CELLPHONES: Huawei Surges, Lenovo Stumbles in Q2
Bottom line: Second-quarter smartphone data confirms recent trends that have shown a surge for Huawei and Apple, while Lenovo and Samsung struggle and Xiaomi also faces rapidly slowing growth.
The latest smartphone sales figures are out, showing a recent surge for Huawei and strong but slowing growth for Xiaomi, as Chinese brands continued to take 3 of the top 5 global spots. Meantime, the same chart shows the lackluster Lenovo (HKEx: 992) continued to stumble as it failed to find an audience for its products, and global leader Samsung (Seoul: 005930) also continues to struggle.
The latest second-quarter figures from IDC come as another smaller data tracking firm IHS Technology released its own numbers showing Xiaomi continued to rule the China roost and even boosted its share of the market. Meantime, Samsung continued to slip in the world’s biggest smartphone market, falling a notch to barely stay in the top 5 brands.
None of these particular trends is new, and I’ve written frequently about the recent rise of Huawei, the rapidly slowing growth of Xiaomi, and broader failure for Lenovo. But the latest figures do confirm all those trends, including a resurgence for smartphone pioneer Apple (Nasdaq: AAPL) that helped it to boost its share of the global market to 14.1 percent from 11.7 percent a year earlier.
That helped Apple to consolidate its position as the world’s second largest smartphone brand. (Chinese article) Huawei also saw its share of the global market rise to 8.9 percent from 6.7 percent a year earlier, making it the world’s third largest brand. Huawei’s recent rise has come as the company finally finds a successful marketing model that can properly promote its products, which enjoy a reputation for good quality.
While Apple and Huawei were on the rise, the opposite was true for Samsung and Lenovo, which both saw their share of the global market slip sharply in the quarter. Samsung fell by more than 3 percentage points to 21.7 percent, to maintain its place as the world’s top smartphone brand. Lenovo, including its recently acquired Motorola brand, saw its share tumble by a similar amount to 4.8 percent.
Lenovo’s continuing slide certainly doesn’t bode well for a part of its business that it sees as critical to its future, and is almost certainly causing big worries in the company’s board room. The company replaced its cellphone division head last month to address the problem, and I would expect we might see some new initiatives from that move perhaps by the end of the year. (previous post)
Xiaomi in the Middle
While other companies were rising or stumbling, Xiaomi came out squarely in the middle by posting growth that looked good on the surface but was probably a disappointment for many. Xiaomi boosted its share of the global market to 5.3 percent in the second quarter from 4.6 percent a year earlier. It also retained its title as China’s leading brand with 18 percent of the market for the quarter, up sharply from 14 percent in the previous quarter, according to IHS. (English article)
But Xiaomi’s second-quarter global shipments of 17.9 million smartphones was up just 30 percent from a year earlier — a sharp slowdown for a company that was used to regularly posting triple-digit gains in its first 3 years of business. That latest figure also represented a sharp slowdown from the 36 percent growth Xiaomi recorded in the first quarter, and puts the company in danger of missing its lowered target of selling 80-100 million smartphones for all 2015.
There’s nothing leading me to believe the current trends will change significantly in the second half of the year, meaning Xiaomi is almost certain to miss its 2015 target. In the meantime, we can expect to see Huawei consolidate its position as the world’s third largest smartphone brand, and for Lenovo to continue to struggle. China’s other homegrown brands will continue to be limited outside their home market, though one or two names like Meizu or Oppo could start to emerge as strong brands in developing markets like India and Brazil.
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