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28 Jul 2016

Worldwide Smartphone Volumes Relatively Flat in Q2 2016 Marking the Second Straight Quarter Without Growth, According to IDC

FRAMINGHAM, Mass. July 28, 2016 – According to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 343.3 million smartphones worldwide in the second quarter of 2016 (2Q16). This was relatively flat, up 0.3% from 2Q15 when vendors shipped 342.4 million units. The market did show greater sequential growth as shipments were up 3.1% from 333.1 million in the first quarter of 2016.

"We continue to see a number of changing dynamics in the smartphone market and many vendors are readjusting their business strategy and portfolio to take advantage of these market movements," said Ryan Reith, program vice president with IDC's Worldwide Quarterly Mobile Device Trackers. "Mature markets continue the transition away from pure subsidy and over to EIP programs and Apple is beginning to put more emphasis on 'Device as a Service' to try to prevent lengthening replacement cycles. This is a growing theme we have heard more about from PCs to smartphones. Additionally, the overall China market slowdown continues to ramp up competition in other high growth markets like India, Indonesia, and Middle East. Interestingly enough, our early findings show low-end Chinese OEMs that predominantly built their business domestically in China are having success penetrating non-China markets, despite low-end competition from local brands already in place."

The top five list remained intact from last quarter with Samsung remaining in front while also gaining share thanks to strong Galaxy S7 and S7 Edge performance. For Apple, the second quarter is seasonally its lowest of the year as consumers hold off on purchases in anticipation of the next big launch in the third quarter. Apple shipped 40.4 million units in 2Q16, which marked the lowest quarterly volume in seven quarters, despite the mid-cycle introduction of the iPhone SE. In the face of declining shipments, Apple did witness strong sales in both established and emerging markets thanks to the launch of the more affordable iPhone SE.

"Outside of Samsung's Galaxy S7 flagship, a majority of vendors, including Apple, have found success with more affordable models compared to their flagship handsets," said Anthony Scarsella, research manager, Mobile Phones. "As smartphone prices continue to drop and competition escalates at the high-end, vendors will need to continue to push 'flagship-type' devices at affordable price points to encourage upgrading on a more frequent basis. Chinese brands such as Huawei, OPPO, vivo, and Xiaomi have witnessed success with this strategy by shipping premium styled devices that focus on the features that matter most to consumers, such as imaging, sound quality, and design."

Smartphone Vendor Highlights:

Samsung remained the leader in the worldwide smartphone market thanks in large part to the success of the new Galaxy S7 and Galaxy S7 Edge flagship handsets. The new models proved to be the right mix of style and features and helped Samsung grow profits in the quarter. The inclusion of removable storage, waterproofing, and faster processor proved to be the winning combination for Samsung as consumers flocked to the new model. Outside of the S7, the J-Series performed well in both developed and emerging markets thanks to refreshed models (J7, J5, J3) which offer something for everyone at various sizes and price points. Look for the pending arrival of the Note 6/7, coming later this year, to challenge Apple's latest and greatest.

Apple’s second quarter saw the Cupertino-based giant ship 40.4 million iPhones, representing a 15.0% year-over-year decline from the 47.5 million units shipped last year. The new 4-inch iPhone SE proved successful in both emerging and developed markets as the new SE has captured many first-time smartphone buyers as well as Android users switching over to the Apple ecosystem. The success of the cheaper SE did, however, have an impact on the overall average selling price (ASP) for an iPhone in the quarter. The ASP for an iPhone was $595, down 10.1% from $662 one year ago. As smartphone competition continues to escalate and upgrades continue to slow, Apple will look to drive sales with a newly designed iPhone 7 combined with their upgrade program come this fall.

Huawei captured the third position once again thanks to strong domestic sales and even stronger European sales. The increase in these two regions contributed to shipments totaling 32.1 million units, up 8.4% from last year. Huawei's premium lineup of phones, like the new P9 and Mate 8 handsets, also pushed 25% of the quarter's volume to the high-end (priced $500-$600). The Honor Series combined with the Y-Series balanced out the mid-tier and low-end with models like the Honor 5X and V8 proving successful as premium-like affordable alternatives. With Huawei number one in China at the moment, Huawei's remaining challenge will once again be penetrating the U.S. market at the high-end to compete with both Samsung and Apple.

OPPO continued with its aggressive marketing and advertising in 2Q16, especially for its flagship R9 device, which helped it see good sales in the quarter. It continued to leverage its strength in Tier 3 to Tier 5 cities in China, which significantly contributed to the strong growth. In Tier 1 cities, OPPO continued to be a leading sponsor for big name entertainment shows which has helped build the brand and bring light to its high-end portfolio. The key model for OPPO will be the R9, which right now is its top shipping model and the aggressive marketing around the device shows the company's ambition in the high end of the market. Overall growth is still primarily in lower-tier China cities, as well as other big opportunity emerging markets like India and Indonesia.

vivo is still on an upward trajectory in China, with momentum spread across multiple product models. At the time, vivo is still 100% focused on Asia/Pacific, with the vast majority of volume still in China. vivo had several new product launches in China during the second quarter, including the V3 and V3 Max. It also successfully hired the popular Korean star Soon Joong Ki as its celebrity endorser. Soon Joong Ki was the male lead in a Korean drama, "Descendants of the Sun," which was a big hit in China. Having him as an endorser helped to give a boost to its brand as well as its smartphone sales in the region.

Top Five Smartphone Vendors, Shipments, Market Share, and Year-Over-Year Growth, Q2 2016 Preliminary Data (Units in Millions)

Vendor

2Q16 Shipment Volumes

2Q16 Market Share

2Q15 Shipment Volumes

2Q15 Market Share

Year-Over-Year Change

Samsung

77.0

22.4%

73.0

21.3%

5.5%

Apple

40.4

11.8%

47.5

13.9%

-15.0%

Huawei

32.1

9.4%

29.6

8.6%

8.4%

OPPO

22.6

6.6%

9.6

2.8%

136.6%

vivo

16.4

4.8%

9.1

2.7%

80.2%

Others

154.8

45.1%

173.6

50.7%

-10.8%

Total

343.3

100.0%

342.4

100.0%

0.3%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, July 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.

This chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic are available by clicking here.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad. The IDC Tracker Chart app is also available for Android Phones and Android Tablets.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.

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