Huawei pulls in front of Apple
Huawei Technologies pulled ahead of Apple to claim number two spot in global smartphone shipments in the second quarter, just behind Samsung, solidifying the rise of Chinese competitors.
Huawei Technologies pulled ahead of Apple to claim the number two position in global smartphone shipments in the second quarter just behind Samsung Electronics, solidifying the rise of Chinese competitors.
Huawei shipped 54.2-million phones in the quarter, 41% more than a year earlier, to jump ahead of the iPhone maker for the first time, according to market research firm IDC.
The company accounted for 16% of the market, compared with 21% for South Korea’s Samsung and 12% for Apple. Xiaomi and Oppo, both based in China, rounded out the top five.
Chinese smartphone makers have been gaining influence as their domestic market grows and they expand abroad.
Huawei has pushed into Europe and Africa, though it has failed to crack the US market. Apple tends to sell iPhones at higher prices than its rivals and profits from services like iTunes, which helped it top earnings estimates for the quarter.
“The importance of Huawei overtaking Apple this quarter cannot be overstated,” said Ben Stanton, a senior analyst at Canalys. “It is the first time in seven years that Samsung and Apple have not held the top two positions. Huawei’s exclusion from the US has forced it to work harder in Asia and Europe to achieve its goals.”
Canalys pointed out that the second quarter has historically been a weak one for Apple. The California-based company introduces new phones late in the year, then usually sees sales climb in the fourth and first quarters. That momentum for the $1,000-plus iPhone X was not sustained into the second quarter, the firm said.
Globally, the smartphone market continued its slowdown, with shipments slipping 1.8% for the quarter to 342-million units.
The number of smartphones shipped in 2017 fell 0.3%, according to IDC — the first drop after years of strong growth.
Samsung earnings took a hit from the sluggish market when it reported earnings on Tuesday.
The South Korean company, which makes memory chips and screens as well as smartphones themselves, reported net income that fell short of analysts’ estimates.
“Huawei’s momentum will obviously concern Samsung, but it should also serve as a warning to Apple, which needs to ship volume to support its growing services division,” Stanton said in a statement. “If Apple and Samsung want to maintain their market positions, they must make their portfolios more competitive.”
HUAWEI’S MOMENTUM WILL … CONCERN SAMSUNG, BUT IT SHOULD ALSO SERVE AS A WARNING TO APPLE
Apple may have just notched up its fourth straight quarter of double-digit revenue growth in China but the shine quickly came off that stellar performance as Chinese state media stepped up a tirade of criticism against the smartphone giant.
On Tuesday evening, the same day as Apple’s earnings, China’s official state broadcaster, in a 30-minute special report, accused Apple of allowing illegal content, including gambling apps, onto its platform.
The programme was one of at least five reports by state media that targeted the company in the past week.
Although Beijing has criticised Apple before, the attacks highlight an increasingly fraught balancing act for the firm in the world’s biggest smartphone market, where trade friction, tighter regulations and fierce competition threaten robust consumer appetite for its iPhones and other products.
Mo Jia, an analyst at industry tracker Canalys, said the reports needed to be seen as part of the US-China trade conflict, noting tensions over a US ban imposed on telecoms equipment maker ZTE that has yet to be lifted.
“The Chinese government is maybe trying to warn the US government in a similar way by saying, your tech firm in China is not that safe either,” he said.
The Trump administration has upped the ante in its trade war with Beijing, and is considering a 25% tariff on $200bn worth of goods. That prompted China on Wednesday to say “blackmail” would not work and to threaten to hit back.
The criticism of Apple also comes ahead of a new campaign by the country’s regulators to clean up spam and unsolicited calls, which are a pervasive issue in China where phone numbers are often sold on black markets. The 18-month campaign was announced on Monday and started in July.
“Major communication operators in China have little ability to prevent such spam messages, since [Apple] says it has no right to monitor user messages out of privacy concerns,” the People’s Daily said last week.
Apple declined to comment on the state media reports, while a fax to the Chinese internet regulator requesting comment did not receive a response.
BIG SPENDERS
Like its performance in other regions, much of the 19% revenue growth in China for the past quarter was led by the price hike for the iPhone X. It retails for 9,605 yuan ($1,415) in China — a price tag that does not appear to be fazing the Chinese smartphone consumer.
Apple’s efforts to alter the iPhone X’s appearance and new features such as facial recognition have gone down well — a contrast to the iPhone 7, which had a less substantive upgrade and led to a sharp China sales decline in 2016 for the firm.
“I had to buy the X, not even the 8, because it has a better camera, a larger screen, and also for the face recognition,” said an 18-year-old college student who gave her first name as Feifei.
THE CHINESE GOVERNMENT IS MAYBE TRYING TO WARN THE US … YOUR TECH FIRM IS NOT THAT SAFE EITHER
However, the question of brand loyalty always looms large in China.
“Chances are I may have to shift to a domestic smartphone to support Chinese companies,” said Michelle Huang, a 23-yearold bank worker in Beijing, who owns an iPhone and is thinking of getting a new phone.
Competition in China has also become tougher. Huawei Technologies overtook Apple to become the world’s second biggest smartphone seller in the June quarter, data from market research firms showed, as it expanded its lead back home.
Canalys’s Jia said, however, he did not see too much of an immediate threat to Apple from the state media reports.
“Apple’s fan base is quite stable in China and they are premium users so they are not so easily swayed by the government and the news,” he said.