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China to thank for the uptick after Apple launched its latest device right at the end of September, and Samsung’s flagship met a fiery end.
Telco hacks like me who expected the iPhone’s late-September arrival and Samsung’s Galaxy Note 7 woes to result in something of a Halloween horror-show in terms of Q3 smartphone volumes received a surprise this week.
"Global smartphone shipments grew an improved 6% annually from 354.2 million units in Q3 2015 to 375.4 million in Q3 2016. This was the smartphone industry’s fastest growth rate for a year," said Linda Sui, director of Strategy Analytics, on Wednesday.
Figures published by GfK on Tuesday were even more positive, putting global smartphone sales growth at 7.5% compared to last year, with 353.3 million units sold to end users.
Another research firm, IDC, was slightly less bullish, putting global growth at 1%, with volumes growing to 362.9 million from 359.3 million a year ago.
These encouraging figures are a far cry from the doom and gloom surrounding the sector earlier this year.
In Q1, smartphone shipments inched up to 334.9 million from 334.3 million a year earlier, by IDC’s reckoning. Strategy Analytics was more pessimistic: its figure of 334.6 million represented a 3% contraction.
Back to the third quarter, and despite the discrepancies in sales/shipment figures, all three research firms were unanimous about where the growth came from.
"China remained the key global growth driver in 3Q16," said Arndt Polifke, director of telecom research at GfK.
According to Strategy Analytics, 121 million smartphones were shipped in China during the quarter, up 15% on last year.
"China remains by far the world’s largest smartphone market, accounting for nearly one in three of all 375.4 million smartphones shipped globally this quarter," said Sui. "China’s smartphone market is returning to faster growth in the second half of this year, due to a more stable economic climate, multiple flagship 4G model launches, and solid direct or indirect subsidies from Chinese operators."
Chinese consumers overwhelmingly favoured domestic smartphone brands during the quarter.
Huawei held onto top spot in China, shipping 18 million devices, followed by new kid on the block OPPO, which overtook Vivo, Xiaomi and Apple, to become the country’s second-biggest player, with shipments of 17 million units. Vivo overtook Xiaomi to grab third place, shipping 16.5 million smartphones.
These days, if you’re big in China, you’re big on the world’s stage.
Both Strategy Analytics and IDC now rank OPPO and Vivo as the world’s fourth and fifth-largest smartphone vendors respectively. Huawei sits in third place behind Apple.
As reported earlier this week, Apple is hoping for a healthy uptick in fortunes during the current quarter.
Global iPhone shipments fell 5% to 45.5 million in the three months to 24 September; its recently-unveiled iPhone 7 went on sale on 16 September, too late to have any meaningful impact on volumes.
According to IDC, Apple’s market share fell to 12.5% from 13.4% a year earlier.
Still, Apple’s slightly lacklustre Q3 is nothing compared to what Samsung has been through lately.
Its widely-publicised Galaxy Note 7 issues were writ large in its Q3 report this week.
Sales at its mobile phone business, which accounts for the bulk of sales at Samsung’s IT and Mobile Communications (IM) division, were down 15% year-on-year to 22.09 trillion won (€17.68 billion), while IM’s operating profit plunged to KRW100 billion from KRW2.4 trillion a year ago.
"Samsung shipped 75.3 million smartphones worldwide in Q3 2016, falling 10% annually from 83.8 million units in Q3 2015. This was Samsung’s slowest growth rate for almost two years. Its global smartphone market share has dipped from 24% to 20% in the past year," noted Neil Mawston, executive director of Strategy Analytics.
"Samsung’s recent Galaxy Note 7 recall was handled badly, which dented its brand image and left a large product gap in its premium smartphone lineup. Samsung will now be looking to its next flagship launch, such as the rumoured Galaxy S8 model, to recover momentum in 2017," he said.
"[Samsung] will focus on expanding sales of new flagship products with differentiated design and innovative features, as well as regaining consumers’ confidence," the company said in a statement on Thursday.
Samsung is optimistic about demand picking up again during the holiday season, helped by its current crop of high-end handsets, namely the Galaxy S7 and S7 Edge.
"As for 2017, the company anticipates a turnaround with the launch of new flagship smartphones. Next year will also see expansion of Samsung Pay rollouts and cloud-related services as well as the introduction of artificial intelligence related offerings," Samsung said.
Samsung needs to act quickly though, because judging by this week’s smartphone stats, the momentum is well and truly with China’s homegrown handset makers.
