Although shipments of smartphones to the channel recovered somewhat in the third quarter of 2020, that hasn't necessarily translated into sales.
According to Gartner's quarterly Global Smartphone Market Share report, sales dropped 5.7 per cent to 366.6 million. This, the analyst noted, is the third consecutive quarterly decline.
Unsurprisingly, the worst performing vendor was Huawei, which saw sales plummet by over a fifth. It sold 51.8 million units, a drop of 14 million from Q3 2019. Like every other smartphone vendor, Huawei has been forced to wrestle with a global pandemic that has severely dampened consumer appetite for new devices. But that would only be telling part of the story.
Since May of last year, Huawei has been forced to reconcile with crushing US sanctions, which have exerted tremendous pressure on its mobile business. The most apparent casualty is its inability to license Google's proprietary Android software (Google Mobile Services, or GMS), which includes the Google Play Store. Separately, its ability to source components from new devices is constantly under attack, and long-time suppliers including Samsung and TSMC have been forced to suspend trading with the company.
According to Gartner's senior director analyst Anshul Gupta, things can get much worse. "Next year, I think its volumes will be nearly one-fifth of its usual yearly business," he said.
One factor in this forthcoming decline, Gupta said, is that the only devices Huawei can currently sell with GMS pre-installed are older models released before it found itself on a US entity list. Huawei has, for example, released a modestly updated version of the venerable P30 Pro flagship from last year. This isn't a long-term solution, however, particularly for a company that prides itself on innovation, and Gartner can't imagine it working much beyond the fourth quarter of this year.
Huawei wasn't the only phone vendor to have a difficult Q3. Apple saw its sales decline by 0.6 per cent to 40.5 million. This, Gartner's VP analyst Annette Zimmerman said, is due to delays in the iPhone 12 lineup. Apple typically refreshes its smartphones in September, giving its sales figures a significant boost in the last few weeks of the quarter. That didn't happen this year due to production difficulties caused by the pandemic.
Xiaomi had a strong quarter, as demonstrated by its financials released earlier this week, as well as Gartner's own figures showing the firm sold 44.4 million devices – up 34.9 per cent when compared to the previous year's Q3.
Gartner attributed this to the upstart phone maker swallowing market share from Huawei both within China and foreign markets. Given the ongoing economic malaise, it also helps that Xiaomi is heavily positioned within the budget sector of the market. Premium phones – anything costing more than €300 – represent a tiny portion of its output.
Similarly, Samsung, which has spent much of this year targeting the low-to-middle levels of the smartphone market, saw its sales grow by 2.2 per cent to 80.8 million – up from 79 million in Q3 2019. In addition to its usual flagship fare, Samsung has released a flood of cheaper A-series devices, as well as a cheaper "fan edition" variant of its top-drawer Galaxy S20 mobile.
This quarter 5G devices started to increasingly assert themselves, accounting for nearly 75 per cent of sales volumes in China, and 45 per cent in the US and Europe. However, future growth is contingent upon networks deploying the necessary infrastructure, according to Gupta, and it will take some time for 5G phones to overtake sales of LTE-only devices on a global level. ®