Global Smartphone Recession Confirms Consumer Downturn

 

Q3 smartphone sales data show the global market in recession, as Strategy Analytics confirmed:

“The global smartphone market has now declined for four consecutive quarters and is effectively in a recession.”

The warning signs began in Q1, when the market plateaued for the first time, as discussed here in May:

“The global smartphone market has finally gone ex-growth as China’s slowdown continues. In turn, the market is starting to polarise – with Apple pushing further up-market whilst Chinese brands such as Xiaomi focus on volume. Samsung’s middle market positioning looks increasingly under threat.”

The chart highlights the key issues:

  • Samsung’s market share has declined from a third in 2013 to a fifth today, as its mid-market positioning leaves it without a clear value proposition for consumers
  • China’s Top 3 players have meanwhile soared from just a 12% market share to 29% today, powered by their low-cost positioning
  • Apple’s market share has remained very stable, as it has focused on the top end of the market, prioritising price over volume
  • “Others”, also usually without a clear value proposition, have seen their share drop to just 36% from 46% in Q3 2016

China remains the world’s largest smartphone market, with 103 million phones sold in Q3. But its volume was down 8% compared to Q3 2017, as the stimulus programmes continue to slow. As the Counterpoint chart shows, the market is now consolidating around a few winners:

  • Huawei are emerging as the market leader with a 23% share
  • Vivo and Oppo remain key challengers at 21%
  • But “Others” have dropped to 13%, and Samsung has almost disappeared at just 1%
  • As Counterpoint note, the top 5 brands now hold 86% of the market:

“The Chinese smartphone market is saturated with accelerated market consolidation. The competition in 2018 is almost a zero-sum game for the top five players. It is challenging however, even for the leading brands to create clear product differentiation. In Q3, only Huawei and vivo managed to achieve positive YoY growth among the top 5 brands.”

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this ...

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Kurt Benson 9 months ago Member's comment

This makes #Apple's numbers even more impressive $AAPL

Gary Anderson 9 months ago Contributor's comment

Smartphone companies are mostly lying, greedy, cheating enterprises. They are dreadful and selfish. They do not care about their customers. They make the airlines look humane. What could possibly go wrong?

George Lipton 9 months ago Member's comment

That's harsh. What are you basing that on? While I've had dreadful experiences with airlines, cable TV companies and other companies that are notoriously bad to their customers, I've had no issues with my cell phone makers.

Gary Anderson 9 months ago Contributor's comment

Location may be key to service in the cell phone arena. I wrote an article about cable, so I know they are a problem and cell phones have improved from the old days: www.talkmarkets.com/.../should-cable-tv-fear-att-directv-now