iPhones are increasingly looking like yesterday’s technology, priced like the phones of tomorrow, and it seems the market has finally caught on to this.
The IDC reports that the smartphone market, in general, saw a 6.6% dip in Q1 2019, but that Apple’s iPhone shipments were down a staggering 30.2%.
The IDC notes:
Apple had a challenging first quarter as shipments dropped to 36.4 million units representing a staggering 30.2% decline from last year. The iPhone struggled to win over consumers in most major markets as competitors continue to eat away at Apple’s market share. Price cuts in China throughout the quarter along with favorable trade-in deals in many markets were still not enough to encourage consumers to upgrade. Combine this with the fact that most competitors will shortly launch 5G phones and new foldable devices, the iPhone could face a difficult remainder of the year. Despite the lackluster quarter, Apple’s strong installed base along with its recent agreement with Qualcomm will be viewed as the light at the end of the tunnel heading into 2020 for the Cupertino-based giant.
The company has now clearly lost the second position to Haiwei, which has shipped nearly twice as many smartphones as Apple, and has managed to grow sales by 50.3% despite the challenging environment.
The IDC notes:
Huawei moved its way into a clear number two spot as the only smartphone vendor at the top of the market that saw volumes grow during 1Q19. Impressively, the company had year-over-year growth of 50.3% in 1Q19 with volumes of 59.1 million units and a 19.0% market share. Huawei is now within striking distance of Samsung at the top of the global market. In China, Huawei continued its positive momentum with a well-rounded portfolio targeting all segments from low to high. Huawei’s high-end models continued to create a strong affiliation for the mid to low-end models, which are supporting the company’s overall shipment performance.
Samsung is still hanging on to the first spot but is somewhat beleaguered. The IDC notes:
Samsung saw volumes drop 8.1% in 1Q19 with shipments of 71.9 million. The results were enough to keep Samsung in the top spot of the market, but Huawei is continuing to close the gap between the two smartphone leaders. Despite challenging earnings in terms of profits, Samsung did say that the recently launched Galaxy S10 series did sell well during the quarter. With the 5G variant now launched in its home market of Korea and plans to bring this device and other 5G SKUs to other important markets in 2019, it will be equally crucial for Samsung not to lose focus on its mid-tier product strategy to fend off Huawei.
Smartphone vendors shipped a total of 310.8 million units in 1Q19, which marked the sixth consecutive quarter of decline. In 2018, smartphone shipments dropped 4.1% over 2017, which was inclusive of a first quarter that was down 3.5% – just half of what the market experienced in 1Q19. This quarter’s results are a clear sign that 2019 will be another down year for worldwide smartphone shipments. The only highlight from a vendor perspective was Huawei, which made a strong statement by growing volume and share despite market headwinds.
From a geographic standpoint, while the China market will likely be challenged for the remainder of 2019, it was the U.S. market that felt the worst of the downturn in 1Q19. Smartphone volumes declined 15% year over year during the quarter as replacement rates continue to slow in one of the world’s largest markets. Apple iPhone challenges contributed to the exceptionally poor 1Q19 in the U.S., but they were not alone as Samsung, LG, and other top vendors also witnessed declining volumes during the quarter.
“The less than stellar first quarter in the United States can be attributed to the continued slowdown we are witnessing at the high end of the market,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker. “Consumers continue to hold on to their phones longer than before as newer higher priced models offer little incentive to shell out top dollar to upgrade. Moreover, the pending arrival of 5G handsets could have consumers waiting until both the networks and devices are ready for prime time in 2020.”