China’s smartphone market declines 15 per cent, but Apple grew in double digits

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Apple managed to double its quarterly growth in China's declining smartphone market thanks to the iPhone 11. (Image source: Bloomberg)

China's smartphone market declined by double digits at 15 per cent for the fourth quarter of 2019, reported data research firm Canalys. Except for Huawei, nearly all top players had a double digit annual decline in the world's biggest smartphone market in the world.

But, Apple had a relatively more successful fourth quarter thanks to the iPhone 11 as it managed to double shipments compared to the third quarter of the year. Apple CEO Tim Cook also acknowledged their double digit growth in Mainland China in the company's results for the quarter, which were announced yesterday.

Apple had a revenue of $56 billion in the quarter, and the success of the iPhone was driven by the most affordable one in the list, the iPhone 11. "In fact, iPhone 11 was our top-selling model every week during the December quarter, and the three new models were our three most popular iPhones,” Tim Cook revealed during this investor earnings call.

China market falls drastically

In China, the total shipments stood at 85 million, compared to the 100 million shipments seen in the same quarter for the previous year.  This decline is the 11th consecutive quarterly decline for China, notes Canalys, though this is the lowest level since the first quarter of 2013.

China's total smartphone shipments for 2019 stood at 369 million units, which is a seven per cent yearly decline.

So why did China market fare so poorly in the fourth quarter for 2019, which is traditionally supposed to drive volumes given it is the holiday season? Canalys blames this on slowing sales of 4G smartphones. Users chose to wait in anticipation of upcoming 5G devices from most major vendors, notes the research firm.

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While Huawei remained on top, it had a 20 per cent sequential declined compared to the third quarter. (Image source: Bloomberg)

Huawei on top, Apple sees growth

Apple emerged the big winner rising to the number four position in the market, thanks to a strong performance in this quarter. It managed to double its growth on a quarterly basis from 5.1 million shipments in Q3 to 10.1 million in Q4.

As a consequence, the iPhone maker's market shared increased from 5.2 per cent to 11.8 per cent. On an annual basis though, Apple saw a 12 per cent decline. Still the fourth quarter of 2019 marked Apple's highest market share in China in the last eight quarters.

The growth was driven primarily by the iPhone 11, whose pricing has delivered results for the company. “The competitive pricing of the iPhone 11 was a big contributor to Apple’s Q4 result,” Nicole Peng, Canalys' VP Mobility said.

She added that the iPhone 11 bucked the trend that users were waiting for 5G devices over 4G phones. The iPhone 11 was best-selling 4G device in the China market.

Huawei remained on top with 39 per cent market share and 11 per cent yearly growth compared to the fourth quarter of 2018. But, it had a sharp decline compared to the third quarter of 2019 at nearly 20 per cent. Its shipments were 41.5 million in the previous quarter, which declined to 33.3 million by this quarter.

“Huawei will find it challenging to persuade smartphone distribution partners to increase wallet share of Huawei’s devices in 2020, as the sell-out of 4G smartphones, especially the mid to high-end, is becoming difficult. Despite Huawei leading the 5G smartphone shipments with a 78 per cent share, the vendor must help channel partners ease the 4G device inventory pressure before more 5G devices flood the market,” Peng cautioned.

Oppo and vivo were number two and three respectively in the China market, though both saw double digit decline in their annual growth compared to the same quarter a year back. Even sequentially, Oppo and vivo saw their shipments decline.  While in third quarter both had shipped nearly 17 million plus devices respectively, in this quarter Oppo's shipments stood at 14 million and vivo stood at 13.1 million.

Xiaomi was number five on the list with shipments at 8.1 million and a yearly decline of 14 per cent compared to Q4, 2018. In the previous quarter, Xiaomi had shipped 8.8 million phones, and thus also saw a sequential decline in the fourth quarter.

“Oppo and Vivo suffered from a lack of channel appetite in Q4 amid Huawei’s strength. However, there were some positive notes. Vivo became the second largest in 5G smartphone shipments following Huawei in 2019, with 1.2 million units shipped,” Louis Liu, Canalys Research Analyst said in a press statement.