Canalys: Samsung and Apple both grew global smartphone shipments, but both lost share to Chinese vendors

Canalys has published its final Q2 2013 smartphone shipment estimates by vendor for the 50-plus countries that it tracks. Some 238.1 million units shipped in Q2, an impressive 50% year-on-year increase. And while Samsung and Apple grew their shipments by 55% and 20% respectively to maintain first and second place, both lost share to Chinese vendors. Lenovo, Yulong and Korean vendor LG completed the top five vendors. Collectively, the five Chinese vendors shipping the most devices worldwide (Lenovo, Yulong, Huawei, ZTE and Xiaomi) made up 20% of the total market, up from less than 15% a year ago.

Apple’s market share fell to its lowest level since Q1 2009, but its numbers were buoyed by the performance of its older models after a price cut. ‘The high end of the market continues to grow but there is no doubt that the explosive growth will come from the low end of the market,’ said Chris Jones, VP and Principal Analyst. ‘Apple needs to respond to this dynamic and it is evident from the performance of its older models this quarter that there is real demand for a new low-cost iPhone. The challenge that it faces is maintaining high margins on arguably the most important products in its portfolio.’

Shipments in China grew 108% year-on-year, the second highest growth rate of the major markets, to 88.1 million. This represented over a third of all worldwide shipments. Lenovo took second place in China this quarter, where it shipped 10.8 million smartphones. 95% of its total 11.3 million shipments were in its home market, helping take it to third place in the worldwide smartphone market for the first time. ‘Lenovo has benefited from its large TD-SCDMA product portfolio, much of which is aimed at the low-end,’ said Nicole Peng, Research Director, China, in a statement. ‘China Mobile’s strategy of continuously pushing TD-SCDMA smart phones to the mass market benefits local vendors, in particular Lenovo and Yulong. The critical task for these vendors now though is to reduce their reliance on their home market and grow their businesses internationally. To achieve this they will need to invest in patents, establishing local teams and channels as well as diversifying their product portfolios to attract a broader range of consumer segments.’

Canalys worldwide smartphone shipments by vendor Q213

The US was still in second place in terms of shipments, but geographically, India stood out this quarter with smartphone shipments there growing the fastest of the major markets by 129% to hit 9.0 million and make it the world’s third largest smartphone market. But the dynamics of the market make it challenging for international vendors, besides Samsung, to succeed. ‘Samsung has invested heavily in its brand and channel relationships over a number of years, which has given it a big advantage over many of its international competitors. Samsung took over a third of the Indian market this quarter, followed by local vendor Micromax at 22%. Karbonn, Sony and Nokia made up the top five,’ said Jessica Kwee, Canalys Analyst, in a statement. ‘India is a market in transition, moving from feature phones to smart phones, and is a market that offers huge potential as hundreds of millions of users have yet to upgrade their feature phones. Domestic vendors, such as Micromax and Karbonn, are capitalizing on the popularity of their feature phones and are quicker to respond to local market demands, hence their current success.’

Canalys worldwide smartphone shipments by country Q213

Platform-wise, Android grew the fastest during the quarter, by 79% year-on-year. It powered 190 million, or 80%, of the smartphones shipped in Q2. Apple’s iOS share fell to 13% as the vendor readies itself for anticipated new products in the second half of 2013. Microsoft’s Windows Phone shipments grew by 54% annually. This was driven by Nokia with 31% sequential growth in Windows Phone shipments, enabling Microsoft to retain a 3% share. BlackBerry’s shipments grew sequentially by 15%, also helping it to retain a 3% share of the market. For the record, Q2 2013 represented another nail in the coffin for Symbian, as shipments slipped under the million mark for the first time since Q1 2003.

Source: Canalys

[Thanks to MacDailyNews Readers “Fred Mertz” and “Lynn Weiler” for the heads up.]

18 Comments

    1. I believe that is one of Wall Street’s major concerns regarding Apple. After all, the iPhone generates a significant part of Apple’s revenues and profits and is an important part of its mobile ecosystem and maps/ads monetization plan.

      Another major concern is the effect of the proliferation of these lower cost devices on Apple’s revenues and profits. This is important even if Apple is able to maintain high gross margins on its iPhone models.

