Smartphone shipments dip as iPhone ‘fatigue’ sets in and China reaches saturation

Both Apple and Samsung saw a drop in smartphone shipments in the first quarter, Strategy Analytics said

The global smartphone market saw its first year-on-year decline in the first quarter of this year, with both Samsung Electronics and Apple shipping fewer phones, according to a research firm.

Global smartphone shipments fell 3 percent annually to 334.6 million from 345 million units in the first quarter of 2015, Strategy Analytics said late Wednesday.

It attributed the decline to slowing smartphone growth because of increasing saturation in major markets like China and consumer caution about the future of the world economy.

Apple reported Tuesday that the number of smartphones it sold worldwide fell by 16 percent to 51.2 million units in its fiscal second quarter ended March 26. The company saw a 26 percent year-on-year decline in revenue from Greater China, its second largest market. The revenue drop in mainland China was less at 11 percent

The company’s problems could run deeper, as it is up against customer ennui, according to some analysts. Apple is facing iPhone fatigue and pressure is mounting for the company “to innovate a new wow design beyond its standard rectangle form factor," according to Neil Mawston, executive director at Strategy Analytics.

Apple’s South Korean rival Samsung shipped 79 million smartphones worldwide in the first quarter, down 4 percent annually from 82.7 million units in the first quarter of 2015, Strategy Analytics said. Its market share declined marginally to 23.6 percent from the 24 percent it held in the same period last year, while Apple's share was down to 15.3 percent from 17.7 percent a year earlier.

Samsung reported earlier on Wednesday that while smartphone and tablet demand saw a slight quarter-on-quarter decrease due to seasonal effects, overall operating profit for its IT & Mobile Communications Division increased. The revenue of the division also saw a 6.6 percent year-on-year increase. The company does not break out data for smartphone sales.

The company's new Galaxy S7 and S7 edge sold "vigorously" in the month of March, while its more affordable J-series phones did well in emerging markets, according to IDC.

IDC estimated year-on-year growth in smartphone shipments in the first quarter had been flat at 0.2 percent, reflecting saturation in developed markets.

While the top three vendors in the smartphone market remain unchanged from the last quarter, with Huawei holding the third position, an interesting development in the quarter was the entry of a little known Chinese brand, Oppo, as the fourth largest player, according to both research firms.

Starting as a local smartphone brand in 2011, targeting the domestic market, Oppo has expanded into other markets in Asia, the Middle East and Africa, which accounted for about 20 percent of its shipments last year, IDC said. In the first quarter, it shipped 18.5 million smartphones, up by a whopping 153 percent from the same period last year.

The fifth place also went to a Chinese player, according to both the research firms. IDC placed Vivo with a market share of 4.3 percent as the fifth largest player, while Strategy Analytics estimates that Xiaomi managed to retain the fifth position it held in the previous quarter. Xiaomi remains under pressure from Oppo, Vivo and others across Asia, while it is still very weak in North America and Western Europe, Strategy Analytics said.

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