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The global smartphone industry is huge and is growing rapidly. According to GSMA Intelligence, 80% of mobile connections in the world will be smartphones by 2025. Currently, China, India and the United States are the top three countries in terms of number of smartphone connections . Although there are a large number of smartphone companies, some major players dominate the global smartphone industry.
Global smartphone industry: the best players
According to IDC, Samsung, Huawei, Apple (AAPL), Xiaomi, Vivo and Oppo control over 75% of the global smartphone market. According to Gartner, five of these companies (excluding Vivo) account for around 63% of global smartphone sales. Four of the six largest smartphone companies are Chinese. Global smartphone sales in 2019 are expected to be around 1.4 billion units.
Samsung, Huawei and Apple
Samsung controls more than 20% of the global smartphone market. The Korean conglomerate has maintained the highest market share of the global smartphone industry since 2011.
The company's computer and mobile communications division accounted for 37% of its net sales in 2018. The division's contribution to Samsung's revenues reached 48.9% in the first half of 2019. The Samsung divisions of Consumer Electronics and Device Solutions represent the remaining sales. The company offers a wide range of smartphones to meet the needs of its diverse clientele. Samsung's S-series and Note-series smartphones target the high-end segment, while the A-series is aimed at the mass market.
Founded in 1987, Chinese manufacturer of smartphones Huawei has 188,000 employees. Huawei sold 206 million smartphones in 2018. In the first half of 2019, the company sold 117 million smartphones. According to IDC, Huawei accounted for 14.7% of the global smartphone market in 2018. Its share rose to 18.9% in the first quarter of 2019.
Apple sold 218 million iPhones in 2018. The company's iPhone sales declined during the 2019 fiscal year. In the first nine months of fiscal 2019, sales Apple's iPhone dropped to 109 million USD, down 15% from the corresponding period of fiscal 2018. Decline iPhone sales reflect the global downward trend of smartphone sales. Especially for Apple, the reason for this drop in sales is due to a decrease in consumer upgrades. Consumers do not upgrade to newer versions of iPhone because they do not see an incremental value sufficient to justify the upgrade.
Xiaomi, Vivo and Oppo
Listed on the Hong Kong Stock Exchange, Xiaomi was founded in 2010. It is currently the fourth largest smartphone sales company in the world. In the first half of 2019, Xiaomi's smart phone revenue grew 9.8%. The company sold about 60 million smartphones in the first half. In 2018, Xiaomi's smartphone sales grew by 41% and the volume of its units by 30% compared to 2017.
Xiaomi recently separated its brands Xiaomi and Redmi. Its Xiaomi brand focuses on the mid to high end market. Redmi is aimed at users looking for good value for money.
vivo and Oppo are subsidiaries of the Chinese company BBK Electronics Corp. BBK manufactures and sells consumer electronics, mainly in China. According to IDC, Vivo and Oppo each captured about 7.4% of the global smartphone market in the first quarter of 2019. The OnePlus Technology smartphone company also belongs to BBK.
Other global smartphone companies
In addition to the major players mentioned above, a number of other companies manufacture smartphones around the world. Another big Chinese smartphone company is Lenovo. Lenovo acquired the US mobile phone company Motorola in 2014. A Korean conglomerate LG also offers a range of smartphones.
Decline in global smartphone sales
Gartner expects a 2.5% decline in global smartphone sales in 2019. The main factor behind this expectation is the decline in replacement demand in developed markets. Two types of customers are driving smartphone sales growth. The first is the first buyer of smartphones. These include those who switch from functional phones to smartphones and young users who start getting their first devices. Developing and underdeveloped economies continue to experience growth among first-time smartphone buyers. This is especially true for markets that are experiencing reasonable economic and demographic growth.
The second category of consumers is the one that seeks to upgrade their existing smartphone. Growth in smartphone sales in developed economies, such as the United States and Japan, is mainly due to this demand for replacement. In the absence of value-added features, this segment is not upgrading as quickly as before, resulting in lower sales growth.
Smartphone companies are constantly innovating to drive growth in demand. We will examine their potential growth drivers in the next part of this series.
Increasing Chinese domination
Another trend in the global smartphone industry is the growing dominance of Chinese smartphone companies. Four of the six largest smartphone companies are Chinese. In addition, most of their market share continues to grow, even though smartphone sales are down. However, the trade war between the United States and China could affect the growth of Chinese players.
President Donald Trump has long accused China of "stealing" technology from US companies. The United States also worry about China's spying on other countries, including the United States, through technology companies. Trump recently banned US technology companies from doing business with Huawei. These developments could affect the growth of Huawei and other Chinese smartphone manufacturers, as consumers are increasingly concerned about the software, applications and future support they will be able to offer.
Until now, we have discussed the best players and the main trends of the smartphone industry. We will then discuss the potential growth drivers of the industry, including 5G connectivity, AI and smartphone growth in emerging markets. We will also discuss the main risks that smartphone companies face.
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