Many industry commentators thought that Samsung would be the main beneficiary of the decline of Huawei. But it is another Chinese company — Xiaomi — which is taking its share.
Xiaomi has pushed out Apple from the second-place slot as a smartphone maker, and in the last quarter it made a lot of progress in catching up on Samsung for the top slot.
Xiaomi’s success only goes to underline the degree to which the Chinese have come to dominate the Android industry.
At a holding company level, at which the business is rarely viewed in the press, the BBK group, which encompasses the brands OPPO, vivo, OnePlus and realme, is since the end of last year the biggest global maker of smartphones. It accounted for 31.1% of the Android market in unit terms in Q2 this year according to IDC's Worldwide Quarterly Mobile Tracker.
After Samsung, Xiaomi comes next, then Apple. Another Chinese multi-brand group, Transsion, less well known than BBK, comes fourth.
Made up fast for the fall of Huawei
Taken together, the Chinese big three accounted for 58.1% percent of Android shipments globally in the second quarter.
A year ago these three firms had 40.4% of the worldwide Android market, so 17.7% less than in Q2 this year. In the meantime, Huawei and Honor have dropped from 23.3% to 5.9%, a loss of 17.4%.
So the current top three makers in China have gained more share over the last year than Huawei and Honor have lost.
The rapid ascendancy of the Chinese companies is not much of a surprise at a manufacturing level, as all their main rivals make a lot of their phones in China too.
It is more of a surprise at a brand level. While being the workshop of the world, China has few global consumer brands.
In the phone business, some Chinese players have expanded by buying up foreign names, with TCL holding the Alcatel phone brand, and Lenovo that of Motorola.
Homegrown brands are the key ones
Going international with a homegrown brand is more difficult, but these brands have been the more successful. The BBK brands and Xiaomi dominate the Indian market and many others around Southeast Asia. Transsion has established itself across Africa, a complex operation, and mastered local markets and outplayed the competition.
In many ways this phenomenon is far more impressive than the achievements of Huawei in the phone business before it was laid low by American sanctions. Huawei already had lots of international experience from its years in selling telco gear, and offices in many countries.
The smartphone business has seen such rapid ups and downs in its short life that big changes are not surprising.
Nokia's reign as a company from a small northern country dominating a major global consumer industry always looked improbable in any long-term perspective, and it came and went.
The hold of a rather larger country, South Korea, one with a major industrial base, but nevertheless still not so big, looks unsteady. LG is out of the game, and Samsung is struggling to hold its own.
China has so many advantages, in its huge home market and lead in deployment of 5G, that there has been an inevitability that it would take over – a sort of Manifest Destiny. And with that goes the likelihood that it will stay in that position for the foreseeable future.
Strength and vulnerability
If the speed of recent changes show Chinese strength, the last couple of years have also shown Chinese vulnerability. When the U.S. was originally deciding to target Huawei, it was not focused on security risks from its smartphones, just its 5G network gear. The phone side of the business just became an easier target than the 5G infrastructure, which the U.S. wanted to constrain.
Huawei's telco gear business is still doing pretty well. It still makes 5G network equipment, and many countries still want to buy it.
But the bans on carrying Google Mobile Services and then on using American 5G chips, have laid low Huawei's phone production.
The other Chinese players know that could happen to them too, and that their success is very fragile. China is no doubt doubling down on its attempts to make itself independent in chips to solve this issue. But it won't be solved for a number of years.
The parable of the mall and the market
The Chinese success in the phone business is also rather hollow because it is all done in the shadow of Apple. To highlight why, here is a detour to the Chinese clothes business.
This comparison comes from Shanghai but no doubt is repeated in many bigger cities across modern China. Visit one of the swish marble-clad malls in upmarket Pudong across the river from the Bund, and it will be filled with Western-brand name boutiques, most of which are selling products made in China.
Here the Chinese do most of the work but most of the profits from the high prices go abroad.
On the other side of the Huangpu river in the older parts of town, there are more traditional markets, selling conventional Chinese clothes at cheap prices, way better value for money.
Shanghai's golden youth and moneyed classes obviously have a taste for the products in the malls. Apple is the upmarket mall, and the local Android companies are the ones supplying the traditional markets.
Apple is gaining in value terms even in China
In Q2 the top Chinese three players listed above made less money than Apple — on smartphone sales more than three times as high.
And in financial terms Apple is gaining on the Chinese — a year ago Apple made a quarter of the value of smartphone sales outside the U.S., now it is closing on a third.
Even in China Apple is doing well, and has close to doubled its value share in the last two years.
Meanwhile the Android market worldwide is coalescing around value-for-money phones in which consumers expect more features for the price.
Simon Baker is program director for mobile phones and consumer devices at IDC EMEA and a coordinator of IDC global forecasting for the 5G smartphone market. He is a long-time analyst in the mobile phone arena. Please contact him at [email protected]
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.