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Apple and Xiaomi Increase Share in a Slowing Smartphone Market

By Aditya Raghunath - Mar 3, 2020 at 2:36PM

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While Apple's iPhone has gained market share in Q4 of 2019, investors may be worried about its 2020 performance.

Market research firm Gartner reported Tuesday that the global smartphone market contracted by 0.4% year over year in the fourth quarter of 2019 and declined 1% in 2019. Among the top five manufacturers, Apple (AAPL 1.89%) and China's Xiaomi (XIACF -0.06%) were the only players to increase market share in the smartphone space in Q4.

Gartner predicts that iPhone sales returned to growth after four consecutive quarters of year-over-year decline. In the fourth quarter of 2019, iPhone shipments rose 7.8% to 69.5 million units, easily outpacing the overall market.

Apple seems to have benefited from attractive pricing models for its latest lineup of smartphones as well as price reductions for previous-generation models, explained Gartner's Vice President of Research, Annette Zimmermann.

The research group further forecasts that iPhone sales in China rose 39% in the fourth quarter. iPhone also generated strong demand from international markets of the United Kingdom, France, Brazil, India, and Germany.

Image shows a woman engaged on her smartphone

Image source: Getty Images.

Apple ended Q4 with a market share of 17.1%, up from 15.8% in the prior-year quarter. Samsung continued to lead the global smartphone race with a share of 17.3% while Huawei, Xiaomi, and OPPO have market shares of 14.3%, 8%, and 7.5%, respectively. 

Xiaomi managed to increase smartphone shipments by 16.5% to 32.4 million units and was the top-performing manufacturer in the fourth quarter of 2019.

What next for Apple and the iPhone?

Though Apple has expanded its ecosystem to include several revenue streams, the iPhone still accounts for the majority of company sales. In fiscal 2019, the iPhone generated 54.8% of total sales. Apple stock almost doubled in 2019, driven by strong supply chain data for the iPhone as investors were buoyed by encouraging demand for the iPhone 11.

However, last month Apple confirmed that it will miss revenue guidance for the March quarter due to the coronavirus outbreak which will temporarily result in a constrained supply of the company's flagship product.

Several partner stores have been shut in China and those operating are experiencing low customer traffic and shorter working hours. This is a short-term headwind that dragged Apple shares lower by 13% in the last week of February.

Consumer demand will be tepid in China and other countries impacted by the virus. This will result in lower than expected sales for Apple over the next quarter or two. 

 

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.56 (1.89%) $2.63
Xiaomi Corporation Stock Quote
Xiaomi Corporation
XIACF
$1.72 (-0.06%) $0.00

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