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China distorts smartphone market as sales slow

Smartphone sales have slowed, according to Gartner’s latest market share data

Worldwide sales of smartphones to end-users totalled 330 million units in the second quarter of 2015, an increase of 13.5% over the same period in 2014 but the slowest growth rate since 2013, according to analyst Gartner.

Gartner said Apple has been gaining on rival Samsung. Despite the launch of new S6 models, Samsung's premium phones continued to be challenged by Apple's large-screen iPhones.

Samsung’s market share declined by 4.3 percentage points in the second quarter of 2015 compared with 2Q14, while Apple recorded strong iPhone replacements in both emerging and mature markets, particularly in China.

Anshul Gupta, research director at Gartner, said: "China is the biggest country for smartphone sales, representing 30% of total sales of smartphones in the second quarter of 2015. Its poor performance negatively affected the performance of the mobile phone market in the second quarter."

Gupta said China represents a quarter of the global market, selling 440 million phones a year, of which over 400 million are smartphones, with an average selling price of $150.

Company

2Q15

Units

2Q15 Market share (%)

2Q14

Units

2Q14 Market share (%)

Samsung

72,072.5

21.9

76,129.2

26.2

Apple

48,085.5

14.6

35,345.3

12.2

Huawei

25,825.8

7.8

17,657.7

6.1

Lenovo*

16,405.9

5.0

19,081.2

6.6

Xiaomi

16,064.9

4.9

12,540.8

4.3

Others

151,221.7

45.9

129,630.2

44.6

Total

329,676.4

100.0

290,384.4

100.0

Source: Gartner (August 2015)

*The results for Lenovo include sales of mobile phones by Lenovo and Motorola both in 2Q15 and 2Q14.

In the smartphone operating system (OS) market, Android's global share was affected by China's weak performance in the second quarter of 2015 and the strong performance of Apple in China.

Gartner said Microsoft had continued to struggle to generate wider demand for Windows Phone devices.

"The low barrier to entry into the Android segment will continue to encourage an array of new players, adding to further disruptions coming from Chinese manufacturing and innovative internet players with new business models that are not reliant on hardware margins," said Gupta.

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While Windows Phone is a relatively cheap device, Gupta said Android phones are even cheaper and generally offer better features. The challenge for Microsoft is to get application developers to write mobile apps for Windows 10, he said.

Microsoft is expected to release a Windows Bridge for Android later this year, which will allow developers to move their apps to the Windows platform relatively easily. "With Windows 10, the majority of apps could be migrated, but the challenge is whether developers will see the benefit," said Gupta.

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Of course sales have slowed. Now that most buyers have a smartphone, the market is certain to shrink. There will always be early adopters who upgrade to the latest&greatest, but the vast majority of smartphone users will wait for significant upgrades and the Holy Grail of the next killer app. Until then, each iteration offers fewer reasons for yet another purchase.
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