Huawei smartphone sales surge as it pulls away from iPhone

Global sales of smartphones to end users declined 2.7% in the first quarter of 2019, totalling 373 million units, new data from research and advisory group, Gartner shows.

And despite its absence from the US, Huawei maintained its ranking as the No. 2 smartphone vendor worldwide and continued to reduce the gap with Samsung.

“Demand for premium smartphones remained lower than for basic smartphones, which affected brands such as Samsung and Apple that have significant stakes in high-end smartphones,” said Anshul Gupta, senior research director at Gartner.

“In addition, demand for utility smartphones declined as the rate of upgrading from feature phones to smartphones has slowed, given that 4G feature phones give users great advantages at a lower cost.”

Slowing innovation in flagship smartphones and rising prices continued to extend replacement cycles. The two countries that sell the most smartphones, namely the US and China, saw sales decline by 15.8% and 3.2%, respectively, in the first quarter of 2019.

In the first quarter of 2019, Samsung retained the top spot in worldwide smartphone sales achieving 19.2% market share. Huawei achieved the highest year-over-year growth among the world’s top five, growing 44.5% and smartphone sales totalling 58.4 million units.

Sales of Huawei smartphones grew in all regions. “Huawei did particularly well in two of its biggest regions, Europe and Greater China, where its smartphone sales grew by 69% and 33%, respectively,” said Gupta.

Huawei’s continued dominance in Greater China, where it commanded a 29.5% market share, helped it secure the No. 2 global smartphone vendor ranking in the first quarter of 2019.

“Unavailability of Google apps and services on Huawei smartphones, if implemented, will upset Huawei’s international smartphone business which is almost half of its worldwide phone business. Not the least it brings apprehension among buyers, limiting Huawei’s growth in the near term,” Gupta warned.

Smartphone Sales by Vendor in 1Q19 (Thousands of Units)

Vendor 1Q19 Units 1Q19 Market Share 1Q18 Market Share
Samsung 71 621.1 19.2% 20.5%
Huawei 58 436.2 15.7% 10.5%
Apple 44 568.6 11.9% 14.1%
Oppo 29 602.1 7.9% 7.3%
Vivo 27 368.2 7.3% 6.1%
Others 141 405.2 37.9% 41.5%
Total 373,001.4 100% 100%

Samsung and Apple Recorded Year-Over-Year Declines

Despite a decline in its smartphone sales of 8.8% in the first quarter of 2019, Samsung remained the No. 1 smartphone vendor worldwide. “Samsung launched its flagship Galaxy S10 smartphone portfolio, which received a good response. However, its impact was limited as Samsung only started shipping the S10 at the end of the first quarter,” said Gupta.

“Samsung also strengthened its midtier and entry-tier smartphone ranges with a refreshed A series and J series and the newly introduced M series, but aggressive competition from Chinese manufacturers limited their impact.”

Sales of Apple iPhones totalled 44.6 million units in the first quarter of 2019, a decline of 17.6% year over year.

“The price cut for iPhones across markets helped drive up demand but wasn’t enough to restore growth in the first quarter,” said Mr Gupta. “Apple is facing longer replacement cycles as users struggle to see enough value benefits to justify replacing existing iPhones.”

Vivo beat Xiaomi to claim the No. 5 spot in the first quarter of 2019. Vivo sold 27.4 million smartphones during the quarter. Xiaomi sold 27.2 million.

The latest features, such as in-display fingerprint scanner, slider camera, fast charging and almost bezel-less display, helped Vivo achieve double-digit smartphone sales growth in the first quarter of 2019.

“However, the company could do much better by expanding its range of its entry-tier smartphones and selling them in emerging Asia/Pacific markets,” said Gupta.

Trade war

President Donald Trump’s decision to blacklist Huawei Technologies could open the door to retaliation against US brands, Bloomberg reported.

Companies might “just have to read the tea leaves on how their business operations are being treated,” Erin Ennis, senior vice president of the US-China Business Council, said in an interview with Bloomberg Television.

The most obvious target is Huawei’s smartphone rival Apple Inc, which gets about a fifth of its revenue from China and manufactures its iPhones there. Apple, Bloomberg noted, has already been suffering in the region, seeing sliding revenue as consumers buy more phones from Huawei and other local brands.

Blowback from Trump’s Huawei ban could cost Apple about 3% to 5% of its iPhone sales in China over the next 12 to 18 months, according to Dan Ives, an analyst at Wedbush Securities.

Huawei’s founder, Ren Zhengfei, took the high ground in an interview with Bloomberg Television, saying China shouldn’t punch Apple. If that does happen, the billionaire added, “I’ll be the first to protest.’’

Read: Billionaire Huawei founder defiant in face of threat

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Huawei smartphone sales surge as it pulls away from iPhone