For the second quarter in a row, Chinese smartphone makers produced more phones than market leaders Apple and Samsung, according to a new Q3 shipment volume report from global market research firm Trendforce.
Apple saw its iPhone volume production fall 5.3 percent from the three months previous, while Samsung registered minor growth of 1.3 percent. Chinese smartphone makers on the other hand? A quarterly increase of 18 percent.
This doesn’t quite tell the whole story, though.
On the Apple front, iPhone production totaled 45 million units in Q3. The iPhone 7 began shipping at the tail end of this period, but shipments were limited in quantity and therefore not enough to stop an overall decline on the number of iPhones manufactured.
[contextly_auto_sidebar]
Nonetheless, Apple was the second top company in terms of smartphone production volume and market share — with 12.9 percent of the global market. This number was down slightly on the 15 percent of the previous quarter.
Samsung, meanwhile, built 78 million units — mainly thanks to the success of its Galaxy J, Galaxy S7 and S7 edge handsets. Overall, Samsung was the world leader for market share with 22.3 percent of the market. Like Apple, this number was down slightly from the 24.3 percent of the previous quarter.
Of the total 350 million smartphones manufactured worldwide, a massive 168 million handsets were manufactured by Chinese companies. Leading the list was Huawei, followed by OPPO, BBK, Lenovo, and Xiaomi.
So why is there more to the story than this? There are a few reasons. For one, volume shipments can be a misleading statistic, since it does not necessarily correlate directly with sales. More importantly, it doesn’t correlate with profit — which is notoriously hard to come by the lower you go down the smartphone food chain. Even measuring market share is non-reliable as a measure of success, since companies like Apple have never chased market share as the be-all-and-end-all metric by which to judge success.
Perhaps most notable, though, is that looking at the calendar Q3 smartphone volume leaves people on something of a cliffhanger. As noted, the iPhone 7 started shipping at the end of the quarter, but we won’t be able to see its impact until Q4. Given that reports suggest that the handset is doing better than even Apple expected, it will be interesting to see what the next three month period holds.
This is also the time in which Samsung will start to feel the effects of its disastrous Note 7 recall and subsequent halt in production. With Samsung’s reputation damaged at the top end by the Note 7 saga, and squeezed more than ever by low-cost OEMs at the other, Q4 could well see a reversal of fortunes for Apple and Samsung.
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
8 responses to “Apple beware: Chinese phones are taking over the world”
And Apple still takes 88% of ALL smartphones profit.
That’s because they start at a price point where the company can actually make a profit plus Apple offers 2 year support contracts, which adds to the profitability.
I think when they break down all of the smartphone sales data, they need to break them down even further into price categories to see how many phones are being sold at what price points and I think they should also break down sales into screen size categories.
The more detailed the data, the more of the story it tells.
I guess these market research firms are just lazy OR the journalists don’t inquire about more detailed market share data to examine.
They’re not lazy. They’re producing reports that cater to their customers so they show numbers that favor them. They do this on purpose to fit their agenda.
If they broke them down into categories (say, for example, flagship high-end phones), then Apple would be #1 by a long shot with #2 Samsung a distant second with less than half the sales of Apple.
They sure are:
Creative Strategies reports that 190m premium Android phones worth $500 or more were sold in 2015 – that’s only 17% of all Android phones sold last year.
Likewise, Counterpoint Research reports that 60% of the phones $400 or greater sold last year were iPhones meaning only around 154M Android phones were $400 or greater.
Compare this to the 230 million iPhones sold last year and you can see Apple well and truly dominates the high end of the market.
Yep…competition should worry Apple only and no other company.
This is hardly news.
Cheap Chinese phones will ALWAYS sell more than EXPENSIVE (Chinese-made) phones.
Cheap Chinese EVERYTHING always sells more.
Given the abysmal quality of all low-end Chinese products, life expectancy for those is predictably short, which means that users need to purchase a new item more often and keep the wheel spinning.
Personally, I would never compare a $20.00 Chinese Android phone, subsidised with malware and with a life expectancy of mere months, to a flagship phone (no matter which brand). There’s people still using iPhone 4, which is now over six years old. Granted, it will not run the latest iOS, but it is by far a better phone that any other phone of the same vintage.
And guys, this is CULT OF MAC. Android-power stories like this one should be posted on Cult of Android…
And the customers who buy these phones as Steve jobs put it, are customers who apple chooses NOT to serve.
Not a problem for Apple on several counts.
Apart from Apple raking in the vast majority of profits from the entire mobile world as has already been mentioned, Apple also has a FAR higher share of the active OS Installed base – a far more important figure than quarterly smartphone market share.
Apple recently reported there are over 1 Billion active Apple devices worldwide (of which around 900m were iOS devices back in January). Since that time Apple has sold another 112m iOS devices and sells well over a quarter of a Billion iOS devices every year.
In contrast, Google reports they only have 1.4 Billion active Android devices and AOSP forked Android devices in China only account for another 20-30% over the last 2 years according to ABI Research.
As a result, Apple devices represent a huge 50-60% of all Android devices and are owned by a far more lucrative demographic.
This leads to the other reason why quarterly smartphone market share is irrelevant: because of the value each Apple user drives for 3rd parties as well as Apple.
IBM and Adobe report that the iOS platform generates 400% more e-commerce revenue than the Android platform. The iOS platform also generates 90% more revenue than the Android platform for 3rd party developers, up from 80% the previous quarter and 70% the previous year according to App Annie.
In terms of advertising revenue (Google’s lifeblood and the reason they created Android). iOS users generate an incredible 1,790% greater advertising ROI than Android users according to Nanigans, the latter of whom actually lost money for advertisers. Google is reliant on the iOS platform for an amazing 75% of their mobile search revenue according to Goldman Sachs.
As a result, a rise in the sales numbers of cheap plastic Chinese phones that rapidly get thrown away matters very little to Apple and the rich ecosystem surrounding Apple’s devices.