Can Apple retain its crown in the high-end smartphone market?

January 03, 2019 12:15
Apple's iPhone continues to dominate the premium smartphone segment amid the stiff competition and slowing sales. Photo: Reuters

Apple’s iPhone continues to dominate the high-end smartphone market globally, but slowing sales and stiff competition from Chinese rivals are threatening its leading position. 

In particular, Xiaomi, Vivo, Oppo and Huawei are making aggressive inroads into emerging markets, and that's where the US technology giant is encountering its toughest battles.

The premium segment continued to grow faster than the overall smartphone market in the third quarter of 2018, according to Counterpoint Research’s Market Monitor. The growth was driven by new iPhone models along with flagship launches by key Chinese players such as Oppo and Vivo. 

On Wednesday, after the market close, Apple chief executive Tim Cook wrote a letter to investors revising down the company’s revenue guidance for the first fiscal quarter that ended Dec. 29, citing slowing sales in Greater China and economic uncertainties.

For sure, this is not the first time Apple blamed the region for its weak performance.

But its forecast of lower-than-expected revenue may also reflect rising pressure from Chinese competitors that offer premium products targeting Apple users in emerging markets at much more affordable prices. 

The global smartphone market has been declining since last year as consumers keep their existing phones for a longer time and the lack of innovations in the latest models makes them even more reluctant to upgrade.

However, the premium segment offers a richer hunting ground for smartphone makers as competition becomes more intense in the low-end sector. 

In fact, there are now about 40 players battling each other in the global premium segment, although the top five account for almost 89 percent of the shipments. 

Apple, of course, is the market leader with a 47 percent share, followed by Samsung (22 percent), Huawei (12 percent), Vivo (5 percent), Oppo (5 percent), and Xiaomi (3 percent). It’s worth noting that Huawei hit double-digit percentage share for the first time in the latest reporting period. 

The market has been speculating that Apple’s latest offerings, the iPhone XS and the iPhone XR, are not doing well because they lack new features and design, but the fact is that the iconic brand can still draw consumers to its latest products. 

Its shares are being battered by news of slowing sales, but visit any of the Apple Stores in Hong Kong and you will see that many customers are still snapping up its phones. 

To boost sales, Apple has introduced a special trade-in offer at local outlets to convince existing iPhone users to upgrade to the latest models. 

An iPhone XR can be had for as low as HK$4,299 while an iPhone XS can be bought for HK$6,399 when users upgrade from specific iPhone models. 

As various channels launch a similar campaign to boost sales, some iPhone models are said to be out of stock at the moment. 

Apple is still the king in the premium phone market. In the last quarter, Apple and Samsung together represented 81 percent of the shipments in the US$600 to US$800 market, while Huawei saw its share increase, driven by P20 series shipments. 

For units priced US$800 or higher, Apple clearly dominated the segment with an 80 percent share. 

Within the premium segment, however, the US$400-US$600 price band was the sweet spot, accounting for 46 percent of the entire shipment volume.

There is slightly more brand diversity in the premium market as more smartphone makers enter the arena to strengthen their bottom line.

In the US$400-US$600 segment,  Samsung leads with a 25 percent share, followed by Apple (21 percent ), Huawei (17 percent ), Vivo (10 percent ) and Oppo (7 percent ). 

OnePlus remains one of the fastest growing brands in the US$400 to US$600 segment. Its sales in this segment were driven by India, China and Britain. 

In India, OnePlus continued to lead the premium segment for the second straight quarter, capturing 30 percent of the market. Its strong performance was driven by OnePlus 6.

OnePlus was also among the top five premium brands in France, Germany, Italy, the Netherlands, Sweden and the United Kingdom due to strong OnePlus 6 sales. 

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EJ Insight writer