"The first quarter of 2024 is the most competitive quarter [in China's smartphone market], with a gap of only 3 percentage points between the top six manufacturers in terms of market share. Mengmeng Zhang, senior analyst at market research firm Counterpoint Research, commented. Previously, the agency's report showed that China's smartphone sales in the first quarter of 2024 increased by 1.5% year-on-year and 4.6% quarter-on-quarter, marking the second consecutive quarter of positive year-on-year growth.
Huawei stood out among all mobile phone brands in the quarter, with a year-on-year increase of 69.7%, while Honor also posted double-digit growth. Vivo ranks first, followed by Honor and Apple. Apple's sales fell 19.1% year-on-year in the first quarter as Huawei's comeback changed the high-end market landscape.
A Huawei mobile phone store in Beijing.
A number of analysts interviewed by the Beijing News Shell Finance reporter said that the narrowing of the market share gap between manufacturers shows that the competition is more intense. The launch of Huawei's Pura70 series will continue to have a relatively large impact on Apple's mobile phone sales, and Huawei's share and sales in the entire mobile phone market will continue to increase. In addition, the application of generative AI in the field of mobile phones has also become a hot concept, but it still needs a lot of effort and improvement to hope that it will have more applications or capabilities in this field.
One of the most competitive quarters
According to Counterpoint, China's smartphone sales increased by 1.5% year-on-year in the first quarter of 2024, marking the second consecutive quarter of positive year-on-year growth. Ethan Qi, the agency's associate director of research, said the recovery momentum in China's smartphone market appears to be building. Promotions during the Chinese New Year period were the main factor driving the momentum of sales growth.
It is worth noting that the gap between the top six manufacturers by market share is only 3 percentage points. "The first quarter of 2024 was one of the most competitive. Mengmeng Zhang, a senior analyst at Counterpoint, commented that smartphone brand manufacturers have developed various marketing and promotional strategies in advance to compete fiercely during the holiday season. Especially during the Spring Festival holiday, driven by the demand for more affordable smartphones for returning workers, Chinese manufacturers seized the opportunity of the surge in sales in the low-end market with their rich cost-effective products. This further narrows the market share gap between the major players.
"The smaller market gap is mainly due to the smaller and smaller brand differences, product differences and channel differences between mobile phone manufacturers. Zhang Yi, CEO and chief analyst of iiMedia Consulting, told reporters that the degree of involution in China's smartphone market is becoming more and more obvious.
Lin Zhi, chief analyst of WitDisplay, said that after the return of Huawei's 5G mobile phones, China's smartphone market has been reshuffled, and different manufacturers have both offense and defense in order to reduce the impact of Huawei's return. He also believes that as Huawei's sales climb, the share of other mobile phone manufacturers will gradually decline. "Huawei is currently mainly focusing on the high-end market, which has the most obvious impact on Apple, and if it continues to explore, other mobile phone manufacturers will be under greater pressure. ”
Huawei's return affects Apple's market position
Talking about the performance of each brand, Ivan Lam, senior analyst at Counterpoint, said that vivo took the top spot this quarter with a 17.4% share of the strong sales of the Y35 Plus and Y36 in the low-end market and the S18 in the mid-range market. Honor is in second place with a 16.1% market share, and Apple is in third place with a 15.7% market share. "Huawei's strong comeback has a direct impact on Apple's position in the high-end market, and Apple's sales in the quarter were slightly weaker. Compared with previous years, Apple's replacement demand is also slightly weaker. ”
Brand share of China's smartphone market in Q1 2024. Source: Counterpoint Research
Huawei stood out among mobile phone brands in the first quarter, with a year-on-year increase of 69.7%. According to the report, much of Huawei's growth is due to the booming sales of its 5G-enabled Mate 60 series, coupled with its own household recognition, and its significant increase in market share in the premium segment above $600.
"The favor of Huawei's high-end machines is first affected by the development of domestic trendy products, and Chinese consumers are increasingly recognizing Huawei's technical capabilities. Secondly, Huawei's mobile phones themselves are becoming more and more innovative. Zhang Yi analyzed.
Liang Zhenpeng, a senior industrial economic observer, told reporters that the Huawei Pura70 series will make the decline in sales of Apple's mobile phones more obvious, and will also make Huawei's share and sales in the entire mobile phone market continue to increase.
Lin Zhi also analyzed that the Huawei Pura70 series is mainly aimed at fashion groups, and as it further acquires high-end users and young luxury groups, it will continue to affect Apple's market share, and it will also affect other high-end mobile phone manufacturers in China, "Xiaomi may be one of them, and at the same time, the high-end of OV (OPPO and vivo) will become more difficult." ”
Looking ahead, however, Ivan also sees the possibility of a recovery in iPhone sales. "We're seeing a slow but steady improvement in weekly volumes, so the momentum may be turning. For the second quarter, the iPhone may be introduced in a new colorway, which, along with aggressive sales plans, could bring the brand back to positive growth, and of course, we expect Apple to show off its progress on AI capabilities in June. All of these factors could change the situation in the long run. ”
AI applications may penetrate down into the mid-market
As artificial intelligence models become more and more popular, mobile phone manufacturers have added AI-related functions to their products. Counterpoint expects vendors to continue to explore new AI applications and penetrate these AI applications down the mid-market market.
How much uncertainty will the AI wave bring to the mobile phone market, and will it likely prompt a reshuffle of the industry pattern?
"It's hard to shuffle the market with AI alone. In Liang Zhenpeng's view, the smartphone market is a contest of comprehensive strength. Manufacturers compete in many aspects, including systems, applications, software, products, performance, style and quality. "The capabilities of smartphone manufacturers in the field of generative AI are mainly at the software application level. ”
Lin Zhi believes that the current AI experience is not so ideal, and the impact of AI mobile phones on the market may need to wait for Apple to upgrade new AI functions in the second half of the year. "The AI experience will once again reshuffle the smartphone market, and even some new players will emerge. ”
Zhang Yi concluded that generative AI is a good concept for the mobile phone market this year, but it still needs to be more efforts and improvements to hope that AI will have more applications or capabilities in mobile phones. Of course, it may also become a key killer feature in the next one or two years, which is worth investing and developing by various manufacturers. ”
Beijing News Shell Financial Reporter Sun Wenxuan
Edited by Huang Xinyu
Proofreading by Yang Xuli