Apple suffers first double-digit smartphone decline

Global sales of smartphones to end users totalled 349 million units in the first quarter of 2016, a 3.9% increase over the same period in 2015, Gartner has estimated.

According to the research firm, smartphone sales represented 78% of total mobile phone sales in the first quarter of 2016, with Apple suffering its first double-digit decline, allowing Samsung to extend its market lead.

Across the board, smartphone sales were driven by demand for low-cost smartphones in emerging markets and for affordable 4G smartphones, led by 4G connectivity promotion plans from communications service providers (CSPs) in many markets worldwide.

“In a slowing smartphone market where large vendors are experiencing growth saturation, emerging brands are disrupting existing brands' long-standing business models to increase their share,” Gartner research director Anshul Gupta said.

“With such changing smartphone market dynamics, Chinese brands are emerging as the new top global brands. Two Chinese brands ranked within the top five worldwide smartphone vendors in the first quarter of 2015, and represented 11% of the market.

“In the first quarter of 2016, there were three Chinese brands - Huawei, Oppo and Xiaomi - and they achieved 17% of the market."

In the first quarter of 2016, Samsung extended its lead over Apple with 23% market share.

“Samsung's Galaxy S7 series phones and renewed portfolio positioned it as a strong competitor in the smartphone market, and more so in the emerging markets where it has been facing fierce competition from local manufacturers,” Gupta said.

As such, Apple endured its first double-digit decline year on year, with iPhone sales down 14%.

Gupta said Apple's "upgrade program" in the US has helped sweeten its flagship iPhone 6s and 6s model pricing to drive sales in its largest smartphone market.

“Apple is also exploring ways to refarm second-hand iPhones coming through the program in emerging markets,” he added.

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Meanwhile, Lenovo disappeared from the top five smartphone vendor ranking as well as the top 10 mobile phone vendor market in the first quarter of 2016.

“Lenovo had another challenging quarter with its worldwide smartphone sales declining 33%," Gupta added.

“Its smartphone sales fell by 75% in Greater China, where it faced strong competition from local brands. Lenovo is also struggling to bring synergies with Motorola's device business, managing lower costs and overheads of the two brands.”

In terms of the smartphone operating system market, Android regained share over iOS and Windows to achieve 84% share.

"As mature smartphone markets are reaching saturation, Google is pursuing new revenue growth opportunities by expanding the reach of its platforms in cars, wearables, connected homes, immersive experiences and more," Gartner research director Roberta Cozza added.

“Despite the Android platform’s advancements and its dominant market share, the challenges of profitability remain for a number of Android players.

“This will have an impact on the vendor landscape where new or more innovative business models will increasingly become key to succeed.”

Going forward, Gupta believes Nokia’s announced return to the smartphone and tablet markets will not be an easy mission.

“In today’s market it takes much more than a well-known brand to sell devices,” he added.

“Making good hardware won’t be an issue for Nokia, but users need a compelling reason to remain loyal to the same brand. Furthermore, that the smartphone market is slowing down makes it difficult for mobile phone vendors to reach previous levels of growth.”

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