Apple continues to lead global premium smartphone segment by capturing more than half of the market while OnePlus entered the top five brands in the premium segment for the first time ever in 2018 as competition intensified in the global premium smartphone segment**. The segment grew faster than the global smartphone market, according to Counterpoint Research’s Market Monitor 2018 service.

The segment grew 14% year-on-year (YoY) in terms of sell-in and 18% YoY in terms of sell-through. Growth was driven by new iPhones and launches in a premium segment from Chinese OEMs like Huawei, OPPO, OnePlus.

Overall, Chinese players have scaled up their presence in the premium segment and have expanded the category. Further, they are now eyeing new geographies for growth. Apple remained the market leader capturing 51% share of the premium segment, a significant lead over its nearest competitor Samsung which had a 22% share. However, Chinese brands made their mark as Huawei’s share in the segment reached double digits (10%) for the first time in a calendar year. OPPO (+863%), OnePlus (+209%), and Xiaomi (+149%) were the fastest growing brands in the premium segment.

An indication of the increasing competition in the segment is highlighted by the fact that close to 40 OEMs now compete in the premium segment globally. Of these, the top five players account for almost 90% of shipments. Premium segment contributed to one-fourth (22%) of the global smartphone shipments in 2018.

Lets a take a closer look at how the different brands performed in the premium segment: -

• Huawei’s strong performance was primarily due to the success of the P20 and Mate 20 series, which focussed on camera, power, and design as key differentiating features. It also gained share in the premium segment in China and Europe.
• OPPO’s growth came from its home market China with R15 and R17 series doing well. The brand is actively targeting European countries with its mid-to-high-tier offerings. Additionally, it is also targeting operators in Europe to launch its 5G portfolio outside China, along with new features in its flagship like 10x Zoom.
• OnePlus’s performance came on the back of the OnePlus 6T. In terms of regions China, India, and Western Europe drove four-fifths of its global shipments. OnePlus recorded its highest ever shipments in a single quarter (Q4 2018) in India to lead the premium smartphone segment for three successive quarters and captured 36% market share. Another feat for the brand came in Q4 2018 when it entered among Top five OEMs in the premium segment in the US for the first time.
• Google entered the top five premium smartphone brands in Western Europe in 2018.

Exhibit 1: 2018 Premium Smartphone Segment Market Share

In terms of regions, APAC was the fastest growing region for the premium segment with a growth of 27% YoY. Huawei, OPPO, Vivo, and Xiaomi’s performance in China drove this growth. In terms of countries, China and the US alone contributed to more than half of the global premium market shipments. China’s premium segment grew 37% YoY while the US grew 10% YoY. Other countries where the premium segment grew fast include Indonesia (+54%), Russia (+28%), Canada (22%), Mexico (22%), Thailand (+20%), India (+14%), Brazil (13%), and Japan (10%).  Below are the top five brands in the premium segment by different regions in 2018: -

Exhibit 2: Premium Smartphone Segment Rankings of OEMs by Regions 2018

Source: Counterpoint Research Market Monitor 2018

Going forward we estimate that the premium smartphone segment will continue to grow in double digits. By offering additional features like AI, triple camera, full-screen display, and higher memory configurations, smartphone OEMs are subtly increasing the average selling price (ASP) of devices. This also helps them leverage the gap created by Apple in the premium segment. The next growth cycle in the premium segment will be driven by the emergence of commercially available 5G smartphones. This will help OEMs to not only to target users looking to upgrade but also give Chinese OEMs an opportunity to enter new geographies where 5G will be commercially available soon.

*Pricing analysis is based on wholesale pricing

** Premium segment >$400