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Europe in the driving seat for global smartphone market

Samsung, Huawei and Xiaomi lead the charge to drive unprecedented shipment numbers in the third quarter of 2019, says Canalys study

Europe became the fastest-growing region in the global smartphone industry in the third quarter of 2019, increasing shipment units by 8% annually. Analyst Canalys said this was the region’s best-performing third quarter ever.

Amid US-China trade tensions, Chinese suppliers, led by Huawei and Xiaomi, gave Europe the highest priority in global expansion in the quarter, but Canalys’s research identified Samsung as European leader, with 18.7 million units shipped in the region in the third quarter, its highest in Europe and an increase of 26% year on year.

Huawei maintained second position with 11.6 million units, showing a strong bounce-back from 8.5 million units in the second quarter, but still some way short of its impressive first quarter and flat compared with Q3 2018.

Xiaomi grew by 73% in Europe in the third quarter, driven by aggressive market expansion and a strong volume product portfolio, further consolidating its fourth position, following Apple.

“Europe is in a favourable position and attracts the attention of many Chinese vendors given its channel balance,” said Canalys analyst Mo Jia. “Operators and open channels form 47% and 50%, respectively, in terms of go-to-market. This has given the potential to scale and healthier margins with mid- to high-end products.

“Another key incentive for Chinese vendors to up their game is the opportunity to take on a weakening Huawei. Despite shipments recovering in Q3 from a catastrophic Q2, Huawei is not yet walking away from its worst period. Western Europe shipments still fell 17% year on year, but Central and Eastern Europe proved more solid for Huawei as shipments grew 26% annually.”

The analyst said that going into 2020, the signs were good for Europe, especially for other Chinese suppliers. It noted that Xiaomi was accelerating its market entry and channel developments with operators and open channels and that other Chinese brands, such as Oppo, Oneplus, Realme and Vivo, were also expected to invest more in brand awareness and local sales forces.

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Canalys senior analyst Ben Stanton said Europe was rife with opportunity and threat, with Brexit leading to suppliers in the UK stockpiling products and hedging against impending tariff risk. As well as artificially boosting the market, the accompanying risk, costs and uncertainty of Brexit were also acting as a drain on the industry, he said. However, Stanton added that opportunity is knocking in the region.

“In the UK, shipments of premium devices from Samsung and Apple accelerated before each Brexit deadline this year, in March and recently October, followed by a large dip,” he said. “Yet there are great opportunities in Europe as 5G networks roll out. Europe’s operator landscape is fragmented compared with single, large-population countries like the US or China, so network build-out will be slower.

“However, this fragmentation means smartphone vendors have a far broader range of potential partners and, in some markets, relatively new brands like Xiaomi and Oppo have been ranged by operators at an unprecedented pace. Operators will continue to make bold ranging decisions as the 5G battle shifts to the mid-range next year.”

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