We now have confirmation that Huawei has surpassed Apple to become the world’s second-biggest maker of smartphones: Gartner has belated weighed almost a month after IDC did, noting the same milestone.
As I first reported in Apple Delivers a Blockbuster Quarter, But… on August 1, Apple sold about 41 million iPhones in the quarter ending June 30, flat with the year before. But IDC, at the time, provided some bad news, noting that Apple had slipped from second place, by sales, in the smartphone market to China-based Huawei, a firm that basically doesn’t even sell handsets in the United States.
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But now that Gartner has weighed in too, we can take a closer look at the results.
Using my normal averaging model, the smartphone industry shipped about 358 million handsets in the second quarter of 2018, roughly flat with the 357.4 million it sold in the same quarter a year ago.
Samsung, as usual, emerged as the number one smartphone manufacturer with 72 million units sold, good for approximately 20 percent marketshare. A year earlier, Samsung had sold about 81.4 million units, for a loss of about 2.8 percentage points overall.
Last year, Apple was the number two maker of smartphones with 41 million units sold, good for 11.5 percent marketshare. As you might expect, it’s marketshare in the most recent quarter was roughly identical.
The problem, for Apple, is that Huawei sales have surged in the same time period. A year ago, the China-based handset maker sold about 37 million units, just below Apple, garnering quarterly marketshare of 10.4 percent. This year, sales jumped to 52 million units. And Huawei now controls 14.5 percent of the market, well ahead of Apple.
And Apple has two other China-based smartphone makers nipping at its heels, as both Xiaomi and OPPO have experienced tremendous year-over-year growth. If these trends continue, Xiaomi, at least, will easily surpass Apple within a year: It saw unit sales grow from over 21 million units in Q2 2017 to over 32 million units in the most recent quarter. And OPPO came is right behind it with 29 million units sold in Q2 and a similar year-over-year growth trajectory.
Is Apple prepared for a number five finish by mid-2019? Its recently-revealed iPhone strategy suggests it is: Apple plans to raise the average selling price of its iPhones and lean more heavily on iPhone-adjacent subscription services. If successful, it can claim, fairly accurately, that marketshare doesn’t matter as much as profits and user engagement.
<blockquote><em><a href="#307865">In reply to jrickel96:</a></em></blockquote><p>Just so you know I have a iPhone X, a 256gig with Apple Care. I use a ton of Apple products.</p><p><br></p><p>ALL companies rise and fall. IBM, Microsoft etc. Apple fell once before and they will fall again. Their biggest problem is that the iPhone makes up the lion share of their revenue and profits. A "fall" at the wrong time could be devastating.</p><p><br></p><p>Apple's ASP (average selling price) going up is great for Apple. They keep ramping the price and people keep paying it…..until they don't.</p><p><br></p><p>Apple makes "brave" moves like removing the audio jack, or giving you face ID and at the same time removing the finger ID. Apple does not use USB-C like the rest of the world…or at least on the iPhone (Mac is all USB-C now). They keep raising the prices as well and so far sales have not been impacted or at least are flat-ish and not down. I think Apple is one brave move (in the wrong direction) from shattering the hype of the iPhone.</p><p><br></p><p>Add to that smartphones from all vendors have reached the "good enough" stage in terms of features and speed. If I had to get rid of my iPhone X and move to some mid range Android phone (One Plus, Moto etc) I could do it and do it with not much pain. Smartphones, their hardware and services are rapidly maturing and innovation is coming at the cost of change for change sake these days.</p><p><br></p><p>I am a Mabook Pro user (15inch 2017) and I feel like Apple has made too many "brave" moves and I am seeing once loyal Macbook Pro users move to Windows because of crazy price hikes on Macbooks (8th gen 13inch starts at $1799) and things like USB-C only, horrible keyboard, lame touchbar and the removal of the fantastic MagSafe. These people move to Windows and they get almost unlimited choice of hardware and they almost always get way more for their money (RAM, SSD size, up-gradability etc) which means they save money. With Mac sales down 13% last quarter I think Apple has been a bit too "brave" with their Mac decisions. </p><p><br></p><p>If Huawei comes to the US, in a big way, that can't be good for Apple either.</p><p><br></p><h1><br></h1><p><br></p>
<blockquote><em><a href="#307870">In reply to Angusmatheson:</a></em></blockquote><p>"Huawei’s and Apple’s growth have nothing to do with each other."</p><p><br></p><p>And yet comparisons between smartphone growth and PC decline is taken as significant. Surely market comparisons between products in the same category are more relevant than cross-category comparisons. Of course, deciding which players are losing by Huawei's growth is pure speculation.</p>
<blockquote><em><a href="#308365">In reply to Brockman:</a></em></blockquote><p>"Have to agree with other commenters; the story here isn't about Apple."</p><p><br></p><p>Yet the potentially irrelevant reference to Apple seems, more often than not, to benefit them. How many times have we read reviews of competing products that spend as much time comparing them to Apple products as reviewing the product on its own merits. Regardless of profit margins, if one were to review a Huawei smartphone and compare it to a single competing smartphone, shouldn't the first choice be Samsung and Vice Versa? Why compare to company #3?</p>
<blockquote><em><a href="#308615">In reply to ghostrider:</a></em></blockquote><p>Yes, I have to laugh at the articles that claim that the $1000 smartphone is the new normal. The new normal for who? </p>
<blockquote><em><a href="#309549">In reply to Rob_Wade:</a></em></blockquote><p>Right. I bought one on Amazon a few months ago and I'm in the US.</p>
<blockquote><em><a href="#310177">In reply to Brockman:</a></em></blockquote><p>I don't know if unlocked phones are the dominant way to purchase smartphones these days, but it certainly has become very common. Our Huawei smartphone works flawlessly with AT&T and could be used with any GSM carrier.</p>
<p>I'm failing to see how this inherently bad for Apple. As pointed out in the article their marketshare is maintaining. So, Huawei's growth isn't coming at someone else's expense rather than Apple's. So there is either consolidation happening at the lower end of the market, Samsung is losing ground or a combination of both. Seems like the bad news here is more for other makers of Android phones as Huawei is pulling their business. </p>