Apple and Samsung feel the smartphone slump, as Huawei and Xiaomi quickly catch up

Given how close we are to smartphone saturation point, it’s no surprise that the market is stagnating somewhat, but new figures from Gartner show that Chinese brands are taking full advantage while the rest falter.

While the top five vendors has been unchanged for some time, the difference between the big hitters is getting smaller, and both Apple and Samsung appear to be tailing off. In 2018 as a whole, Samsung still shifted the most units – 295 million according to Gartner – but that’s down from 321 million in 2017, meaning it now occupies 19% of the market. Apple felt a similar decline, selling 209 million smartphones, down from 215 million in 2017.

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But the three other vendors in the top five all bucked the trend and closed the gap on Samsung and Apple. Huawei jumped from 151 million units in 2017 to 203 million in 2018, for a market share of 13% – less than half a percentage point behind Apple.

Xiaomi leapfrogged fellow Chinese brand Oppo to take fourth place, but both saw growth. Xiaomi went from 89 million to 122 million, while Oppo jumped from 112 million to 119 million in the same period.

Not only did Apple suffer an 11% YOY sales drop, it also wasn’t saved by Q4, which usually is where it makes its money thanks to a combination of Christmas and the annual September phone launch. This year, though it dipped to 65 million and a 15.8% market share, down from 73 million and 17.9% in 2017.

“Apple has to deal not only with buyers delaying upgrades as they wait for more innovative smartphones, but it also continues to face compelling high-price and midprice smartphone alternatives from Chinese vendors. Both these challenges limit Apple’s unit sales growth prospects,” said Anshul Gupta, Gartner’s senior research director.

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On top of that, the company’s lack of budget options are beginning to bite, as consumers seem to be deciding that entry-level phones are ‘good enough’. “Demand for entry-level and midprice smartphones remained strong across markets, but demand for high-end smartphones continued to slow in the fourth quarter of 2018,” Gupta said. “Slowing incremental innovation at the high end, coupled with price increases, deterred replacement decisions for high-end smartphones. This led to a flat-growth market in the fourth quarter of 2018.”

Despite having a wider range of options for different budgets, Samsung has its work cut out too. “Although Samsung is strengthening its smartphone offering at the midtier, it continues to face growing competition from Chinese brands that are expanding into more markets. It also faces difficulty bringing significant innovation to high-end smartphones,” said Gupta.

It’s Huawei that is really the success story of 2018. Managing to grow its market share by 3.3% in a year when it had to face giving up on nearly 5% of the world’s population is no mean feat.

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