Samsung is still by far the largest smartphone vendor in the world and continues to dominate the global market even as the thereof experienced yet another quarter of overall decline, new findings made by Counterpoint Research reveal. Over the three-month period ending September 30, the industry was responsible for 380 million device shipments, down five percentage points annually. Developing countries such as India are still offsetting the performance drop-off in the West but have been unable to completely nullify it in recent quarters as developed markets continue exhibiting signs of severe saturation.
In overall, every major region in the world experienced a decline in smartphone shipments over the course of the third quarter of the year, with Latin America being hit the hardest as its handset market shrunk by seven-percent year-over-year, as per the new report. Nearly every fifth shipment was from Samsung, followed by Huawei and Apple that accounted for 14- and 12-percent of the market, respectively. Huawei’s position is particularly noteworthy because it was only last quarter that the Chinese technology juggernaut managed to surpass Apple’s shipment numbers for the first time ever. The ten largest original equipment manufacturers on the planet held nearly 80-percent of the market in the third quarter of 2018, whereas the rest of the sector is being contested by more than 600 companies, with that consolidation of power being likely to continue moving forward, the new report suggests. HMD Global is still the fastest-growing phone maker in the world, having increased its third-quarter global market share by 73-percent annually.
Samsung set new shipment records in India over the observed period but saw its sell-through figures decline for the fourth quarter in a row. Strong competition in the mid-range and entry-level price brackets is believed to be one of the main reasons for the trend, together with the fact that consumers simply aren’t upgrading their devices as quickly as they used to. On the other hand, Huawei’s latest strategy placed a particular focus on the upper mid-range and premium smartphone category which allowed the company to grow 33-percent year-on-year, the new findings reveal.
Background: Counterpoint’s newest report comes on the heels of numerous similar estimates and predictions from other established industry trackers such as Gartner and IDC. By most accounts, the global smartphone market won’t return to growth until 2019. China is widely considered to be the main reason for the negative trend as its handset sector is now extremely saturated and fierce competition led to devices that consumers are happy to keep for over two years without feeling a need to upgrade. Future growth is predicted to be largely fueled by the fifth generation of mobile networks as 5G support will be touted as one of the main selling points of many handsets set to be released over the next several years. The foldable form factor may have a similar impact on the market, with Samsung, Huawei, and LG all aiming to release at least one bendable smartphone each in 2019. Those two features combined should already provide consumers with more incentive to upgrade their mobile devices than what they’ve been given in recent years, some industry watchers believe.
The main drawback of the new technologies is the same one that troubled previous smartphone generations as well – high production costs that translate to higher price tags. The first-generation foldable handsets are believed to retail at over $1,500, which is likely to dissuade the average consumer from considering them. 5G should be a different story as support for the next connectivity revolution is expected to be much more affordable to implement. First 5G handsets will launch in the United States, South Korea, Japan, and several other countries in the first half of 2019. How successful 5G ends up being at reversing the recent decline in the global smartphone industry will primarily depend on the speed of worldwide deployment of next-generation infrastructure – smartphones with 5G support won’t be particularly attractive to consumers in areas without true 5G networks.
While handsets are now declining in nearly all parts of the planet, they aren’t nearly as concerning as tablets which are quickly becoming obsolete, according to most industry trackers. The global tablet market shrunk by 13.5-percent in the second quarter of the year alone, IDC reported in August. One of the main driving forces behind the trend is the rapidly increasing size of smartphones which are now viable alternatives to smaller tablets, though not even that consolidation of features was enough to prevent a decline in handset shipments and sales since late 2017.
Impact: Counterpoint’s latest findings suggest the main trends observed in the smartphone industry over the last year or so are continuing. Those include an overall decline in global handset shipments, as well as Huawei’s rapid rise. What’s unclear is how successful Huawei’s primary brand truly is worldwide seeing how the new report crams its performance together with that from its subsidiary Honor which is already doing rather well on its own. Huawei remains adamant that Honor won’t be spun off into a separate business anytime soon, which is unsurprising given how the company’s current strategy appears to be working; several quarters after first outperforming Apple in terms of device shipments, Huawei remains the world’s second-largest smartphone vendor. While Apple is likely to outdo it over the final three months of the year due to the newly released iPhones, there’s a realistic chance Huawei surpasses the Cupertino-based firm in terms of annual figures, either this year or the next.
Regarding the industry as a whole, the first signs of recovery may even be observed over the current quarter seeing how the holiday season is historically the most lucrative period of the year for all consumer electronics manufacturers. Most data companies believe the global handset market will return to growth at some point in 2019 but remain wary about predicting massive performance spikes in the future; as things stand right now, the smartphone industry peaked in late 2017 and may not surpass 1.55 billion shipments in the immediate future, with that figure now only seeming achievable after 5G becomes available on a global level.