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Smartphone market shows modest growth in Q2, 2016

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After dismal Q1 growth in the smartphone sector, and fears stemming from reports of a saturated Chinese market dragging the global total down, a recent Canalys report that brings along signs of positive growth should be able to provide some slight comfort to manufacturers. According to Canalys, the worldwide smart phone market managed to exhibit a growth — albeit modest — in Q2, 2016.

The total global shipments have crossed the 330 million units mark, with Samsung leading the market with approximately 80 million units shipped. The company’s VR strategy was cited as having a role to play in the company’s good fortunes as well and Gear VR bundles have helped boost flagship handset sales.

Meanwhile, Apple’s fortunes have continued to decline, with the company shipping just 40 million iPhones in Q2. This also marks the second time where Apple’s iPhones have shown consecutive annual decline in shipments. The company had managed to ship over 51 million handsets in the first quarter of 2016.

Apple definitely has cause for worry now. While a single period of decline may be disregarded, two consecutive annual declines are not a good sign. Particularly since they come in face of new releases by the manufacturer, including the iPhone SE. However, at almost USD 400, the SE is face to face with at least equally powerful lower-priced devices from competitors, specially within India and China.

As per Canalys Analyst Rushabh Dosh,

Shipments in intended growth markets, such as China and India, saw little improvement as the price of the device kept it out of reach of the mass market, which typically sees strong shipments. Consumers instead opted for local vendors, whose build quality and specifications are a better value alternative

And that is definitely true. While customers used to opt for local vendors over Apple because of price concerns, they are now increasingly doing so because local manufacturers are often able to provide them with better value for their money. The build quality has significantly gone up as well. Also, the average consumers is willing to hold on to his existing smartphone rather than shell out hundreds of bucks for the next Apple variant, which are releasing every year anyways.

Meanwhile, Chinese manufacturer Huwaei has continued to gain on competition. The company managed to sell over 31 million devices this quarter and was a significant contributor to the global growth. However, the global loss of interest in smartphone purchase has affected it as well and it will need to increase sales if it hopes to reach its 140 million shipments target.

 Huawei has had an excellent start to 2016, with its leadership position in China helping the global picture.Despite this strong start, it will need to continue breaking shipment records and improve its position in the US if it is to surpass its annual shipment target of 140 million units.

The company had shipped  27.5 million smartphone in Quarter 1 as compared to 17.4 million units in Q1 in 2015. The company’s focus on both premium and entry-level devices is reaping rich fruits and sales are growing steadily. The company has proved successful in China as well as in many developed European markets, however, it still needs to increase its footprint in US.

Meanwhile, it’s interesting to see that the difference between Apple and Huawei has been reduced to less than 10 million devices a quarter. Unless the iPhone 7 and its buddies — which are slated for release later this year — can make a difference, we may just see the top two rungs being held by Android manufacturers.

More on the topic soon, stay tuned!

A bibliophile and a business enthusiast.

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