Earlier this month research firm IDC reported on the state of the global smartphone market share by vendor for Q4 2016, and the results are very interesting for several reasons.
International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker – Q4 2016
Q4 is a crucial quarter for the smartphone industry, especially in developed markets where it is a major holiday and shopping season. This year, everybody’s been waiting for Apple’s and Samsung’s numbers to finally be revealed, especially in comparison with Chinese smartphone majors like Huawei, OPPO and vivo, all three of whom have made tremendous gains over the past year.
Apple and Samsung have retained their Number 1 and Number 2 positions in the global smartphone market for Q4 2016. Apple saved its pole position by a mere 0.2%, coming in with an 18.3% smartphone market share and 78.3 million iPhone units shipped, against Samsung’s 18.1% and 77.5 million units shipped.
What’s significant about these numbers is that Samsung did not have a major product launch in Q4 2016. The only big move from Samsung smartphones was two new colors for the Galaxy S7 and S7 Edge. Despite losing an entire H2 2017 flagship product in the Note 7, Samsung managed to ship 77.5 million units in the three months ended December 31, 2016. That’s kudos to their strategy and marketing teams, if anything.
Meanwhile, Apple’s smartphone market share barely managed to edge past Samsung’s on the strength of iPhone 7 and iPhone 7 Plus, which many feared would show lackluster sales when it came to take stock of the numbers.
Even more surprising is the continuing rise of China’s top three smartphone makers. Xiaomi didn’t make it to this year’s list, but its peers did. Huawei, OPPO and vivo all gained smartphone market share during the final quarter of 2016.
Another important point to note is that the top five smartphone makers collectively accounted for 60% of smartphone sales, compared to 54.8% the year before.
Why is that significant?
This is something we’ve spoken about several times. Margins are extremely tight in the non-premium smartphone segment, sometimes even non-existent. Premium models have better margins, but it’s only Apple, Samsung a few others that really make any money in the smartphone market. And with Apple taking away more than 90% of the profits, it’s clear that something has to give way sooner or later.
That “give” will be in the form of industry consolidations and unit closures. The smaller players will either be forced to sell out or forced out altogether. Looking at it another way, the smartphone market is evolving into a top-heavy one, with just a few companies taking the lion’s share of sales, market share and profitability.
The market share change for the “Others” segment from 46.2% to 40% is one of the signs of that. It might not be a steady decline every quarter, but it’s certainly a predictable one.
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