The Chinese smartphone market fell 15% to 85.3 million units in the fourth quarter of 2019, as device fatigue hit consumers. This is the 11th consecutive quarterly decline and the lowest level in the market since the first quarter of 2013. For the year 2019, the Chinese market closed at 369 million units, down 7% year on year. The market has significantly underperformed in a traditionally high season of smartphone sales, given a drastic slowdown in 4G smartphone purchases coupled with weaker demand than anticipated by major vendors for 5G smartphones. Meanwhile, distribution channels have started to dump 4G inventory in anticipation of 5G adoption in the new year. Huawei maintained the leadership in China with 39% market share, growing 11% from the fourth quarter of 2018, despite a sharp sequential decline of 20%. Oppo and Vivo remained in second and third places, although both shipments fell faster than the market average to 25% and 29%. Apple climbed from one position to number four and Xiaomi rounded up the top five in the fourth quarter.
Huawei shipped more than 33 million smartphones to China in the fourth quarter. But a caveat is in order for the market leader’s uninterrupted growth over the past 12 months. “The build-up of channel inventory in the second and third quarters negatively impacted Huawei’s performance in the fourth quarter,” said Nicole Peng, vice president of mobility at Canalys. “Huawei will have a hard time persuading smartphone distribution partners to increase Huawei’s device wallet share in 2020, as the sale of 4G smartphones, especially the mid-range and high-end, becomes difficult. Although Huawei leads 5G smartphone shipments with a 78% share, the supplier must help channel partners reduce the pressure on 4G device inventory before more 5G devices flood the market. “
Apple was able to reverse its decline with a fourth-quarter Chinese smartphone market share of 11.8%, the supplier’s highest in eight quarters. Apple reduced its year-over-year decline to 12% with 10 million iPhones shipped. “The competitive price of the iPhone 11 was a big contributor to Apple’s fourth quarter result,” Peng said. “As the industry heads at full speed to replace 4G with 5G phones, consumers are likely to put off replacing phones with future-proof devices. The iPhone 11 series goes against the trend and was the best-selling 4G device in the Chinese market. He demonstrated that there is still a strong pull factor for Apple products, at the right price, given the strength of the hardware and service ecosystem. This will contribute to a better than expected upgrade rate when its iPhone 5G finally arrives. “
Oppo and Vivo have been hit hard by the market downturns. “Oppo and Vivo suffered from a lack of appetite for channels in the fourth quarter amid Huawei’s strength,” said Louis Liu, research analyst at Canalys. “However, there were positive notes. Vivo became the second-largest shipment of 5G smartphones after Huawei in 2019, with 1.2 million units shipped. Oppo’s new Reno brand has also started to show promise, as its Reno 3 series shipped over 400,000 units in one week. Each vendor is determined not to lose any share to Huawei and is ready to fight with stronger 5G smartphone portfolios in 2020. ”
“With the wider rollout of 5G and more incentives given by carriers this year, 5G smartphones are expected to surpass 150 million units by 2020. Small vendors hope to break market dominance of big brands, while competition between the top five will be fierce. ”, Added Peng. “The market as a whole is also facing strong pressure to downsize with the black swan event of the coronavirus outbreak. This will have a significant and lasting negative effect on the country’s technological manufacturing industry, the retail sector and consumer consumption. Suppliers need to start preparing for other business risks and disruptions as the developing epidemic unfolds. “
Source: Canalys media ad