Author(s): Marina Koytcheva
Last week, CCS Insight published its latest quarterly analysis of the global market for mobile phones.The comprehensive report provides an assessment of the total market and detailed analysis of the performance of the top 10 players. Here is a short summary of our findings.
CCS Insight estimates that the total mobile phone market in 3Q16 declined by 1.8 percent over the year, to 481 million units, in line with our forecast published in September 2016. The fall was attributed to weakness in developed markets where consumers are becoming less excited about the latest crop of smartphones. It was exacerbated by difficult market conditions in many emerging regions, especially Latin America. Demand in China, however, appears to be recovering from a very weak 2015.
In 3Q16, smartphone shipments grew by 5.1 percent to 352 million units. This improvement came at the expense of non-smartphones, sales of which dropped by 17 percent. Growth of smartphones was considerably stronger than in the first two quarters of 2016. This was expected: in summer 2016, key component manufacturers signalled that the second half of the year would be better than the first, as the transition from non-smartphones to smartphones regained momentum. It should also be noted that smartphone growth in the second half of 2015 slowed considerably compared with the first half of 2015, so the market in 3Q16 grew from an already low base.
Samsung maintained its number-one smartphone maker position, with global market share of 22 percent. The company recorded a 10 percent year-on-year drop in smartphone shipments, to 76 million units, as it continued to withdraw from unprofitable low-end segments in many markets. Shipments came within the guidance Samsung provided to investors in late July 2016, thanks to a strong performance by the Galaxy S7 and S7 edge.
The end of Samsung's third quarter was marked by difficulties with the Note7 phone. It's important to note that the incident didn't dramatically affect total shipments. Samsung only sold about 2.5 million Note7 devices (3 percent of total smartphone shipments in 3Q16), before it decided to cancel the product and recall all sold units. Some commentators appear to have jumped to wrong conclusions about the impact of the Note7 on shipments. The real pain came from the cost of the phone's withdrawal and cancellation, which resulted in a complete wipeout of the operating profit for Samsung’s mobile business.
Apple saw iPhone shipments fall for a third consecutive quarter, this time by 5 percent over the same quarter of 2015. Global market share was 13 percent. Sales took a hit in China and the US. However, toward the end of the quarter, Apple benefited from the launches of its new iPhone 7 and iPhone 7 Plus. The outlook for 4Q16 is more positive, and we expect a small year-on-year growth in shipments, mainly thanks to replacement sales of the new iPhone models to existing Apple customers.
The phone maker with the most positive quarter was third-ranked player Huawei. Its smartphone shipments grew 23 percent year-on-year and market share remained close to 10 percent. Huawei has underlined its ambition of overtaking Apple to secure the second spot within two years.
Chinese manufacturers Oppo and Vivo, both owned by conglomerate BBK and not particularly well-known in the West, continued to expand their sales units and market share. Both players had a strong performance in their domestic market of China, where they put pressure on Samsung and Apple.
We project smartphone sales to reach 412 million units in 4Q16, rising 6.7 percent from 4Q15. The total mobile phone market, however, is expected to fall by 1.3 percent in 2016 from 2015.