The start of 2020 has not been very optimistic for the smartphone industry. The global smartphone market suffered a total market drop of 13%. For the first time since the first quarter of 2014, the global shipment has fallen below 300 million units per quarter. There were only 284.7 million smartphones shipped in the second quarter of 2020, while 331.8 million units were shipped in the same period a year ago.
- The global smartphone industry experienced a market plummet in the beginning of 2020.
- Huawei surpasses Samsung leading the global smartphone market.
- Analysts and vendors are optimistic that 5G technology will boost declining smartphone sales.
As COVID-19 emerged in the first quarter of 2020, the smartphone market was not able to fully accelerate in attaining market recovery seen in the last leg of 2019. The unprecedented pandemic—considering the shift in consumer behavior and interruption in supply chains— clearly took a toll on the smartphone sector like how it did to other industries.
The market drop is a result of a 27% year-over-year (YoY) shipment decline in China. China’s early lockdown resulted in delayed components and hardware supply shipments for some original equipment manufacturers (OEMs). In parallel, the change in consumer behavior had also a massive effect on the market.
Regarding the smartphone market demand, Counterpoint Associate Director Tarun Pathak shared his thoughts: “From the consumer standpoint, unless replacing a broken phone, smartphones are mostly a discretionary purchase.”
He also stressed out the pandemic’s effect on consumer mindset, “Consumers, under these uncertain times, are likely to withhold making many significant discretionary purchases. This means the replacement cycles are likely to become longer.”
Smartphone Brands in Close Competition
In the first quarter of 2020, Samsung dominated the market capturing one-fifth of the global smartphone shipments. However, in the second quarter, Huawei overtakes Samsung in the ranking of global smartphone producers with 55.8 million units shipped globally.
Since 2012, the South Korean company has impressively maintained 20 to 30% share in the smartphone market. In 2018, Samsung started to dominate the industry and until today shows its competence in the market. According to Counterpoint’s record, Samsung kickstarted 2020 with an upper hand as it held 20% of the market share in the first quarter followed closely by Huawei at 17%.
Samsung’s main line of smartphone products is the Galaxy series, the first of which was released in April 2009. The company started to become a big player in the smartphone scene when its global shipments have grown from 2.4 million at the beginning of 2010 to 74.1 million by the end of 2017.
On the other hand, Apple has long been the direct rival of Samsung electronics. In 2019, Apple has been solely leading in the North American market. Apple was also seen head-to-head competition with Samsung in the European smartphone market with Samsung Galaxy A50 just 1% and 2% ahead in sales against the Apple iPhone XR and iPhone 11, respectively.
The Rise of Chinese Smartphones
The reigning years of Samsung and Apple slowly crumbled in 2018, when both companies started losing 50% of the smartphone market to Chinese mobile companies. According to Newzoo’s research, both Samsung and Apple acquired more than half of the market in 2016 and 2017.
Since then, Chinese smartphone companies have gained dominance as Huawei, Oppo, Xiaomi, and Vivo have taken a significant share. Because of its affordable prices and accessible functions and applications offered by Android OS, Chinese phones became very competitive in the low and middle-class markets.
Looking at the top smartphone vendors in the world, three Chinese companies belong to the top 5. These Chinese brands rapidly followed through the ranks are: Huawei, Xiaomi, and Vivo.
On Counterpoint Research’s chart above other Chinese smartphones such as Oppo, RealMe, and Techno join the growing list. Out of the ten brands, there were six Chinese smartphone active players in the smartphone market.
Huawei Takes the Lead in the Global Market Share
For the first time, Huawei has taken the top spot worldwide in the second quarter surpassing Samsung, the world-renowned player in the smartphone market. With 55.8 million units shipped, Huawei now takes the lead in the ranking of global smartphone vendors. Samsung comes in second place with 53.7 million units and Apple in third place with 45.1 million units.
Despite Asian brands like Samsung and Huawei topping the charts, Apple shows resilience amid the market downturn. Apple was the sole company that recorded a positive sales increase in the second quarter of 2020. Thanks to Apple’s Phone SE series, the American vendor was able to ship 45.1 million iPhone units globally in the last quarter, showing a notable 25% YoY growth.
According to Canalys, China’s flagship smartphone manufacturer sold 72% of its handsets in mainland China while only 28% overseas. Huawei’s international smartphone shipments have also dived 27% year-on-year in the second quarter of 2020. This shows that the Chinese population has supported Huawei’s dominance in the chart of the second quarter.
In terms of shipment, Huawei acquired 41.4% domestic market; good progress from 33.9% a year ago. Its overall unit shipments rose about 1% to 30.1 million. However, Huawei’s growth came at the expense of other local rivals like Oppo, Vivo, and Xiaomi. The three companies saw their shipments reduced by 26%, 19%, and 26%, respectively.
China’s lucrative phone market goes beyond smartphone sales. China is a mobile-first market leading in terms of mobile payment adoption, having 577.4 million active users using WeChat and Alipay. Chinese enterprise Tencent—a technology company that owns WeChat — also reigns in the global mobile games market scene. Moreover, China is also one of the earliest nations to upgrade to the world’s largest 5G network.
5G Phones to Revive the Smartphone Market
5G network is the latest advancement in telecommunication. Slowly many countries are looking into the implementation of 5G networks, but due to the COVID-19 pandemic, there is an evident slowdown.
Many Android smartphone vendors are hoping the hype for the next-generation mobile network can boost smartphone sales growth. Counterpoint Associate Director Tarun Pathak revealed his optimistic and valuable insights: “The share of 5G smartphones increased to 8% in Q1 2020, compared to 1% in Q4 2019. 5G is likely to help the rate of recovery during the second half of 2020.”
Furthermore, Pathak claims that as the economic situation slowly recovers, the 5G sales will be further driven by OEMs including Samsung, Oppo, Vivo, Xiaomi, and Realme launching devices in the sub $300 price band.
Huawei’s 5G phones are selling hot in China. Other brands jumping early in the 5G bandwagon are Vivo, Oppo, and Samsung. Chinese phones are marketing their advanced 5G smartphones innovation worldwide aggressively.
During Xiaomi’s 5G phone launch event in Barcelona, Qualcomm, a prominent chipmaker claims that the 5G technology is coming fast to enhance everything.
5G is the next big thing in the smartphone market. As more countries shift networks to 5G, consumers are expected to upgrade their smartphones. Huawei, though capable of providing the 5G networks overseas, faces challenges in bidding to provide 5G networks due to issues in privacy and trade war.
As Apple won’t be able to provide 5G iPhone anytime soon, many Android-based smartphone vendors with 5G-enabled phones in the market will encounter healthy competition among Android phones without Apple in the scene for some time.
RR Author
Real Research News is the media platform that presents insights and studies of wide-range of topics. It focuses on insights gathered from its survey app.
