Losses for Apple, Samsung Are Huawei's Gain

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Smartphones are having a rough year: Q1 was "the first time ever in history the global smartphone market ..shrunk on an annualized basis," according to Strategy Analytics.

IDC echoed that concern, reporting that 334.9 million handsets shipped worldwide in the first quarter of 2016, marking the smallest year-over-year growth on record (334.3 million shipped in Q1 2015). The firm pointed to "strong smartphone saturation in developed markets, as well as a year-over-year decline from both Apple and Samsung" as the reason for the drop.

Samsung, despite a 4 percent annual dip, maintained first place with 24 percent global smartphone market share, according to Strategy Analytics Executive Director Neil Mawston. The Korean company shipped 79 million handsets worldwide in Q1 2016, while Apple followed with a "disappointing" 51.2 million, dropping Cupertino's market share from 18 to 15 percent.

"Apple is facing iPhone fatigue and pressure is mounting for Apple to innovate a new wow design beyond its standard rectangle form factor," Mawston said.

Huawei retained its third place position with 8 percent of the market, up from 5 percent a year ago. The China-based manufacturer saw impressive 64 percent growth annually, shipping 28.3 million smartphones worldwide in the latest quarter.

"Huawei is closing the gap on Apple, but Huawei itself is now being chased hard by ambitious rivals like Oppo and Vivo," said Woody Oh, director of Strategy Analytics.

IDC concurred, suggesting Huawei, Oppo (18.5 million shipments), and Vivo (14.3 million shipments)—which pushed out previous players Lenovo and Xiaomi—will end 2016 victorious.

But, as IDC's Anthony Scarsella points out, these brands are virtually unknown outside of China, and will need to break into the US and Western European markets to compete with the likes of Apple and Samsung.

"While Huawei is furthest along in terms of international recognition, selling equally impressive volumes outside of China remains a challenge for many of these brands, whether it is Xiaomi, Lenovo, OPPO, or Vivo," Scarsella said. "Their ability to drive local growth no longer applies when it comes to international expansion, where premium branding quickly turns to price competition."

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