Maksym Yemelyanov - Fotolia
The recent launch of Apple’s budget iPhone SE will support its overall shipments in the coming months, but will face such stiff competition from Chinese brands that it is unlikely to help Apple in the medium-to-long term, according to analysts at Taiwan-based TrendForce.
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TrendForce recently released its first quarter smartphone shipment results, revealing that shipments of Apple iPhone products declined 43.8% sequentially to 42 million units. The overall smartphone market was down 18.6% to 292 million units compared with the final quarter of 2015, and 1.3% year-on-year. This is mostly attributable to market saturation.
TrendForce’s Avril Wu said: “As the budget model, iPhone SE will support Apple’s overall shipments in the second quarter before the next major iPhone release.
“However, iPhone SE is going to face severe price competition from Chinese-branded products in its target market, which is the mid-range device segment. 2016’s iPhone SE shipments are projected to come in below 15 million units and they are unlikely to help turn around the weak annual shipment result for Apple.”
This was Apple’s largest quarterly decline ever for iPhone shipments, said TrendForce, due to a number of factors, such as a lack of ground-breaking features on the iPhone 6s, and more conservative channel inventory management.
Samsung’s first quarter shipments were up 2.5% on the final quarter of 2015 as a result of the updates to its flagship handsets, while its entry level J series saw some success.
Moreover, combined shipments of Chinese brands – such as Huawei and Xiaomi – continued to grow as the market outside of China and India reached saturation point. Combined shipments – including exports – from China accounted for 42.9% of the global market in the first quarter, more than Apple and Samsung combined.
In China, said Wu, local brands benefitted from generous subsidies for 4G smartphones from mobile network operators (MNOs).
As a result of these factors, Chinese suppliers did not suffer as steep a shipment decline in the first quarter as their competitors, down just 16% collectively. However, Wu forecast that intensifying competition would soon start to eat into their margins.
“Huawei won’t be able to overtake Apple and become the number two smartphone brand worldwide any time soon,” said Wu. “Still, the market share gap between Huawei and Apple is expected to narrow with each passing year.”