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28 Oct 2016

IDC:OPPO tops the Chinese smartphone market for the very first time

Beijing, October 28, 2016—According to IDC’s latest Asia/Pacific Quarterly Mobile Phone Tracker, the China smartphone market grew 5.8% YoY and 3.6% QoQ in the third quarter of 2016, with OPPO and vivo overtaking Huawei for the first time in the market.

Vendor dynamics

OPPO and vivo rose because the Chinese market has evolved beyond operator and online driven channels over to an offline structure that dovetails with OPPO and vivo’s strengths.

There were three key growth phases of the Chinese smartphone market seen in the past few years. The first phase (before 2014) was when it was driven mainly by operators. Samsung, Lenovo, and Coolpad led the smartphone market then with the help of huge subsidies offered by operators. In the second phase (2014-2015), with e-commerce booming in China, Xiaomi was one of the first vendors that rode on that e-commerce wave and disrupted the market by selling its phones online through its flash sales. That kicked off another trend as other vendors soon tried to follow suit and created their own online brands and sold their phones through their own websites and that of eTailers. The third phase unfolded this 2016, where the share of phones sold online has started to stabilize. OPPO and vivo triumphed due to their strengths in the offline channels especially in Tier 3 to Tier 5 cities. That, coupled with their other strengths in marketing and advertising, helped them to see strong growth in the market in 2016Q3.

“OPPO’s success is not something that was achieved overnight. Back in the earlier years when vendors depended on operator subsidy to grow, OPPO was clear in its direction and focused on expanding its offline channels. It also had key strengths such as its VOOC fast charging technology and in the elegant design of its phones. This, coupled with its aggressive marketing tactics, helped it succeed in the market,” says Xiaohan Tay, Senior Market Analyst, Client Devices Research, IDC Asia/Pacific.

Huawei continued its momentum with its P9, and we expect the momentum for Apple to pick up in 2016Q4 where we expect its iPhone 7 to do better than the 6s. Key highlights for Xiaomi includes the launch of its Redmi Note 4 and Redmi Pro in 2016Q3.

Outlook for the coming years

“As the growth in online channels stabilizes, many other vendors have expressed interest in increasing their offline channels. However, given the huge amount of cost involved in this, vendors need to focus on targeting key customers in specific cities or provinces where they can find their target audience. Blind expansion may eventually lead to higher risks and losses,” comments Tay.

“It is also important for vendors to focus on investments in technology to have a key flagship product that stands out in the market. We have seen in the case of OPPO how its single product, the R9, played a huge part in increasing its shipment numbers and in getting people to talk about its brand,” adds Tay. In 2016Q4, IDC expects the market will continue to see both a QoQ and YoY growth and lead to a low single-digit YoY growth for 2016.

Top Five Smartphone Vendors in PRC, Shipments, Market Share, and Year-Over-Year Growth, 2016Q3 Preliminary Data (Units in Millions)

Vendor

2016Q3 Shipment Volumes

2016Q3

Market Share

2015Q3

Shipment Volumes

2015Q3

Market Share

Year-Over-Year Growth

1. OPPO

20.1

17.5%

9.8

9.0%

106.1%

2. vivo

19.2

16.7%

9.5

8.8%

101.1%

3. Huawei

18.0

15.7%

17.2

15.8%

5.1%

4. Xiaomi

10.0

8.7%

17.3

15.9%

-42.3%

5. Apple

8.2

7.1%

12.4

11.4%

-34.1%

Others

39.6

34.3%

42.6

39.1%

-7.1%

Total

115.1

100%

108.8

100%

5.8%

Source: Asia/Pacific Quarterly Mobile Phone Tracker, Oct 28, 2016

Notes:

  • Data is preliminary and subject to change.
  • Vendor shipments are branded device shipments and exclude OEM sales for all vendors.
  • The "Vendor" represents the current parent company (or holding company) for all brands owned and operated as subsidiary.

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Coverage
Companies Covered

Huawei Technologies Co., Ltd., OPPO Electronics Corp., VIVO S.A., Apple Inc.

Regions Covered

China

Topics Covered

Smartphone