Analyzing the world's 14 biggest handset makers in Q3 2013

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The numbers are in, and it's time to make sense of the data. ABI Research's Michael Morgan checks out the world's 14 largest branded cell phone makers in the third quarter of 2013, providing sales data as well as insight into their strategy and competitive position in the market.

Though most research firms only list the market's top five handset makers, ABI lists a full top 14 (and the firm is providing shipment numbers for all of the vendors listed).

A few notes: ABI's numbers represent "sell in," or phone shipments into the retail channel, rather than "sell out," or sales to consumers. Further, ABI's ranking only counts phones that carry the manufacturer's brand. Therefore, phones that bandy a carrier's logo without a hint of which company actually built the device are not counted.

And see ABI's first quarter 2009 rankingssecond quarter 2009 rankings , third quarter 2009 rankingsfourth quarter 2009 rankingssecond quarter 2010 rankingsthird quarter 2010 rankingsfourth quarter 2010 rankingsfirst quarter 2011 rankingssecond quarter 2011 rankingsfourth quarter 2011 rankingsfirst quarter 2012 rankingssecond quarter 2012 rankingsthird quarter 2012 rankingsfourth quarter 2012 rankings, first quarter 2013 rankings and second quarter 2013 rankings.

(And click here for a look at the third-quarter earnings season, and here for a list of the top U.S. wireless carriers in the third quarter.)

Third quarter 2013 market share by OEM

OEM shipments from first quarter 2010 to the third quarter 2013

Overall smartphone shipments vs. non smartphones

Third quarter OEM shipments by handset type

Analysis from ABI's Michael Morgan

Vendor
Q3 2013 shipments (in millions)
Analysis
1. Samsung  116.3  
On paper, Samsung's Q3 performance continued to set records in terms of shipments, revenues and profits. However, Samsung's shipment growth underperformed against sequential market growth. While the Galaxy S III continued to enjoy strong shipments numbers, Samsung's current flagship device the S4 is showing signs of slowed growth. ABI Research believes that the launch of the iPhone 5s put a damper on demand for Samsung's key bread winner, and the effects will likely worsen in Q4. No longer a "fast follower," Samsung's true innovation and market leadership capabilities will be thoroughly tested in the coming quarters.
2. Nokia  64.6 In Q2, Nokia completed its smartphone portfolio switch to Window Phone. In Q3, Nokia agreed to have its handset business become a part of Microsoft. Selling 8.8 Lumia smartphones in Q3, Nokia pushed the Windows Phone operating system past BlackBerry and into the No. 3 ecosystem position.  As part of the Microsoft mother ship, ABI Research believes that Nokia will be better able to drive improvements and integration of the Windows Phone platform for itself. However, the new Microsoft-Nokia mashup will likely further alienate other handset OEMs from the Windows Phone ecosystem. 
3. Apple  33.8 Apple's launch of the iPhone 5s and the 5c generated an additional 9 million shipments in Q3 with only nine markets participating. As the new iPhone reaches another 90 countries in Q4, ABI Research believes that Apple will have a record Q4 with 52 million shipments. Unfortunately, the 5c was not the expected low-cost smartphone offering and is nothing more than a plastic wrapped place holder for the discontinued iPhone 5. While iPhone demand and satisfaction remains strong, the 5c shipments did not resonate with Apple's fan base, which prefers premium products over a $100 discount. With no solution for the low-cost market, ABI Research forecasts that Apple's 2013 shipment growth will decline to 15%, which is down from 46% in 2012 and 96% in 2011.
 
