone market.
According to the latest research from Counterpoint’s Market Monitor service, the global smartphone shipments grew 3% in Q2 2016.
Commenting on the findings, Tarun Pathak Sr. Analyst at Counterpoint Research said “First half of 2016 was challenging for the overall smartphone industry as growth in in key countries across both developed and emerging markets remain stagnant. The slowing smartphone demand from double digit rate end of last year to a dramatic drop of low single digit this year can be attributed to weaker economic climate in many emerging countries as well as slowing upgrade cycles in developed markets. Furthermore, the Taiwanese earthquake in February also drove key component shortages which slowed down supply almost through May. As a result, many of the incumbent and smaller brands saw growth slowing down though offset by the Chinese brand trio Oppo, Vivo and Huawei which grew faster than the rest together capturing almost fifth of the smartphone market, highest ever for the first time.”
Commenting on strong performance for Chinese brands, Research Director, James Yan noted, “Oppo and Vivo growth story has surprised everyone in the industry, however, this has been as a result of years of investment in building strong offline distribution channels, competent R&D team, slicker product portfolio and aggressive marketing and promotions. The BBK group which owns both Oppo and Vivo is technically the world’s third largest smartphone OEM shipping more than 39 million units during the quarter, slightly behind Apple.”
Tina Lu, Sr. Consultant, further commented, “The smartphone industry revenues however remained flat due to growth in Chinese brands such as Oppo and Huawei pushing mid-tier and affordable premium models. whereas, Apple and Samsung saw its smartphone ASP decline 13% and 10% annually respectively dragging down overall smartphone industry revenues. Samsung & Apple together captured more than half of smartphone industry revenues though down from two-thirds a year ago, due to significant growth from Huawei, Oppo and Vivo which almost doubled their revenue share in just one year.”
Market Summary
- Smartphone shipments reached 360 million units in Q2 2016 with YoY growth of 3%.
- 4 out of 5 mobile phones shipped during the quarter were smartphones
- After a steep sequential decline in Q1’16 the sell-in grew sequentially by 7%.
- Top 10 brands contribute to almost 70% of the smartphone volumes in Q2 2016.
- However, sell-in was tepid during late Q2 as unit production was reduced after weak demand signals from markets like Latin America but high growth markets in SEA registered healthy sell-in during Q2 2016 and supply constraints for key components from Taiwanese suppliers.
- The quarter was dominated by Chinese brands which continue to scale their operations both in their domestic market and beyond.
- Chinese brands like Huawei, Oppo & Vivo continue to scale fast and now setting up benchmark in mid to high end flagship segment on account of their impressive designs and aggressive pricing.
Exhibit 1: Global Smartphone Shipments Annual Growth Rates (%)
Source: Counterpoint Research: Quarterly Market Monitor Q2 2016
OEM Performance Insights
- Samsung led the smartphone market by volume with a market share of 21%. Its smartphone shipments increased 3% YoY reaching 77 Mn units during the quarter.
- Its latest Galaxy S7 series continue to give it a strong momentum in premium flagship segment during the month of its launch.
- In emerging countries, the J series continue to drive volumes as it successfully refreshes its key J series 2016 versions during the quarter.
- Apple reported better the estimated results though the performance was relatively weak compared to Apple standards
- Apple shipments declined by 15% YoY to reach 40.4 Mn units during the quarter.
- Huawei continues to be among top three smartphone brands globally and with its smartphone market share increased to 9% as compared to the last quarter.
- During the quarter it successfully ramped up its retail presence with 116% YoY in its number of stores globally.
- Oppo with the highest YoY growth among Top 10 brands secured fourth spot with 6.4% market share.
- Oppo has adopted a simple but effective strategy, going after the offline market which still contributes more than 70% of total sales in China
- Vivo too saw strong quarter with shipments grew 62% YoY reaching its highest ever 16 Million units. Apart from this its performance in overseas market was also strong.
- In India it grew by 250% thereby entering 1 Million per quarter club which only seven brands have achieved so far
- ZTE and Xiaomi captured fifth and sixth spot in the Global smartphone market.
- Huawei, Oppo and Vivo were the only Chinese brands among Top 10 to show positive YoY growth.
Exhibit 2: Global Smartphone Shipments Volume Share (%)
Source: Counterpoint Research: Quarterly Market Monitor Q2 2016
Smartphone Shipments Revenue Share:
- Apple led the smartphone market with a 29% revenue share down from 38% a year ago.
- Samsung followed Apple with 23% revenue share and managed to narrow the gap due to strong performance of its flagship GS7 series along with lower ASP A & J series.
- Apple and Samsung together now control almost half of the smartphone industry revenues with 800 brands competing at the same time.
- Huawei, Oppo and Vivo were the star performers with revenues growing 84%, 152% and 66% annually with strong performance in domestic market as well as overseas market.
- Xiaomi was the sixth largest brand in terms of revenue which slipped 14% as the product mix shifted towards lower ASP models as well as overall shipments declining almost 24% YoY
Exhibit 3: Global Smartphone Shipments Revenue Share (%)
Source: Counterpoint Research: Quarterly Market Monitor Q2 2016
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Tina Lu
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@tinistoon
Tarun Pathak
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tarun@counterpointresearch.com
@Tarunpathak
Neil Shah
+91 9930218469
neil@counterpointresearch.com
@neiltwitz
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