Samsung shipments hit, as smaller manufacturers continue to prosper

July 30, 2014
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Figures collected and published by research firm IDC show that is has been another 12 months of strong growth for the global smartphones market. Shipments have grown by 23 percent compared with the same quarter last year, with total smartphone shipments reaching 295.3 million in Q2 2014, compared with 240 million in Q2 2013. However, it seems that the biggest players in the market are starting to lose out to smaller vendors.

Out of the industry’s five largest manufacturers, Samsung, Apple, Huawei, Lenovo, and LG, Samsung is the only company to have shipped fewer smartphones in the second quarter of this year than they did in the same quarter last year. Samsung’s worldwide shipments fell by 3.9 percent year-on-year, which is expected to be reflected in Samsung’s earnings report due out tomorrow.

idc-smartphone-share-q2-2014

Chinese manufacture Huawei couldn’t be painting a more different picture, the company managed to increase its shipments by an astonishing 95 percent. Huawei’s growth stems from strong homeland support and global demand for its lower-cost Y-series products. LG’s L Series helped spur shipments up by 20 percent, whilst Lenovo’s acquisition of Motorola and strong presence in China saw shipments increase by 39 percent. Apple is also reportedly having some success in the BRIC nations, and continued appeal in the premium market saw global shipments grow by 12 percent.

Whilst this initially seems like particularly bad news for Samsung, we can see a slightly broader trend by looking at shipments over the course of the past year.

Smartphone Shipments Q2 2014

Samsung was experiencing steady growth until the second quarter of this year, suggesting that its new flagship Galaxy S5 hasn’t quite performed up to expectations, but it is far too soon to call this a downward trend yet. Apple has also shown a similar drop off in shipments over the past two quarters, indicating a fall in momentum after the iPhone 5S, which was released last September. However, Apple is leading up to the launch of its new iPhone 6, and the company typically has more cyclical sales than Samsung, which has a more constant stream of new products.

On the other hand, smaller manufacturers, particularly low-cost Chinese vendors, have experienced consistent growth over the past year, see Lenovo and Huawei. Manufacturers outside of the big five have also seen extraordinary growth in smartphone shipments over the past 12 months, and particularly in the second quarter of 2014. According to IDC’s Ryan Reith, “right now we have more than a dozen vendors that are capable of landing in the top 5 next quarter”, reaffirming assumptions that consumers are continuing to move away from the big two, when you look at the global picture.

Smartphone Market Shares Q2 2014

Turning finally to market share, we can see that that Samsung has experienced a rather large drop in its global share of the market, with Apple also experiencing a slight decline in its share compared with last year. Again we can see that Lenovo and Huawei have increase the size of their market shares over the past year. Importantly, the big five combined now account for less of the total market than they did a year ago.

Smartphone Market Share Q2 2013 to Q2 2014

Samsung’s share is also at its lowest point in the past five quarters, as is Apple’s. As we saw from regional sales statistics back in early July, the majority of smartphone growth is coming from Android manufactures. This trend is particularly strong in emerging markets, such as China, where manufacturers that are well established in the West and Japan are not performing as well as home-grown vendors, such as Huawei.

The Android explosion currently taking place in Asian and South American markets has opened the door for new manufactures to grab themselves substantial portions of the global market. Samsung will need to find a way to better fit its products to the demands of these growing markets, or else this trend in vendor diversification is likely to continue.

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