Global Smartphone Shipments Decline For Sixth Consecutive Quarter: Counterpoint


Lengthening replacement cycles, especially in the premium segment, are one of the reasons behind the decline

Global smartphone shipments, as per a Counterpoint Research report, declined five per cent YoY in Q1 2019. This is now the sixth consecutive quarter of shipments falling in the global smartphone market.

Commenting on the decline in smartphone market, Tarun Pathak, associate director at Counterpoint Research said, “The global smartphone market showed no sign of recovery in Q1 2019. The rate of decline came down, particularly in February, due to inventory correction by some brands and the production halt during Chinese New Year. Another reason for the decline is lengthening replacement cycles, especially in the premium segment. The replacement rate for iPhones is reaching close to 36 months, while the replacement rate for premium Android devices is closing in at 30 months. This can be attributed to the higher quality of devices, increasing average selling price (ASP), and the lack of innovative technology.”

Only Chinese brands Huawei, Oppo and Vivo, as per the report, were able to register a growth in the first quarter of 2019. Counterpoint estimated that the smartphone decline will soften with the improving China economics, in the coming quarters.

The case of Huawei and BBK

Huawei’s share in the global smartphone market reached its highest ever level of 17 per cent during Q1 2019, according to the latest research from Counterpoint’s Market Monitor service. The findings of the research reveal that Huawei overtook Apple as the second largest selling smartphone brand in Q1 2019 as its volumes increased by nearly 50 per cent year-on-year (YoY).

Commenting on the growth of Huawei, Research Analyst, Shobhit Srivastava, noted, “Huawei became the second largest smartphone brand by shipment without a significant presence in an important market like the United States. It was also the fastest growing brand among the top 10. At this pace, we expect Huawei to remain ahead of Apple at the end of 2019. What has helped Huawei is the pace of its innovations. It was the first to introduce features like reverse wireless charging, on-board AI, advanced camera, and more. A dual-brand (HONOR) strategy has helped Huawei build a youth connect and gain market share in a sluggish Chinese market. Huawei is now a match for Samsung in smartphone hardware. Like Samsung and Apple, Huawei also is becoming increasingly vertically integrated. We believe it is Huawei that Samsung should be worrying about rather than Apple.”

BBK Group, as per the report, is collectively the world’s third largest manufacturer. All its brands registered growth during the quarter. It is to be noted here that China-based BBK owns OPPO, Realme, Vivo and OnePlus brands.

Performance of other brands

Samsung recorded an increase in revenue as Galaxy S10 flagship smartphones did better than Galaxy S9 at the time of launch. The brand is going through restructuring of its smartphone line-up by launching new M series and A series smartphone. Apple iPhone shipments declined year-over-year for the second consecutive quarter. It is increasingly difficult for Apple to grow ASP’s and China remains a declining market for the company.

Apple’s services, user experience, and companion products make up for its slow adoption of the newest technologies. The growth potential for premium products may be difficult in upcoming quarters. iPhone XR was the best-selling iPhone during the quarter.
Xiaomi smartphone shipments declined annually as it faces competition in home market. The brand continues to do well in India and entering new markets to offset the decline in the home market.

Commenting on the dynamics of the Chinese brands Shobhit Srivastava, reserach analyst, Counterpoint Research, said, “Chinese brands continue to defy norm by expanding outside their home markets. Top Chinese brands are now following a dual-brand strategy to cover maximum price bands. After entering South East Asia and India, leading Chinese OEMs are looking to expand into Europe, to go into higher price bands and increase their ASPs. The shift in focus of Chinese OEMs is clearly visible as Europe becomes their place of choice to launch new flagship models.”