The age of rising smartphone sales is over. Here’s why

iPhone SE smartphone

It’s official. Our appetite for new smartphones has peaked. With recent models only incorporating incremental changes in terms of form factor and performance, there simply isn’t a compelling reason to upgrade anymore. So what’s the state of the current smartphone market?

Vendors shipped 334.9 million units in the first quarter of this year as compared to 334.5 million over the same period last year, data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker shows.

This is the smallest year-over-year growth on record and is primarily attributed to strong smartphone saturation in developed markets, as well as a year-over-year decline from both Apple and Samsung, the two market leaders. In tandem, smaller brands will continue to affect the landscape. According to IDC, the biggest change to the market was the addition of lesser-known Chinese brands Oppo and Vivo, which pushed out previous fourth and fifth place players Lenovo and Xiaomi.

2016Q1 smartphone shipments
Smartphone shipments were flat in the first quarter of this year, IDC reports

How the smartphone brands compare

However, even with a  year-over-year decline of 0.6 per cent in shipments, Samsung remains the global smartphone leader. Despite the slight decline, the new Galaxy S7 and S7 edge sold vigorously in the month of March and were helped by numerous enticing carrier promotions to help push volume, IDC reports. The S7 also brought the reintroduction of a microSD card slot in combination with waterproofing, which looks to have paid off for the Korean giant as early sales look healthy. Within emerging markets, Samsung has performed well with its more affordable J-series as it looks to capture both budget-conscious consumers and first-time buyers.

Apple also reported a decline — its first-ever year-over-year drop — in the first quarter as volumes slipped to 51.2 million units, down 16.3 per cent from last year. Despite the plethora of new features found on the newer S models, current iPhone 6/6 Plus owners may feel that a 6S upgrade is not warranted at the moment, IDC says. Apple also announced the new iPhone SE, which looks to challenge similarly priced Android options in numerous emerging markets where Apple has traditionally been seen as too expensive. The SE features all the power of the 6S in a compact form factor that looks to equally target those who desire smaller phones as well. However, at $399 (Dh1,466), the SE still faces equally powerful lower-priced devices from competitors, particularly within India and China. As Apple CEO Tim Cook has said, the SE will begin having an impact on iPhone shipments in the second quarter of 2016.

Huawei’s continued domestic dominance, combined with a growing presence outside of China, enabled it to capture the number three position worldwide in the first quarter. Shipment volume for Huawei climbed from 17.4 million units in this period to 27.5 million this quarter for year-over-year growth of 58.4 per cent. Huawei’s two-pronged approach with a focus on both premium and entry-level devices proved successful in China as well as in many developed European markets. The recent launch of the P9 smartphone featuring Leica optics provided an additional weapon with which to combat Apple and Samsung. Premium devices such as the P9, Mate Series, and Nexus 6, along with entry level devices from its Honor brand, should help Huawei gain further traction worldwide.

Oppo has been shipping smartphones since 2011 and while its primary focus was initially domestic, it has been shipping internationally since 2012. Landing first in Thailand, then expanding throughout Southeast Asia and more recently to other countries across Asia, the Middle East and Africa, Oppo’s focus is on fostering channel partnerships, supplemented by large marketing budgets and entertainment sponsorship deals to increase visibility, culminating in almost 20 per cent of shipments going outside of China in 2015. Oppo’s expansion in China itself has been via offline channels and a strong push to lower-tier cities. In the first quarter, Oppo’s 18.5 million shipments represented 153.2 per cent year-over-year growth, the strongest among the top five.

Vivo has also shipped smartphones since 2011, but unlike Oppo has been more focused on domestic markets. It first tested the global marketplace in Southeast Asia and India in 2014. Last year, less than 10 per cent of its shipments were outside of China. Positioned as a relatively premium product in China, one of its bestselling flagship products, the X5Pro, is also among the most expensive, priced around $300. Similar to Oppo, Vivo’s retail presence and marketing in lower-tier markets is particularly strong and a key factor to its growth. The brand is also slightly differentiated by its focus on audio. With 14.3 million units shipped in the first quarter and 123.8 per cent year-over-year growth, Vivo remains in tight competition with the other top ten players.