4. LG  18.3 While LG retained its position as the No. 4 handset OEM in terms of shipments, its position in smartphone shipments dropped from third to fifth place, as Huawei and Lenovo moved into  the No. 3 and No. 4 spots, respectively, in Q3. LG smartphone shipment growth was sequentially flat, and the added costs of marketing the LG G2 pushed the handset division to its first quarterly loss since Q3 2012. While teetering on the edge of profitability for the past two years LG's smartphones have found a niche of price-sensitive consumers looking for alternatives to Samsung's pricier offerings. ABI Research believes that LG's smartphone positioning is what Apple is trying to address with its iPhone 5c.
5. Huawei  15.3 Driven by a successful launch of its new flagship device the Ascend P6 (the worlds thinnest smartphone) and the mid-tier G610, Huawei moved to the third spot in terms of Q3 smartphone shipments. While Huawei continues to have strong success in its home market of China, ABI Research believes that Huawei's higher-caliber P6 device will help it capture a greater international presence. Huawei has become one of the fastest growing smartphone OEMs in the U.S. market by addressing the need for low cost smartphones for the pre-paid consumer. However, ABI Research does have some concerns over Huawei's ability to retain its relationships with major U.S. carriers as it exits the U.S. network infrastructure market.
6. ZTE  14.4 ZTE shipments continued to decline in Q3 despite the launch of innovative higher-end smartphones such as the Geek and Grand X2 featuring Intel based processors. The company's overall profitability has suffered over the last three quarters due to unprofitable network equipment contracts. Furthermore, ZTE's push into Western Europe has yet to bear fruit against other mid-tier smartphones. ZTE's  U.S. business may be experiencing some collateral damage as Huawei plans to exit the network equipment business due to security concerns expressed by the U.S. government. ABI Research believes that ZTE must not lose its focus on improving handset quality as other parts of its business face profitability concerns.
7. TCL (Alcatel)  13.9 TCL continued to rise in Q3, outpacing all other OEMs except Huawei. Rising from obscurity, TCL broke from a purely feature phone based business to smartphones by producing Vodafone-branded entry-level smartphones. Taking the Vodafone ODM business from Huawei, TCL is now Vodafone's largest ODM supplier and is now planning to work on its brand recognition by releasing smartphones beyond the Vodafone channels and offering higher-end devices. TCL is already developing an octa-core device to follow up on the success of its Idol X smartphone at a price point of $350. ABI Research believes that TCL will continue to succeed with its formula of higher specs, and lower price points in emerging markets, but remains uncertain of its ability to completely divulge itself of its ODM roots in the near to midterm.
8. Lenovo   12.6 Leveraging a broad portfolio of smartphone models and distribution relationships from it PC business, Lenovo continues to succeed in China with marketshare second only to Samsung. Lenovo does have its sights set on the U.S. market in the near future but for now Lenovo is trying to learn how to succeed in emerging markets like Russia which only account for 3% of Lenovo shipments. To date, Lenovo is the only PC company that has demonstrated any lasting success in the smartphone market, which will be increasingly important as the general PC market continues to dwindle.
9. Coolpad (Yulong)   10.5 Yulong, a subsidiary of China Wireless Technologies, has been riding the surge of 3G Android smartphone growth in China with Coolpad branded smartphones. Fulfilling China's hunger for low cost smartphones has helped this company become one of the top OEMs in China and has also delivered 900,000 Quattro LTE devices on MetroPCS in the U.S. at an attractive $150 price point. Coolpad is also expected to see some significant traction making co-branded Spice-Coolpad smartphones for the Indian market. ABI Research believes that while Coolpad has a lot of potential, funding international growth will be difficult with margins in the 2% range.
10. Sony Mobile   9.9 Sony's Q3 was uneventful with shipment growth underperforming against the total market. Despite releasing a massive 6.4 inch, waterproof smartphone, the Xperia Z Ultra, Sony reported a loss for Q3. ABI Research believes that Sony needs to find a meaningful way to leverage its successful PlayStation 4 gaming console launch into a smartphone opportunity.
11. HTC   4.9 Plagued with supply constraints, executive departures and decreased shipments, HTC posted its first-ever operating loss. As a standalone handset business with no other business units to cushion the financial loss, HTC has now crossed a line that only 10% of handset OEMs ever recover from. As stated in previous editions, once a handset OEM becomes unprofitable, there is 90% chance that it will go out of business in 24 months. ABI Research believes that HTC's response to the loss with cost cutting will only hasten HTCs downward spiral.
12. Xiaomi   4.9 Xiaomi is a Chinese OEM that began selling low-cost smartphones at the end of 2011. The OEM has a unique sales strategy whereby 80% of its devices are sold through its online channels saving money on retail locations. The Mi 2 handet sold over 7 million units in the first half of 2013, making it the best-selling handset model in China, beating out the Samsung S4 and the iPhone. The Mi 2S follow up device launched in April already has 7.5 million orders waiting to be fulfilled! Q3 continued to be a rousing success for Xiaomi's flash mob style of selling device batches of 150,000 in 10 minutes, while building an Apple-esque base of Xiaomi fan boys. Recently, Xiaomi has increased its 2013 guidance to 20 million handsets up from 15 million based on the success of its latest device the Mi3.
13. Motorola   4.1 The launch of the Moto X and Google's reported $500 million in advertising spend to support the launch has reportedly netted only 500,000 shipments of the flagship device in Q3. At $1,000 of marketing spend per device shipment, ABI Research believes that Motorola would have been better off giving away 1 million free devices and left the marketing to word of mouth. In response to the disappointing sales, Motorola will be releasing a lower priced Moto G that will likely help alleviate to slow adoption of Motorola's new devices.
14. Blackberry   3.7 With a channel stuffed full of BlackBerry Z10 devices that required a $934 million inventory charge, BlackBerry reported shipments of 3.7 million devices. Without sufficient confidence of sell-through, BlackBerry has changed its reporting from shipments to revenue recognized shipments. Early reports on Q4 sell through appear to be even worse than Q3. ABI Research believes that Q3 will be the last quarter that BlackBerry appears in the top 14 handset OEMs. 

