China's Huawei pips US Apple for world phone market's 2nd spot

San Francisco/ New York: China-based Huawei outsold Apple's iPhones in the first quarter of this year, seizing the California company's second place spot in a tightening smartphone market dominated by Samsung, a tracker said Tuesday. A total of 310.8 million smartphones were shipped globally during the first three months of this year in a 6.6 percent decline from the same period in 2018, according to preliminary data from the Chinese-owned International Data Corporation.

It was the sixth consecutive quarter of decline for global smartphone shipments, the market tracker added. IDC saw the results as a sign that 2019 will be another down year overall for smartphone shipments, apart from strong growth by Huawei.

"It is becoming increasingly clear that Huawei is laser focused on growing its stature in the world of mobile devices, with smartphones being its lead horse," said IDC mobile device program director Ryan Reith. "The overall smartphone market continues to be challenged in almost all areas, yet Huawei was able to grow shipments by 50 per cent." South Korean consumer electronics behemoth Samsung saw smartphone shipments drop 8.1 percent to 71.9 million in the first quarter.

Huawei, meanwhile, weighed in with 50.3 percent growth to ship 59.1 million smartphones and put it within "striking distance" of Samsung, according to IDC. Apple had a challenging first quarter, with iPhone shipments dropping by a "staggering" 30.2 percent from a year earlier to 36.4 million units, IDC reported.

Price cuts in China along with favorable trade-in deals were not enough to coax people into upgrading to new iPhones, the market tracker said. Apple delivered stronger-than-expected financial results for the past quarter as gains in services helped offset slumping iPhone sales, sparking a rally in shares of the technology giant.

An overall slowdown in the high-end smartphone market has been seen as a symptom of people waiting longer to upgrade to new models and a lack of the kind of captivating innovation that inspires them to do just that. "Consumers continue to hold on to their phones longer than before as newer higher priced models offer little incentive to shell out top dollar to upgrade," said IDC research manager Anthony Scarsella.

"Moreover, the pending arrival of 5G handsets could have consumers waiting until both the networks and devices are ready for prime time in 2020."

Meanwhile, Describing India as a "challenging market in the short-term", Apple CEO Tim Cook said the company plans to make a foray into the Indian market with "all of our might" through its retail stores and manufacturing capability. Cook, during the fiscal year 2019 second quarter earnings conference call Tuesday, said that while India is a very important market in the long-term it is also a very challenging market in the short-term.

"I think India is a very important market in the long-term. It's a challenging market in the short-term. But we're learning a lot," he said.

"We have made some adjustments in India and we've seen preliminarily some better results there. Everything that we do, does advise everything we do in the future so we try to learn the best we can and fold that into our thinking. And we'll obviously do that with this as well," he said.

Last month, Apple dropped the selling price of iPhone XR by up to 22 per cent in the face of stiff competition in the premium smartphone segment in the India. Apple has started manufacturing in India which he said is very important to be able to serve the market in a "reasonable way."

"And we're growing that capability there," he said. He added that Apple would like to place retail stores in India and is working with the government to seek approval to do that. "And so, we plan on going in there with sort of all of our might," he said.

In 2016, Apple India had sought relaxation in the local sourcing norms to set up single brand retail stores in India. Talking about the Apple Accelerator in Bengaluru, Cook said the company is "very happy" with some of the things coming out of there.

"It's a long-term play. It's not something that's going to be on overnight huge business. But I think the growth potential is phenomenal," he said. Apple established the Design and Development Accelerator in Bengaluru, the home of India's startup scene, to support engineering talent and accelerate growth in India's iOS developer community.

With tens of thousands of developers in India making apps for iOS, the operating system for Apple products iPhone and iPad, Apple had said that the initiative would provide additional, specialised support for them. When asked about the Android operating system dominating the Indian market and Apple's comparatively less market share in the country, Cook said "it doesn't bother me that it's primarily Android business at the moment because that just means there's a lot of opportunity there."

According to an April press release by market research firm Counterpoint Research, the market share of Chinese brands in the Indian smartphone market reached a record 66 per cent during Q1 2019, and volumes for the Chinese brands grew 20 per cent year-on-year mainly due to the growth of Vivo, Realme, and OPPO.

India's smartphone market is dominated by phones that run on the Android operating system such as Xiaomi and Samsung. Apple announced the financial results for its

fiscal 2019 second quarter ended March 30, 2019. The company posted quarterly revenue

of $58 billion, a decline of

five per cent from the year-ago quarter. Profit dropped 16

per cent to $11.56 billion for

the three months through March 30.