Gartner reports that global smartphone demand weak in third quarter this year, as Apple and Xiaomi find their shares declining

Global sales of smartphones to end users continued to decline in the third quarter of 2019, contracting by 0.4 percent compared with the third quarter of 2018, according to data released Tuesday by analyst firm, Gartner. Demand remained weak as consumers became more concerned about getting value for money.

This shift has led brands such as Samsung, Huawei, Xiaomi, OPPO and Vivo to strengthen their entry-level and mid-tier portfolios. This strategy helped Huawei, Samsung and OPPO grow in the third quarter of 2019. By contrast, Apple recorded another double-digit decline in sales, year over year.

Huawei was the only one of the top-five global smartphone vendors to achieve double-digit growth in smartphone sales in the third quarter of 2019. The company sold 65.8 million smartphones, an increase of 26%, year over year. Huawei’s performance in China was the key driver of its global smartphone sales growth. It sold 40.5 million smartphones in China and increased its share of the country’s market by almost 15 percentage points.

While the ban on Huawei to access key U.S. technologies is yet to be fully implemented as a three-month extension was just announced, the proposed ban brought negativity around Huawei’ brand in the international market. Nevertheless, Huawei’s strong ecosystem in China continued to show growth. 

The current situation with the U.S. has also fostered patriotism among Huawei’s partners, which are now keener to promote its smartphones in China — a development that makes it difficult for local competitors to compete aggressively against Huawei. Huawei’s long investment in subbrands (Honor and Nova), in multichannel operations (online and retail), and in 5G and other technological innovation forms the basis of its success in China.

Samsung maintained the top position globally in the third quarter of 2019, by increasing its smartphone sales by 7.8 percent, year over year. “Samsung’s aggressive revamp of its portfolio, with a focus on midtier and entry-tier segments, strengthened its competitive position,” said Anshul Gupta, senior research director at Gartner.

Apple’s iPhone sales continued to decline in the third quarter of 2019. Apple sold 40.8 million iPhones, a year-over-year decline of 10.7%. “Although Apple continued its sales promotions and discounts in various markets, this was not enough to stimulate demand globally,” said Gupta. “In the Greater China market sales of iPhones continued to improve, however, it follows a double-digit decline recorded at the beginning of the year. The iPhone 11, 11 Pro and 11 Pro Max saw good initial adoption, which suggests that sales may be positive in the remaining quarter.”

With Black Friday and Cyber Monday approaching, smartphone deals are likely to spur consumer demand in the fourth quarter of 2019. Vendors including Google and Samsung are likely to offer aggressive price promotions not just for their older smartphones but also for new devices such as the Google Pixel 4 and Samsung Galaxy Note 10.

Competition between mobile phone manufacturers will increasingly focus on more intelligent smartphones. These devices will deliver increasingly personalized content and services that draw on users’ contexts and preferences. 

“To deliver relevant personalized experiences, manufacturers will need to improve the integration of artificial intelligence (AI) in smartphones and make security capabilities and privacy key aspects of their brands,” said Roberta Cozza, senior research director at Gartner.

At a time of limited technology-led innovation, product managers should focus on offering attractive features at low prices as quickly as possible. By offering better value for money, they can increase demand for smartphones.

“For the majority of smartphone users, desire has shifted away from owning the least expensive smartphone. Today’s smartphone user is opting for midtier smartphones over premium-tier ones because they offer better value for money,” said Gupta. “In addition, while waiting for 5G network coverage to increase to more countries, smartphone users are delaying their purchase decisions until 2020.”

IDC reports 0.8 percent rise in global smartphone shipments in third quarter, as Huawei went full steam in China

Worldwide smartphone shipments increased 0.8 percent year over year in the third quarter of 2019 after seven quarters of decline, according to new data released Thursday by research firm International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker. In total, companies shipped a total 358.3 million smartphones during the quarter, which was up 8.1 percent from the previous quarter and enough to return the industry to positive growth. 

Digging into the growth areas, India led emerging markets in total, which together were responsible for propelling worldwide growth, mainly from the rise of Chinese brands. In China, greater consolidation toward the top 5 brands was the main trend in the quarter. 

The top Chinese brands all increased their local shipments in preparation for 11.11 or "Singles' Day," the Chinese equivalent of Black Friday for shopping in the U.S. 

Samsung gained share in 3Q19 with annual growth of 8.3 percent on the back of the Galaxy Note 10 launch in August and increased A series volumes, with a total of 78.2 million smartphones shipped. The lower-end to midrange A series in particular helped to fill in the gaps left behind by Huawei. 

Huawei shipped higher volumes than expected as it shifted focus to its domestic market, particularly in lower-tier cities, and increased inventories given the unknown future with Google Mobile services. 

While a sentiment of nationalism has helped to bolster Huawei in China, solid relationships with the local channel players has been key, offering favorable distributor terms and a well-rounded product portfolio. Nevertheless, there will be challenges ahead with 4G inventory to clear while consumers wait for affordable 5G products to hit the market. 

Apple shipped 46.6 million iPhones in the third quarter this year, which was a slight decline year over year but still better than most expectations. Apple continues to sell some refurbished iPhones via its own channels, which sustain and possibly grow the installed base, but also impact iPhone revenues. Newer iPhones, specifically the iPhone 11s and XR, did very well this quarter, capturing strong share in important markets like the U.S. and Western Europe. 

Xiaomi for the first time saw less than a third of its shipments delivered domestically in China, which was second to India in volume. Domestically, despite its launch of the CC series to appeal to young female consumers, shipments declined under pressure from Huawei. 

The runway was clearer for Xiaomi in India, however, where it strengthened its offline presence by expanding its sales network via the Mi Store and Mi Preferred Partners. 

OPPO also focused its attention outside of China as it approached the tipping point of nearly half of its shipments outside of China with domestic shipments focused on the Reno series and the A9. India experienced the strongest momentum internationally where the Reno series helped complete its product portfolio with higher-end offerings while the online-exclusive K series strengthened its online presence. 

"Despite facing challenges across many international markets, Huawei doubled down on China in the third quarter," said Melissa Chau, associate research director with IDC's Worldwide Mobile Device Trackers. "Samsung benefited the most internationally from Huawei's woes, ramping up the more affordable A series, while in China the other domestic competitors felt the heat from Huawei." 

"The market returning to positive growth shows the resilience of this industry as well as the ongoing demand for mobile phones, all in the face of many global macroeconomic challenges," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers. "The number of factors in play for competition are incredible. It is clear Huawei continues to make big gains in China, which remains the world's largest market. Apple beat many expectations and is driving strong volumes in mature markets that face equally challenging headwinds. And most importantly, the top 5 OEMs accounted for more than 70 percent of the world's smartphone shipments for the first time ever this quarter. The industry and vendor landscape is still changing but the trend of consolidation is ramping along with it."