 

The raw data

 

2013 Q3 Handset Shipment Market Share by OEM
Samsung 26.4%
Nokia 14.7%
Apple 7.7%
LG 4.2%
ZTE 3.3%
Huawei 3.5%
TCL (Alcatel) 3.2%
Lenovo 2.9%
CoolPad (Yuloong) 2.4%
Sony Mobile 2.3%
Blackberry 0.8%
HTC 1.1%
Xiaomi 1.1%
Motorola 0.9%
Other 25.6%

 

 

Vendor 1Q 2010 2Q 2010 3Q 2010 4Q 2010 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 2012 1Q 2013 2Q 2013 3Q 2013
Nokia 107.8 111.1 110.4 123.7 453.0 108.5  88.5 106.5 113.5 417.0  82.7  83.7  82.9  86.3 335.6  61.9  61.1  64.6
Samsung  64.3  63.8  71.4  80.7 280.2  70.0  74.0  85.0  93.5 322.5  93.8  94.2 102.6 106.5 397.1 112.8 114.0 116.3
LG  27.1  30.6  28.4  30.6 116.7  24.5  24.8  21.1  20.0  90.4  13.7  13.1  14.4  15.4  56.6  16.2  16.2  18.3
Sony Mobile  10.5  11.0  10.4  11.2  43.1   8.1   7.6   9.5   9.0  34.2   7.3   7.4   8.8   8.7  32.2   8.1   9.6   9.9
Motorola   8.5   8.3   9.1  11.3  37.2   9.0  10.6  12.9  10.3  42.8   8.8   8.1   7.3   5.3  29.5   3.9   3.5   4.1
BlackBerry  10.5  11.2  12.1  14.2  48.0  14.9  13.2  11.8  14.1  54.0  11.1   7.8   7.4   6.9  33.2   6.0   6.8   3.7
Apple   8.8   8.4  14.1  16.2  47.5  18.7  20.3  17.1  37.0  93.1  35.1  26.0  26.9  47.8 135.8  37.4  31.2  33.8
HTC   3.3   5.4   6.8   9.1  24.6   9.7  12.1  13.2  10.1  45.1   6.7   8.3   7.1   6.1  28.2   4.5   6.6   4.9
Huawei   6.1   6.7   6.9   7.7  27.4   9.1  11.9  14.2  16.3  51.6  10.5  10.8  12.1  15.0  48.4  14.2  12.9  15.3
ZTE   8.0   9.9   8.6   9.6  36.1  15.2  19.6  18.9  20.0  73.6  18.9  19.7  17.6  20.8  77.0  16.9  15.1  14.4
TCL (Alcatel Mobile Phones)   2.9   7.6   9.0  12.5  32.0   7.7   8.9   9.4   8.1  34.0   7.8  10.8  10.5  13.4  42.5   8.5  12.1  13.9
Lenovo             0.8   0.9   0.9   1.1   3.6   2.3   6.8   6.9   9.5  25.5   7.6  11.3  12.6
CoolPad (Yulong)                    12.0   2.9   3.2   6.1   7.8  20.0   9.3  10.3  10.5
Xiaomi                   0.2   0.2   1.3   1.6   2.1   2.2   7.2   3.2   3.8   4.9