Canalys: Smartphone shipments in China fell 14% in 2018

Of the top five vendors, Apple had the toughest year.

From “China’s smartphone market falls 14% in 2018,” posted Monday:

In 2018, smartphone shipments in China fell to their lowest level since 2013, at 396 million units. The natural slowdown as consumers keep their smartphones for longer is one factor, but it has been amplified considerably by the economic slowdown in China and consumers’ weakened purchasing power. The latest quarter, Q4 2018, marked a 15% year-on-year drop, and the seventh consecutive quarter of decline…

As shipments tumble, the market is rapidly consolidating. The top five smartphone vendors’ market share has increased from 73% in 2017 to 88% in 2018. Among them, Huawei and Vivo bucked the overall market decline, and grew 16% and 9% respectively. Oppo managed to hold onto second place, falling 2% but growing market share. Xiaomi ranked fourth, as a disappointing second half caused its full-year shipments to fall by 6%. Apple stayed in fifth place with a 13% decline in 2018. It still out-performed the market, but this was the worst growth rate in the top five, and Apple’s third consecutive year of shipment decline in China…

Apple had the toughest year of the top five, with shipments falling 13%, as customers were deterred by the high pricing of its new iPhone. In addition, models such as iPhone 7 and 8 did not see significant uplift in China, even after prices were lowered after the launch of the iPhone XS. “Apple has several challenges in China, and the growing power of competitors is not actually its biggest,” said [Mo Jia, an Analyst based in Canalys’ Shanghai Office]. “As its services division becomes more important in China, it is vital for Apple to maintain or grow its installed base of iOS users. Apple must re-examine its China strategy, and find a way to revive its high-end brand imagine, in order to align with the purchasing behavior of local middle-class and upper-class demographics.”

My take: Has this been priced into Apple’s share price? Not clear.

Cue the market share chart (note: still counting units):

canalys apple toughest year


  1. Gregg Thurman said:
    Only one question: how did revenue fare for each of those competitors?

    As a very wise man once told me, “There are only 10 reasons to be in business. The first is to make a profit, the other nine don’t count”.

    Without revenue there is no profit.

    January 28, 2019
  2. Fred Stein said:
    A positive is that Apple held onto its 9% indicating the ecosystem is OK.

    On the other hand, Huawei’s success impacts Apple in China.This is already priced in.

    January 28, 2019
    • Gregg Thurman said:
      Huawei’s success impacts Apple in China.

      Not that it matters much, but I’m not sure that is totally the case. Filling in the numbers that Canalys omitted from its chart above, I find the following:

      Huawei gained about 15,000,000 units sold.
      Apple lost about 6,000,000 units sold.
      Others lost about 76,000,000 units sold.

      It would appear that Samsung, LG, HTC, Sanyo, and Motorola have become irrelevant, and more than a few Chinese handset manufacturers ceased to exist during the year.

      Why the 61% drop in the Other category? My guess is quality and support. Being buyers of the low priced spread this group doesn’t have the resources necessary to immediately replace purchasing mistakes. I see them re-entering the market over the course of 2019 – 2020 with them buying a different (Huawei, Oppo, et al) low-cost Chinese product.

      Take out the Other category and the Chinese handset market declined about 2.5% for the year.

      Apple maintained its market share percentage. That tells me that 9% of the Chinese handset market is Apple’s target market. This segment did not switch to Huawei (at least not in measurable numbers). As a group, the decision not to buy during this cycle could be the result of having bought the iPhone X ahead of schedule or for current economic reasons. I don’t think they switched platforms.

      A return to economic growth in greater China, and the follow on growth in purchasing power of the RMB (currency exchange rate issue) will result in a return to growth in iPhone sales.

      January 28, 2019

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