At the latest in the second quarter of next year, 5G will be a stimulus, driving a rebound in the mobile phone market. Towards the end of the year, mobile phone manufacturers are not having a hard time. On December 2nd Gartner, an information technology research and consulting firm, released statistics that the number of smartphones sold to end users worldwide continued to decline in the third quarter of 2019, down 0.4% from the third quarter of 2018. Market demand remains weak as consumers focus more on price/performance ratios.
However, the performance of different manufacturers is not the same. During the quarter, Huawei, Samsung and OPPO’s market share increased, while Apple and Xiaomi’s market share declined. The shift has led brands such as Samsung, Huawei, Xiaomi, OPPO and Vivo to strengthen their entry-level and mid-range product lines. It was this strategy that helped Huawei, Samsung and OPPO grow in the third quarter of 2019, while Apple’s market share fell 1.3% from the third quarter of last year.
Analysts believe that a few years ago any manufacturer could have a piece of the smartphone market, the situation is gone. But in this mature market, those with core competencies will continue to offer the best products.
In an interview with the 21st Century Economic Report, Nou Consulting CEO Li Rui said that the global economic situation is depressed throughout 2019, especially in the first half of the year, and Q3 is also a low point in the market. But from the next fourth quarter, with 5G becoming more popular in a big country like China, the decline in mobile phone sales will begin to slowly decline, and rebound next year. Now to discuss the so-called shipments are not real, many products may still be in stock, not real sales. Li Rui believes that “5G will also give the market, especially users to change machine into vitality.” Now the decisive factor of the change is not memory, screen, the replacement period has been extended to two and a half to three years, so 5G is definitely a stimulus. The mobile phone market is expected to rebound by the second quarter of next year at the latest. ”
Steady growth for profit
In the third quarter, Samsung still led the way with 79.05 million units sold, Huawei came in second with 65.8 million units, Apple fell slightly from the previous year, and Xiaomi was also good, with 32.27 million units shipped, with 8.0 percent market share, according to Gartner.
For domestic brands, starting this year, it seems to put earnings at the top of the list. After the November 27 th opening, Xiaomi Group (1810. HK) issued a Q3 and Nine-Month results announcement for 2019. The report showed Q3 revenue of 53.66 billion yuan, up 5.5 percent year-on-year, slightly ahead of market expectations. Adjusted net profit was 3.47 billion yuan, up 20.3% YoY. Xiaomi’s share price has been depressed, although revenue growth has slowed, and xiaomi’s handset shipments have fallen by 1 million units year-on-year.
Compared with the other two main businesses, the performance of mobile phones is not ideal. In the first three quarters of 2019, Xiaomi’s three main business revenues were: 91.3 billion mobile phones, $42.6 billion in IoT and consumer products, and 14.2 billion Internet services. Mobile phone sales as a percentage of revenue fell from 80.4% in 2015 to 61.1% in the first three quarters of 2019. In the third quarter, only Xiaomi’s mobile phone business fell year-on-year. Xiaomi’s mobile phone business fell for the first time, with shipments down 3.6% year-on-year, driving overall revenue down 7.8% year-on-year.
However, Xiaomi chairman Lei Jun still said that this is Xiaomi’s profit is the most ideal quarter. The achievements of another domestic brand are not to be underestimated. Huawei achieved double-digit growth in smartphone sales in the quarter, selling 65.8 million smartphones, up 26% year-on-year.
According to Lu Junguang, senior research director at Gartner, the main driver of Huawei’s global smartphone sales growth is its performance in the Chinese market. Huawei sold 40.5million smartphones in China, an increase of nearly 15 percent in the market. In the Chinese market, Huawei’s strong ecosystem continues to grow. “Huawei’s long-term investments in sub-brands (Glory and Nova), multi-channel operations (online and retail) and 5G and other technological innovations are the foundation of its success in the Chinese market. Lu Junguang further pointed out.
On the other hand, despite the us’s announcement of a further 90-day extension of the grace period for Huawei’s ban, the ban has actually had a negative impact on Huawei’s international market.
Apple’s iPhone sales continued to decline in the third quarter of 2019, with 408.33 million units sold, down 10.7% from a year earlier. Even so, the smartphone market share is still concentrated in the head brand. In the third quarter of last year, “other” brands accounted for nearly 40% of smartphone sales, but this year that share has fallen to 35.8 per cent.
Single mobile phone hardware revenue, has not been enough to support the development of mobile phone brands. Q3, 2019, Xiaomi Internet services revenue of 5.31 billion yuan (8.9% of revenue), up 12.3% YoY. In the past four quarters, total Revenue from Internet services was $18.2 billion. IoT and consumer goods and Internet services achieved 45% and 12% year-on-year revenue, respectively. This revenue model is catching up with Apple, and as Lei Jun puts it, “Xiaomi is not a pure hardware company, but an innovation-driven Internet company.” Specifically, Xiaomi is an Internet company with mobile phones, smart hardware and IoT platforms at its core. ”
And this strategic thinking has long been successfully proven in Apple. Apple’s fourth-quarter results for fiscal 2019 show that iPhone sales still account for more than 50 percent of the company’s revenue, but the importance and share of the iPhone is also on the decline as Apple’s business attributes change. iPhone’s revenue for the quarter was $33.362 billion, down 9 percent from a year earlier; service revenue was $12.5 billion, up 18 percent year-on-year; Mac’s revenue for the quarter was $6.99 billion, down 5 percent from a year earlier; and wearables, home and accessories revenue was $6.52 billion, up 54.4 percent year-on-year.
It is an indisputable fact that hardware growth is hit by the ceiling. Anshul Gupta, senior research director at Gartner, said that while Apple continued to offer promotions and discounts in various markets, it was not enough to stimulate global demand. While iPhone sales in the greater China market continued to grow, they saw double-digit declines at the start of the year. Initial sales of the iPhone 11, 11 Pro and 11 Pro Max were good, indicating a return to positive sales in the fourth quarter.
In an interview with the 21st Century Economic Report, several industry figures said that the arrival of 5G will still give the smartphone industry a new impetus. According to Anshul Gupta, the demand for most smartphone users is no longer a low-cost smartphone. Today’s smartphone users are more likely to choose a mid-range smartphone with a better price/performance ratio than high-end smartphones. In addition, smartphone users are waiting for 5G networks to reach more countries and have delayed their purchase decisionureuding until 2020.
The current mobile phone market is close to saturation, the market has become the stock of competition. It is not realistic that sales have been rising. Improving the intelligence of smartphones will increasingly become the focus of competition among handset makers. Smartphones will be able to deliver increasingly personalized content and services based on their background and preferences. Roberta Cozza, senior research director at Gartner, believes that in order to deliver a personalized experience with users, manufacturers need to further add artificial intelligence to smartphones, while keeping security features and privacy a key element of their brand.