Overall smartphone shipment declined 5% in Q1 2019, making it the sixth consecutive quarter of shipments falling.

New Delhi, Mumbai, Hong Kong, Seoul, London, Buenos Aires – May 1st, 2019

Huawei’s share in the global smartphone market reached its highest ever level of 17% 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 biggest smartphone brand in Q1 2019 as its volumes increased by nearly 50% year-on-year (YoY).

Commenting on the growth of Huawei, Research Analyst, Shobhit Srivastava, noted, “Huawei became the second largest smartphone brand by shipments 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 connection to younger profile consumers and gain additional 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.”

Overall, global smartphone shipments declined 5% YoY in Q1 2019. This is now the sixth consecutive quarter of shipments falling in the global smartphone market.

Commenting on the decline in the 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 accelerated, particularly in February, due to inventory corrections 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 close to 36 months, while the replacement rate for premium Android devices is closing in on 30 months. This can be attributed to the higher quality of devices, increasing average selling prices (ASP), and the lack of innovation sufficient to motivate consumers to upgrade.”

Exhibit 1: Smartphone Shipment Market Share

On the moves being made by smartphone OEMs to address the falling sales, Pathak said, “Android smartphone OEMs are hoping to convert the 5G and foldable display buzz into sales in 2019. Premium features like punch hole cameras, full-screen displays, in-display fingerprint sensor, and on-board AI will continue to diffuse to the mid segment at a rapid rate, potentially stimulating volume growth. However, Apple has signalled that hardware is merely a vehicle for delivering an improving service experience.”

Exhibit 2: Global Smartphone Shipments Ranking and Market Share – Q1 2019

Source: Counterpoint Research: Quarterly Market Monitor Q1 2019

Amid the gloom, Chinese brands keep growing their shipment volumes. Commenting on the dynamics of the Chinese brands Srivastava said, “Chinese brands continue to defy gravity by expanding outside their home markets. Top Chinese brands are now following a dual-brand strategy to cover the maximum number of price bands and to appeal to different market segments. After entering South East Asia and India, leading Chinese OEMs are looking to expand in Europe, and develop their positions in higher price bands, increasing their ASPs. The shift in focus of Chinese OEMs is clearly visible as Europe becomes their place of choice to launch new flagship models.

Key Takeaways:

• The global smartphone market declined for the sixth consecutive quarter as consumers held onto their devices longer, especially higher-end phones. Only Chinese brands Huawei, OPPO and vivo were able to register growth in the first quarter of 2019. We expect the smartphone market decline will ease in coming quarters with an improving China economy - thanks to government intervention - as well as the stimulus from 5G, though this will be muted in 2019.
• Samsung recorded an increase in revenue as Galaxy S10 flagship smartphones did better than Galaxy S9 at the time of launch. The brand is restructuring its smartphone line-up, launching new M series and A series smartphones.
• 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 tough competition in the China market. The brand continues to do well in India and is entering new markets to offset the decline in its home market.
• BBK Group (which owns OPPO, Realme, vivo and OnePlus brands) is collectively the world’s third largest manufacturer. All its brands registered growth during the quarter.

*Lenovo includes Motorola

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Analyst Contacts:

Tarun Pathak

Shobhit Srivastava

Varun Mishra

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