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Smartphones
 
2019 Smartphone Shipments Down 1.2% for Q419 and 1.8% for the Year
February 09, 2020
 
Smartphone shipments as reported by IDC were down by 1.8% Y/Y, a difference of 26.2m phones, not a big deal, Samsung remained #1 in market share, Huawei replaced Apple as #2, and Xiaomi pushed OPPO from #4 to #5. The increasing competition in the smartphone market is leading to a gradual consolidation. The top six brands captured 77% of the market in 2019 compared to 72% in 2018 and 65% in 2017.

Table 1: Q419 Smartphone Shipments, Share, Growth

Source: IDC, Counterpoint

In Q419, overall shipments were down by 1.2%, a difference of 4.3m, well within the error range of the surveys. Apple took the top spot with a 20% share as Samsung #2 at 18.8% down 1.3%, even as Samsung was the leading player in 5G in 2019, shipping over 6.5 Million 5G capable devices in 2019.

• Apple iPhone shipments grew 7.9% Y/Y during the Q4 2019, even without a 5G variant. The iPhone 11 series received an excellent consumer response in all regions. The dual-camera, and lower pricing of iPhone 11 than the XR at the same point last year, helped propel sales.
• Realme continued its growth streak and remained the fastest growing brand during the quarter (163% Y/Y) as well as the year (453% YoY). The brand entered the top five in the Indian market for the full year, which contributed to its strong growth.
• Xiaomi grew fast in 4Q (11.2% YoY). It remained the top player in the Indian smartphone market for the full year in 2019.
• 5G smartphones contributed to 1% of global smartphone shipments in 2019. 2020 is expected to be the breakout year, with 5G smartphones poised to grow to around 250-350m smartphones in 2020.

 
Table 2: 2019 Smartphone Shipments, Share, Growth

Source: IDC, Counterpoint
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The big loser in Q419 was China's smartphone market, which declined 15% to 85.3 million units in the fourth quarter of 2019, marking the 11th consecutive quarterly decline and hit the market's lowest level since first-quarter 2013, according to Canalys. Even more troubling is Q120, which is expected to be even worse due to the Coronavirus.  For 2019, China's smartphone market closed at 369 million units, down 7% on year, Canalys indicated. The market significantly underperformed in a traditionally high season of smartphone sales, given a drastic slowdown of 4G smartphone purchases coupled with weaker demand than major vendors' anticipated for 5G smartphones. Meanwhile, distribution channels started to clear 4G inventory in anticipation for 5G uptake in the new year. Huawei maintained the lead in China with 39% market share by growing 11% over fourth-quarter 2018, despite a sharp sequential decline of 20%, Canalys said. OPPO and vivo remained in second and third place, although both saw shipments fall faster than market average at 25% and 29%. Apple moved up one position to number four and Xiaomi rounded the top five in the fourth quarter of 2019. Huawei shipped more than 33 million smartphones in China in the fourth quarter of 2019, but there is a note of caution to be sounded about the market leader's non-stop growth in the past 12 months. "Channel inventory build-up in Q2 and Q3 adversely impacted Huawei's performance in Q4," said Nicole Peng, Canalys' VP of mobility. "Huawei will find it challenging to persuade smartphone distribution partners to increase wallet share of Huawei's devices in 2020, as the sell-out of 4G smartphones, especially the mid to high-end, is becoming difficult. Despite Huawei leading the 5G smartphone shipments with a 78% share, the vendor must help channel partners ease the 4G device inventory pressure before more 5G devices flood the market." Apple managed to reverse its decline with a China smartphone market share of 11.8% in the fourth quarter of 2019, the vendor's highest in eight quarters, Canalys noted. Apple narrowed its year-on-year decline to 12% with 10 million iPhones shipped. "The competitive pricing of the iPhone 11 was a big contributor to Apple's Q4 result," commented Peng. "Given the industry is heading full speed to displace 4G with 5G phones, consumers are likely to pause phone replacement to future-proof devices. The iPhone 11 series is bucking the trend and was the best-selling 4G device in the China market. It has demonstrated there is still a strong pull factor for Apple's products, at the right price, given the hardware and service ecosystem strength. This will help with a better than expected upgrade rate when its 5G iPhone finally arrives." OPPO and vivo bore the brunt of market declines. "OPPO and vivo suffered from a lack of channel appetite in Q4 amid Huawei's strength," said Louis Liu, Canalys research analyst. "However, there were some positive notes. Vivo became the second largest in 5G smartphone shipments following Huawei in 2019, with 1.2 million units shipped. OPPO's new Reno brand also started to show promise, as its Reno 3 series shipped over 400,000 units within a week. Each vendor is determined not to lose share to Huawei and are ready to fight with stronger 5G smartphone portfolios in 2020."
"With the broader rollout of 5G and more incentives given by operators this year, 5G smartphones are expected to exceed 150 million units in 2020. Smaller vendors are hoping to break the market dominance of major brands, while competition between the top five will be cutthroat," Peng said.
"The overall market also faces high pressure to downsize with the black swan event of the outbreak of coronavirus," Peng continued. "This will have a significant and long-lasting adverse effect on the country's tech manufacturing industry, retail sector and consumer consumption."