For those following the smartphone markets, research firm Gartner's quarterly report serves as a great reality check against the constant spin perpetuated by market participants. After all, the true barometer for corporate success is units sold, not great website reviews or ratings, so Gartner's quarterly worldwide smartphone sales figures are a highly watched barometer for the entire industry.
As for the overall market, Gartner's report casts a bearish shadow on future smartphone growth. Although worldwide smartphone sales increased on a year-on-year basis, growing to nearly 330 million units in 2015's second quarter from 290 million in the same quarter last year, the increase of 13.5% was the lowest growth rate since 2013.
Unfortunately, Gartner pointed to China's poor performance, which actually reported a year-on-year decrease of 4%, as a big reason for the sluggish worldwide figure. This is a negative sign considering China is the world's largest smartphone market, 30% thereof, and — until recently — figured to be the growth catalyst for the immediate future. Not surprisingly, vendors that were still able to perform well in China were those that did well in Gartner's report.
Samsung continues its fall
When it comes to smartphone market share, it's becoming increasingly apparent Samsung (NASDAQOTH: SSNLF) is becoming a "paper champion." Although the South-Korean electronics conglomerate is still No. 1 in terms of market share, the lead continues to narrow. For perspective, in Q2 2014 Samsung commanded 26.2% of the overall smartphone market and shipped 76 million smartphones. Despite since releasing a well-reviewed Galaxy S6 flagship unit, the company continues to struggle and experienced a market share drop to 21.9% this quarter.
But perhaps the most interesting data point for Samsung was how they lost market share. This 4.3-percentage point drop for the company was due to the fact the company shipped fewer phones this period than it did in last year's corresponding quarter. Under pressure from a host of vendors in China — Apple (NASDAQ:AAPL) Xiaomi, and Huawei, among others — Samsung shipped 72 million smartphones this quarter, 5.3% lower than they did last year.
The fastest-growing smartphone maker wasn't Apple
If you're an Apple shareholder, you have to be happy with this report. Gartner's data really doesn't cover new territory on a units sold basis, as it is similar to the figures Apple disclosed in its recent earnings release, but the data is valuable when compared to the overall industry. And, on that basis, Apple did rather well — Cupertino grew 36% on a year-on-year basis, according to Gartner's data, selling 48 million units in the second quarter versus 35.3 million in last year's period.
When compared against the overall growth rate of 13.5%, Apple's performance looks rather strong. However, Apple's outperformance in China is the real story — while the overall smartphone market contracted by 4% there, Tim Cook announced iPhone unit growth of 87% in the Middle Kingdom last quarter. On the back of China's performance, Apple increased its worldwide smartphone market share from 12.2% to 14.6%.
However, the real performer this year is Chinese-vendor Huawei. On a worldwide basis the company jumped from 17.7 million units sold in 2014's second quarter to 25.8 million this year, good for a year-on-year growth rate of 46%. Gartner credits strong 4G sales in China and increased overseas sales as reason for this performance.
A few years ago the company decided to transition to a higher-end smartphone strategy and it's clearly paying dividends. The company appears to be going from strength to strength, as it also won the manufacturing contract for Google's next Nexus unit that should further increase its unit sales numbers going forward. For years, Xiaomi has dominated the conversation as it pertains to Chinese smartphone manufacturers, perhaps it's time to shift that attention to Huawei.