Samsung Loses More Ground In Q3 As Locals Shine In China, India

Samsung Electronics Co. Ltd., the world’s top smartphone seller by shipments, lost more ground to competitors in the September quarter as Xiaomi Inc. expanded its lead in China and Micromax Informatics Ltd. narrowed the gap in India.

Meanwhile, Apple Inc. continued its strong performance thanks to growing demand for its iPhone 6 models, and while Samsung still sold one in four smartphones worldwide, together the two giants only managed to corner 38 percent of the global smartphone market. A year ago, in comparison, the two companies owned almost half of worldwide volumes, analyst firm Canalys said in a report Tuesday.

“The global market is becoming more competitive, with vendors beyond Samsung and Apple enjoying growing success,” said Chris Jones, Canalys' vice president and principal analyst. “This trend is likely to continue,” especially as Chinese vendors continue to offer high quality at lower prices, he said.

Global smartphone shipments rose to cross 300 million handsets in the three months ended September for the first time in a quarter, and local players in China and India continued their strong play, data from Canalys showed.

Six of the top 10 global smartphone sellers in the September quarter were Chinese and three of the top five in India were local players. In India, once Samsung's stomping ground, Micromax Informatics, Lava International Ltd. and Karbonn Mobiles, have all seen sales rise. Micromax continued to close the gap with Samsung, Canalys’s data showed.

But, Samsung remained the market leader in India for smartphone shipments with about 4.2 million units, with Micromax close on its heels with about 4 million smartphones shipped, based on a chart published by Canalys.

Worldwide, the smartphone market rose 23 percent in the September quarter versus the same period a year ago. Samsung retained a fourth of the global smartphone market, but is down from its high of 34 percent in the third quarter of 2013. This reflects “another tough quarter for the vendor as it struggles with channel inventory issues and growing competition,” Jones said.

“Despite improving its share in China over the previous quarter, it fell further behind Xiaomi, and lost share in key markets such as the United States and India,” according to the research firm.

Apple boosted its share to 13 percent globally, on iPhone 6 sales, followed by Xiaomi at 6 percent, and Lenovo Group Ltd. and Huawei Technology Co. Ltd. tied for fourth spot with 5 percent each, before Lenovo’s purchase of Motorola Mobility Holdings Inc., which concluded in the current quarter.

“It has been yet another stellar quarter for Xiaomi, which has extended its lead in China since last quarter,” Jones said. The company has achieved volume growth, albeit a modest one, in markets beyond mainland China, such as Taiwan, Singapore, Malaysia, and most significantly, India, he said.

According to research firm IDC, Samsung remained the clear leader in the worldwide smartphone market, but it was “the only company among the top five to see its shipment volume decline year over year,” according to an Oct. 29 note. Samsung is seeing “continued competitive pressure from nearly every side,” IDC said.

Lenovo's U.S. Advantage

Lenovo’s Motorola deal gives it a strong advantage in the U.S. over Xiaomi, Jones said. The combined Lenovo-Motorola share is about 8 percent of the global market and “Lenovo has gained a U.S. presence and brand, carrier relationships, and crucial patent cover to enable global expansion,” according to the analyst.

If Lenovo can consolidate and grow from its current position, Lenovo, with Motorola, is well placed to mount a real challenge to Apple as the worldwide number two vendor next year, he said.

On the other hand, China accounts for the vast majority of Xiaomi’s shipments, and is expected to do so for the foreseeable future. Further, with only a fraction of a percentage point behind it, Xiaomi will face increasing competition from Huawei, which is also a “vendor with global aspirations and real growth potential as its brand awareness improves,” he said.

Regional Shipments

Mainland China accounted for 34 percent of Q3 smartphone shipments, with the U.S. at 13 percent and India at 6 percent. Smartphone sales in India rose 84 percent in the September quarter from a year ago and by 29 percent over the previous quarter, according to Canalys.

“A key similarity to the Chinese market has emerged in India with respect to the substantial contribution made by domestic vendors,” said Canalys analyst Rushabh Doshi. Micromax, Lava and Karbonn have the “aspirations and potential, in time, to be disruptive on the global stage,” Doshi said. “Samsung has faltered,” with its share down 6 percent from the three months ended June 30, he said, as local players competed on price aggressively.

Google Inc.’s Android One partnership with local companies to sell smartphones in the price range of $100 while keeping a tight rein on features and software updates will also add further pressure at the low end of the price spectrum, he said.