5G next battleground for smartphone vendors as market bucks decline

Samsung tops global shipment rankings, followed by a resurgent Huawei and Apple

The next opportunity for smartphone vendors to grab a bigger slice of the market will be with 5G, according to Canalys.

The analyst house reported that the global smartphone market grew one per cent - the first time in two years - in the third quarter of this year due to an alignment in the market that drove demand.

Samsung had the biggest slice of market share, shipping 78.9 million devices in the quarter, an 11 per cent year-on-year growth that Canalys attributed to its strategy to sacrifice operating profit in pursuit of market share.

"5G is the next battleground for Samsung," said Rushabh Doshi, research director at Canalys.

"It is one of very few smartphone vendors to design its own chipsets and modems.

"It is not, therefore, restricted to the innovation cycle of a third-party component supplier like Qualcomm.

"If Samsung moves faster than Qualcomm, it can win the race to mid-range smartphones with 5G. Its recent announcement of the Galaxy A90 5G and the upcoming Exynos 980 chipset highlights its strategic priorities."

Meanwhile, second-placed Huawei saw the biggest growth at 29 per cent, shipping 66.8 million units. This is despite its presence on the US Entity List which prohibits US organisations from working with the Chinese vendor.

A strong showing in China underpinned its bounce back, but it also saw its fortunes improve as pent-up demand for its devices in overseas markets caused a surge in orders as distributors and operators resumed procurement of Huawei's smartphones which had been paused in Q2.

Ben Stanton, senior analyst at Canalys, warned that the Chinese manufacturer is "not out of the woods yet".

"Its shipments overseas in Q3 were focused on pre-Entity List models, with P30 Lite its best shipper. But its post-Entity List models, like Mate 30, bring uncertainty because there is resistance from channels in critical overseas markets, like Europe, to support Huawei devices without Google Mobile Services [GMS]," he explained.

"Huawei does have the potential to rapidly bring GMS to its devices if the political situation changes, but time is not on its side. It is nearing the launch timeframe for new Y-series and P-Series devices in early 2020.

"These families are major volume drivers for Huawei…it will be a major challenge to retain its overseas volume if the Entity List saga is not resolved."

The Canalys stats also reflected Apple's recent report on its iPhone sales, which showed that while they are still declining, they are doing so at a much slower rate.

Its shipments fell seven per cent to 43.5 million units in Q3, improving on its double-digit decline in the first half of this year.

Vincent Thielke, Canalys research analyst, stated that Apple will struggle against its 5G-compatible competitors as its latest iPhone 11 models do not have those capabilities.

"The iPhone 11 has launched to strong reviews. It has tangible improvements in camera and battery life, and its discount versus the iPhone XR was a welcome surprise to consumers," he said.

"However, Apple devices do not have 5G and it will have to contend with that in early 2002. It will miss out on heavy operator investment in 5G marketing and promotions, and the wide expectation for Apple to launch a 5G iPhone in September 2020 may convince some customers to delay purchasing to ensure their device is future-proof.

"Apple will need an unconventional strategy to keep its volume high in the early stages of next year, which makes rumours of an upcoming entry-level iPhone launch in H1 2020 unsurprising."

Chinese vendors Xiaomi and Oppo rounded out the top five smartphone vendor shipment rankings.