      Even if Apple is able to achieve the same gross margin on the rumored low-cost iPhone as it currently receives on the iPhone 5, it would have to sell many more units just to maintain its current levels of revenue and profit. If the gross margin on the rumored low cost iPhone is lower, then Apple would have to sell even more units just to maintain profits (at a higher level of revenue).

      i have no doubt that the Chinese manufacturers intend to rapidly increase worldwide market penetration with their smartphone products. The last time that I went cell phone shopping, T-Mobile offered several different models of smartphones by Huawei.

      In my opinion, the most important questions with respect to the iPhone and Apple’s long term profitability are:

      1) Can Apple maintain its dominance in high-end, high profit smartphones over the long term?

      2) How far will Apple have to venture into the lower end/lower price points of the smartphone market to maintain sufficient market share to keep iOS and the iOS ecosystem viable over the long term?

      1. Chinese manufacturers sell cheap phones to poor people. Apple sells iPhones to people who can afford them.

        Exactly where is the Wall Street’s problem. I don’t see one.

        1. They’re probably the same Wall Street analysts that used to insist that Apple had to make a cheap-as-sh*t Mac to compete with the commodity PC makers like Dell.

          ——RM

        2. so what? asked a question and i gave a shot at answering it. i am not overly concerned at this point, or I would take my profits in AAPL and sit on the sidelines for a while. But it would be foolish to blindly ignore the threats to Apple’s chief moneymaking product. Kia used to sell cheap cars. But they are gradually working their way up the luxury ladder and taking some sales away from the leaders. Go back to the 1970s and Japanese auto makers including Datsun (later Nissan) mostly peddled low cost and fairly low quality cars. A couple of decades later and Japanese cars are known for quality, luxury, and reliability. Things can and often do change radically over time. However, as long as Apple keeps its focus and does not grow complacent, I believe that it will continue to lead the way in consumer electronics for many years to come.

    1. Amen! These analysts’ estimates are all so much smoke and mirrors: purveying dubious statistics, providing no margin-of-error figures, concerning who-knows-what definition of “smart phone” about global “shipments” obtained who-knows-how for undisclosed clients. The real mystery is why anyone pays attention such slipshod research.

  1. Neither Apple nor Samsung are going to do well in China. The Chinese vendors have the deck stacked in their favor, plus they’re mostly playing in the cheap, low profit, high volume phones. Obviously Apple doesn’t compete in this arena (yet), and Samsung even has trouble competing with home-grown Chinese cheap phones.

    India is a different story. Apple needs an inexpensive iPhone to compete there, or it will simply have to accept that it will never have sales volume and thus market share. Not that such numbers bothers Apple, because it has the lion’s share of smartphone profits.

    However, it would be a mistake for Apple to just concede the low cost phone market. Apple needs to find a way to compete at least to a small degree, because the inexpensive phones can be a road up to a full blown iPhone later for people. What Apple really wants to do is get people locked into the Apple Ecosystem and keep them from Android.

  2. What is it with this damn market share all the time? Does this also go on with refrigerators and toasters? It really is not a positive indicator of anything except for the hedge funds.

    1. Toaster and refrigerators are not used to sell derivated products.

      With a phone/tablet/WhatEverAllowsToRunSomethingElse you can sell:
      – services
      – software
      – Accessories

      You won’t make any benefit in any of those if your market share is too low. So Yes… Market share does matter…

  3. Chris Jones, VP and Principal Analyst needs to fire himself. So Apple needs a low cost iPhone when they already got two??? And the lowest priced iPhone will get a bump when it becomes the iPhone 4S. There are many vendors growing, and Chris Jones, VP and Principal Analyst and others want Apple to chase this growth. But it’s low quality growth. Why would you want to chase that? The reason these vendors are growing as the article stated is because they compete in the low end segment… That is not growth you want. They way you should Look at it is that the reason these vendors are growing so much, in the low end, is because they can’t compete in the high end… Not because they are smart, good or better. Apples sales will get a host around the world with iPhone 5S as the high end phone and 4S as the cheapest iPhone. Why any one would by an iPhone 4 escapes me but what the hell, it’s growth.

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