Smartphone Sales - Q2 2016 - Apple Sales Continues to Slide
IDC recently published their Worldwide Quarterly Mobile Phone Tracker data for Q2 2016.
In Q2 of 2016 343.3M smartphones were sold. Similar to Q1 this was an extremely modest gain of only 0.3% over 2015 Q2 sales of 342.4M units.
The top five vendors maintained their ranking - so Samsung, Apple, Huawei, Oppo and vivo in that order.
#1 Samsung sold 77M units up 5.5% over 2015 and increased their overall market share to 22.4%.
#2 Apple once again saw a dramatic decline in sales of 15% - selling 40.4M units compared to 47.5M units last year and it's market share dropped to 11.8% from 13.9%. The 40.4M units was Apple's lowest unit total in 7 quarters.
The big gainers where the next 3 vendors - all Chinese focusing on the home market - where Apple was the big loser seeing a 33% decline in unit sales year over year from 13.2M units in 2015 to 8.8M in 2016.
#3 Huawei sold 32.1M units and increased market share to 9.4%. Huawei is not only doing well in China but is starting to see significant sales in Europe as well.
#4 Oppo sold 22.6M units - a 136.6% gain over 2015 and increased market share to 6.6%
#5 vivo sold 16.4M units an 80.2% gain over 2015 and a 4.8% market share.
Combined these 3 vendors sold 71.1M units and have a 20.8% market share.
The point here is not to beat up on Apple, they make a great product, but even with the introduction of the iPhone SE, they have been unable to hold off the onslaught of the local vendors.
With China being the largest mobile market on the planet it's significant. It shows a shift now towards local lower cost products and even Samsung is beginning to have a hard time there.
As I stated in my Q1 post on this subject - the Average Selling Price (ASP) for a smartphone is China is around $242. And even though Apple introduced the lower cost SE model - the ASP is much higher.
In fact Tim Cook mentioned is his Q3 earnings call that Apple was beginning to focus more on India than China.
The iPhone has been a remarkable success for Apple with the company recently announcing passing the 1B sales mark. Truly remarkable considering the iPhone is less than 10 years old. iPhone is the engine that drives Apple.
But the challenge now is the next billion devices.
Apple will certainly continue to sell relatively large numbers of iPhones - but without a true entry level device - so in that magic $250 range, they will continue to loose market share to the Chinese vendors.
And even though Apple normally experiences huge Q3/Q4 sales with new product releases - there are not high expectations for the iPhone 7. If the iPhone 7 does not sell well - it is entirely possible that Apple could slip to 3rd in the WW rankings by end of year.
Huawei is just 2.4% behind in market share and growing versus Apple's shrinking. In addition I expect those same Chinese vendors to make a big push in markets like India, Europe and yes here is the US as well. They also have a broader product line up with low, mid and high end offerings that expand their appeal.
There are already some pretty good phones is the $200 - $250 market here in the US. For example the new Motorola (owned by Lenovo) G4 and G4 Plus. In fact you can find Huawei products like the P8, Honor and Mate lines at Best Buy as well. The $250 price point where the greatest share gains are going to happen in the next 5 years and I really don't expect Apple to go there.
So what does this mean for Apple. To me it means they will not experience the overall revenue growth they have experienced in the last decade. In fact when you look at Apple's overall revenue they experienced a 15% year over year decline from Q3 of 2015 to Q3 this year.
While several analysts call out the growth in Apple services - so Apple Store, iTunes, etc - it is a fractional part of the business. It can not make up the loss in device sales. Few people I know spend $600+ on iTunes or the App Store. And with folks holding on to their phones longer, the sales burst that Apple normally experiences with the new iPhone will be shorter lived.
Bottom line is we are entering the next chapter of the smartphone market where there are more players with broad product portfolio's that meet the needs of a larger portion of the market. Apple will still be a top 5 player for now, but without a strategy for the low-mid market will see their WW ranking fall in the coming years.
In Q2 of 2016 343.3M smartphones were sold. Similar to Q1 this was an extremely modest gain of only 0.3% over 2015 Q2 sales of 342.4M units.
The top five vendors maintained their ranking - so Samsung, Apple, Huawei, Oppo and vivo in that order.
#1 Samsung sold 77M units up 5.5% over 2015 and increased their overall market share to 22.4%.
#2 Apple once again saw a dramatic decline in sales of 15% - selling 40.4M units compared to 47.5M units last year and it's market share dropped to 11.8% from 13.9%. The 40.4M units was Apple's lowest unit total in 7 quarters.
The big gainers where the next 3 vendors - all Chinese focusing on the home market - where Apple was the big loser seeing a 33% decline in unit sales year over year from 13.2M units in 2015 to 8.8M in 2016.
#3 Huawei sold 32.1M units and increased market share to 9.4%. Huawei is not only doing well in China but is starting to see significant sales in Europe as well.
#4 Oppo sold 22.6M units - a 136.6% gain over 2015 and increased market share to 6.6%
#5 vivo sold 16.4M units an 80.2% gain over 2015 and a 4.8% market share.
Combined these 3 vendors sold 71.1M units and have a 20.8% market share.
The point here is not to beat up on Apple, they make a great product, but even with the introduction of the iPhone SE, they have been unable to hold off the onslaught of the local vendors.
With China being the largest mobile market on the planet it's significant. It shows a shift now towards local lower cost products and even Samsung is beginning to have a hard time there.
As I stated in my Q1 post on this subject - the Average Selling Price (ASP) for a smartphone is China is around $242. And even though Apple introduced the lower cost SE model - the ASP is much higher.
In fact Tim Cook mentioned is his Q3 earnings call that Apple was beginning to focus more on India than China.
The iPhone has been a remarkable success for Apple with the company recently announcing passing the 1B sales mark. Truly remarkable considering the iPhone is less than 10 years old. iPhone is the engine that drives Apple.
But the challenge now is the next billion devices.
Apple will certainly continue to sell relatively large numbers of iPhones - but without a true entry level device - so in that magic $250 range, they will continue to loose market share to the Chinese vendors.
And even though Apple normally experiences huge Q3/Q4 sales with new product releases - there are not high expectations for the iPhone 7. If the iPhone 7 does not sell well - it is entirely possible that Apple could slip to 3rd in the WW rankings by end of year.
Huawei is just 2.4% behind in market share and growing versus Apple's shrinking. In addition I expect those same Chinese vendors to make a big push in markets like India, Europe and yes here is the US as well. They also have a broader product line up with low, mid and high end offerings that expand their appeal.
There are already some pretty good phones is the $200 - $250 market here in the US. For example the new Motorola (owned by Lenovo) G4 and G4 Plus. In fact you can find Huawei products like the P8, Honor and Mate lines at Best Buy as well. The $250 price point where the greatest share gains are going to happen in the next 5 years and I really don't expect Apple to go there.
So what does this mean for Apple. To me it means they will not experience the overall revenue growth they have experienced in the last decade. In fact when you look at Apple's overall revenue they experienced a 15% year over year decline from Q3 of 2015 to Q3 this year.
While several analysts call out the growth in Apple services - so Apple Store, iTunes, etc - it is a fractional part of the business. It can not make up the loss in device sales. Few people I know spend $600+ on iTunes or the App Store. And with folks holding on to their phones longer, the sales burst that Apple normally experiences with the new iPhone will be shorter lived.
Bottom line is we are entering the next chapter of the smartphone market where there are more players with broad product portfolio's that meet the needs of a larger portion of the market. Apple will still be a top 5 player for now, but without a strategy for the low-mid market will see their WW ranking fall in the coming years.
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