Consumer Electronics
China Smartphone Sales Fall for First Time in 6 Years, Apple Surges
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The economy in China may be worse than believed, or more people in the People’s Republic have smartphones than was previously assumed. For the first time in six years, smartphone sales dropped in China in the first quarter, compared to the same quarter of last year.
The size of the market, which dwarfs even the United States, is the promised land for smartphone companies. The wireless market in China hit 750 million last year. Research firm IDC laid out the recent trouble in a paper written by its experts in China:
IDC’s latest Mobile Phone Tracker shows the China smartphone market contracted by 4% year-on-year (YoY) with 98.8 million units shipped in the first quarter of 2015. This is the first time in six years that the China smartphone market declined YoY as the market continues to mature. On a QoQ basis, the market contracted 8% on the back of a large inventory buildup at the end of last year.
Apple Inc. (NASDAQ: AAPL) dodged the bullet. It is not only the top smartphone company in terms of market share, it is the fastest growing:
Apple was the top smartphone vendor in China in the first quarter of 2015, with consumers still having a strong appetite for the larger screens on the iPhone 6 and iPhone 6 Plus. Xiaomi slipped to the second position as it faced strong competition from other vendors in the low to mid-range segment of the market, while Huawei maintained third position as it saw a good uptake in the mid-range segment. Samsung and Lenovo both led the market at least once last year, but rankings have since changed quickly, highlighting the volatility of consumers’ brand preference in China.
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Apple’s share of the market reached 14.7%, which was up 62.1% from the first quarter of 2014. Units shipped reached 14.5 million. Apple management has said many times that China is far and away the most critical market to its future success.
Two local companies continued to grow. Shipments made by Xiaomi rose 42.3% to a market share of 13.7%. Shipments made by Huawei rose 39.7% to 11.4%. Shipments made by Apple rival Samsung dropped 53% to a 9.7% share.
Even with the market share improvement, Apple management ought to be worried. The contracting Chinese smartphone market has lost some of its luster.
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