Smartphone industry smashes it in Q1 2021

Apple and China among the big winners as smartphone industry shows a renaissance in first quarter due to a boost from 5G-capable devices

Despite the announcement by one of its major players that it is leaving the market, the global smartphone industry was back with a bang in the first quarter of 2021, with its leading lights posting strong sales around the word and mainland China showing a resurgence not seen since 2019.

Analyst Canalys calculated that in the first quarter of 2021, worldwide smartphone shipments reached 347 million units, up 27% year on year.

The Canalys data put Samsung in first place, shipping 76.5 million units to take a 22% share, followed by Apple, which shipped 52.4 million iPhones to take a 15% share. Even though the iPhone 12 Mini sold below expectations, strength in other iPhone 12 models, as well as stronger demand for the older iPhone 11, helped Apple maintain strong momentum.

Xiaomi clocked its best single-quarter performance ever, growing by 62% and shipping 49 million units, while Oppo and Vivo completed the analyst’s top five, shipping 37.6 million units and 36 million units respectively.

Huawei, which no longer includes Honor, took seventh place with 18.6 million units, as the former world number one remains shackled by US sanctions leading to a severe dent in its first-quarter finances.

“Xiaomi is in pole position to be the new Huawei,” said Canalys research manager Ben Stanton, assessing the survey results and their ramifications. “In addition to great product value, it is now also making strides to recruit local talent, become more channel-friendly and lead in high-end innovation, as seen with the Mi 11 Ultra and its recent foldable, the Mi Mix Fold. Its competitors offer superior channel margin, but Xiaomi’s sheer volume actually gives distributors a better opportunity to make money than rival brands.

“But the race is not over,” added Stanton. “Oppo and Vivo are hot on its heels and are positioning in the mid-range in many regions to box Xiaomi in at the low end. Honor is also a looming threat. It has already struck supply chain deals and is now signing distribution agreements to re-enter several markets in the second half of 2021. Xiaomi is leading the pack, but the race has only just started.”

“Xiaomi is in pole position to be the new Huawei. In addition to great product value, it is also making strides to recruit local talent, become more channel-friendly and lead in high-end innovation”
Ben Stanton, Canalys

LG, a stalwart of the smartphone industry, is bowing out of the market this year. Canalys analyst Sanyam Chaurasia said the move was symbolic of a new era in the smartphone market.

“It proves that aggressive pricing and channel strategy are more important than hardware differentiation in the modern day,” added Chaurasia. “LG holds the majority of its share in the Americas, at 80% of its total in 2020, which presents new opportunities for the likes of Motorola, TCL, Nokia and ZTE, particularly at price points below US$200. As the smartphone market continues to consolidate, this will not be the last time the incumbent vendors fight over the remains of a defeated brand.”

Drilling deeper into its research, Canalys noted that the smartphone market in mainland China has finally returned to the first-quarter 2019 level, a year after the pandemic first hit, shipping 92.4 million units. This was a 27% increase on the first quarter of 2020, when the market shrunk by nearly 20% as a result of the national lockdown and production halt. 

Huawei lost its crown to Vivo in China, which recorded 79% year-on-year growth, shipping 21.6 million units. Oppo chased Vivo as a close runner-up, with 20.6 million shipments. Huawei, which has divested Honor, slipped to third place with 14.9 million units shipped in this year’s first quarter. Xiaomi and Apple were number four and five, shipping 13.5 million units and 12 million units, respectively.

For its part, preliminary results in the latest Omdia global smartphone shipment tracker found that the global smartphone market grew by 28.1% year-on-year to 353 million units in the first quarter of 2021, compared with 275.7 million units shipped in the same quarter last year.

The analyst said the annual growth demonstrated that the smartphone form factor continues to be a key piece of technology for users worldwide. It added that while there was significant recovery in the first part of the year, 2021 marked a period of significant transition, with Huawei’s role in the market continuing to change. Omdia predicted that LG’s announcement to exit the market would likely impact multiple manufacturers competing in the mid-range segment – all under the umbrella of a component shortage.

Omdia, like Canalys, put Samsung in the top spot, shipping 76.1 million units, up 29.2% year-on-year. Samsung was also able to raise shipments quarter-over-quarter by 22.8%, from 62 million units in the fourth quarter of 2020. An early update to the Galaxy S line allowed Samsung to take market share away from Apple in the first quarter and put focus on its own flagships, as well as its latest range of devices in the A series.

Omdia said Apple was able to benefit from the delayed roll-out of the iPhone 12 range. After a blockbuster fourth quarter in 2020, the company followed up with what the analyst called significant year-on-year growth of 46%, shipping 56.4 million units in the quarter.

Omdia stressed that Apple continued to dominate the premium smartphone market, and this was borne out by the company’s second-quarter results. For the quarter ended 27 March, Apple posted revenue records in each of its geographic segments and strong double-digit growth in each of its product categories, driving the installed base of active devices to an all-time high.

Apple’s overall quarterly revenues were $89.6bn, up 54% year-on-year. International sales accounted for 67% of the quarter’s total revenue. Net income for the quarter was $23.63bn, more than double that of a year ago. Revenues broke down to $72.68bn of product sales and $16.9bn of services. These represented rises of a staggering 61.64% and 26.61% respectively, compared with the same period in 2020, and clearly show the effect of the launch of the iPhone 12 in autumn 2020. Indeed, Apple revealed that in the quarter it made $47.94bn in iPhone sales, compared with $28.96bn a year earlier.

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