Worldwide smartphone market slides 1.8% in Q3, CCS Insight says

Smartphone girl

The worldwide mobile phone market declined 1.8% last quarter from the previous year, according to fresh data from CCS Insight, as increased shipments of smartphones couldn’t offset plummeting demand for feature phones.

Vendors shipped 481 million phones during the quarter, CCS estimated. Smartphone shipments grew by 5.1% to 5.2 million units, but shipments of non-smartphones plunged 17%.

“The fall was attributed to weakness in developed markets where consumers are becoming less excited about the latest crop of smartphones,” CCS observed. “It was exacerbated by difficult market conditions in many emerging regions, especially Latin America. Demand in China, however, appears to be recovering from a very weak 2015.”

Growth in smartphone shipments picked up considerably in the third quarter, according to CCS, as the ongoing worldwide transition from feature phones to smartphones regained steam.

Interestingly, CCS reported Samsung’s Galaxy Note 7 debacle “didn’t dramatically affect total shipments” from the South Korean electronics giant. Samsung maintained its position as the world’s largest smartphone vendor with a 22% share of the worldwide market, even as it saw a 10% year-over-year drop in smartphone shipments as it continued to retreat from unprofitable low-end segments in some markets.

“The end of Samsung's third quarter was marked by difficulties with the Note7 phone,” CCS wrote. “It's important to note that the incident didn't dramatically affect total shipments. Samsung only sold about 2.5 million Note7 devices (3 percent of total smartphone shipments in 3Q16), before it decided to cancel the product and recall all sold units. Some commentators appear to have jumped to wrong conclusions about the impact of the Note7 on shipments. The real pain came from the cost of the phone's withdrawal and cancellation, which resulted in a complete wipeout of the operating profit for Samsung’s mobile business.”

Shipments of Apple’s iPhone fell for a third consecutive quarter, CCS said, due primarily to weak demand in China and the U.S. The release of the iPhone 7 and 7 Plus late in the quarter provided a boost, though, and CCS said it expects Apple will see modest year-over-year growth in the fourth quarter as existing iPhone owners replace their older models.

Apple claimed 13% of the worldwide phone market in the third quarter, and China’s Huawei was the third-largest vendor with a share of roughly 10% as shipments grew 23% year over year. Fellow Chinese vendors Oppo and Vivo also saw their sales and market share increase in the quarter.

While Samsung may have minimized damage from the Note 7 debacle during the third quarter, the company is surely continuing to suffer the fallout during the crucial fourth quarter. Samsung didn’t halt shipments of the Note 7 until Sept. 1, so perhaps it isn’t surprising that the device's demise wasn’t disastrous during the period. Exactly how costly the botched device will be to Samsung during the holiday season has yet to be determined.