Gartner: Q3 Smartphone Sales Decline 5.7% - 366 Million Units Sold

The crucial holiday shopping season is now underway, and recent data from Gartner indicates a degree of recovery for the smartphone market as manufacturers introduce a variety of new 5G-capable devices.

Gartner’s Q3 smartphone statistics, released today, reveal that worldwide smartphone unit sales reached 366 million, representing a 5.7% decrease compared to the same three-month period last year. While this signifies a decline, it nonetheless demonstrates a noticeable improvement over the first half of the year, which experienced sales drops of 20% in each quarter, largely attributable to the impact of COVID-19 on expenditure and consumer sentiment.

Further encouraging signs are emerging as well. The Thanksgiving weekend recently concluded with a series of robust sales days, traditionally marking the start of the holiday sales period. Although sales figures for Thursday and Black Friday were on the lower side of projections, they still surpassed previous years’ records. Given the prevalence of online purchases for products like smartphones, this trend could suggest increased smartphone sales figures overall.

Furthermore, last week IDC – another firm that monitors and analyzes smartphone sales – issued a report forecasting a 2.4% increase in sales for Q4 compared to Q4 of 2019. Their assessment is that the demand for 5G smartphones will be a key driver of purchases, but prices for these next-generation handsets must decrease to achieve broader market penetration. IDC reports that the average retail price of a 5G smartphone in 2020 is $611, but anticipates this will fall to $453 by 2024, primarily due to more affordable Android-based devices, which have consistently accounted for the majority of smartphone sales.

Regarding brands, Samsung, with its Android offerings, maintained its leading position in terms of total units sold, reaching 80.8 million units and securing a 22% market share. In fact, the South Korean manufacturer and China’s Xiaomi were the only two companies within the top five to experience sales growth during the quarter, with increases of 2.2% and 34.9% respectively. Xiaomi’s strong performance allowed it to surpass Apple and claim the number-three position in overall sales rankings. Huawei narrowly retained its number-two spot. A detailed chart with further information can be found later in this article.

It is also important to note that overall mobile phone sales – encompassing both smartphones and feature phones – declined by 8.7% to 401 million units. This highlights the limited sales of feature phones currently (smartphones are sometimes available at comparable or lower prices, depending on the brand or carrier offers), and indicates that these simpler devices are facing even greater sales challenges than more sophisticated models.

Smartphone slump: It’s not just COVID-19

It's important to remember that even prior to the worldwide health crisis, the growth rate of smartphone sales was already decelerating. This was due to the fact that, following a period of significant consumer excitement for these devices, many countries had reached a high level of market saturation. Furthermore, recent advancements in smartphone technology hadn’t been substantial enough to motivate consumers to upgrade and invest in newer, more expensive models.

Considering this situation, the industry had placed considerable hope in the introduction of 5G technology, which was promoted by both mobile network operators and device manufacturers as offering improved data efficiency and faster speeds compared to previous generations. However, the actual implementation of 5G has been uneven, and many consumers remain unconvinced of its necessity.

Recent quarterly data indicates that growth continues to be influenced by emerging and developing markets, in contrast to innovative features driving sales in more established markets.

“Initial indications of recovery are visible in select markets, including portions of mature Asia/Pacific and Latin America. The improvement of conditions in China to near-normal levels boosted smartphone production, which in turn positively impacted sales during the third quarter,” explained Anshul Gupta, senior research director at Gartner, in a press release. “For the first time this year, smartphone sales to end users in three of the top five markets – India, Indonesia, and Brazil – experienced increases, growing by 9.3%, 8.5%, and 3.3%, respectively.”

These more encouraging Q3 results coincided with a period this summer when new COVID-19 cases were declining in numerous locations and many restrictions were being eased. Attention is now focused on the upcoming holiday season, which is occurring amidst a resurgence of COVID-19 cases and the absence of widespread vaccination or therapeutic programs. This is inevitably creating economic headwinds.

“Consumers are exercising caution with non-essential spending, even as some lockdown measures have been relaxed,” Gupta noted regarding the Q3 figures. “Global smartphone sales saw moderate growth from the second quarter to the third quarter of 2020, largely due to pent-up demand from previous periods.”

Examining the data more closely, Samsung has maintained its leading position, although its growth rate was considerably lower during the quarter. Despite this slowdown, Samsung still holds a significant lead over its competitors.

This is partly because Huawei, the second-ranked vendor with 51.8 million units sold, experienced a decline of over 21% compared to the previous year. The company has faced challenges following a public relations issue stemming from sanctions imposed in the U.S. and U.K., based on allegations that its equipment is utilized by China for espionage purposes. (These U.K. sanctions were, in fact, announced just recently.)

As a result, Huawei confirmed earlier this month its long-anticipated plan to divest its Honor smartphone division. This transaction involves the sale of the division, reportedly valued at approximately $15 billion, to a group of investment firms.

It will be noteworthy to observe how Apple’s slight decrease of 0.6% to 40.6 million units compares to Xiaomi’s 44.4 million units in the next quarter, particularly following the launch of Apple’s new iPhone 12 series.

“Apple sold 40.5 million units in the third quarter of 2020, representing a decrease of 0.6% compared to 2019,” stated Annette Zimmermann, research vice president at Gartner, in a statement. “This minor decline was primarily attributable to a delayed launch of Apple’s new 2020 iPhone generation, which traditionally begins in mid-to-late September. This year, the launch event and shipment start were delayed by four weeks.”

Oppo, which currently lacks a presence through carriers or retail partners in the U.S., completed the top five sellers with nearly 30 million phones sold. The success of Oppo and Xiaomi despite their limited U.S. market presence highlights the role of the U.S. in the global smartphone market: significant in terms of influence, but potentially less critical in terms of actual sales volume.

“The ‘Others’ category – encompassing a wide range of smaller smartphone manufacturers – continues to represent a substantial market share, exceeding the sales of any individual top five vendor. This underscores the fragmentation within the Android-based smartphone industry, although collectively, their numbers were in decline, suggesting a gradual consolidation of consumer preference towards a smaller number of established brands.”

Source: Gartner (November 2020)