Samsung is struggling to maintain the sort of market share it had experienced in the past, according to the latest data and findings from Gartner. In no uncertain terms, the research firm states “Samsung experienced its biggest decline since Gartner has been tracking smartphone sales globally” when referencing the third quarter of 2018. This decline resulted in the market share for Samsung dropping down to 18.9-percent compared to the 22.3-percent noted for the same quarter during the year before.
Gartner points to two different, albeit somewhat related reasons for the situation Samsung now finds itself in. The first is simply demand for its high-end smartphones is not what it once was, with the research firm directly drawing on the Galaxy S9, Galaxy S9+ and the Galaxy Note9 as prime examples of the sort of devices that would normally have helped to stabilize smartphone sales not living up to expectations this year. While this in theory might suggest buyers could be turning to the number of lower-priced smartphones also offered by Samsung, this is where the other main reason attributed to Samsung’s reduction in market share comes in – the continued rise of Chinese brands.
Huawei and Xiaomi continue to chip away at Samsung
In spite of the Samsung decline shown in these figures, the same data suggests Huawei and Xiaomi are managing to compound the issue for Samsung by slowly chipping away at the entry-level and mid-range markets that Samsung might otherwise rely on, in addition to branching out and establishing firm footholds in emerging markets. To the point where Huawei and Xiaomi have seen significant levels of growth during the third quarter of 2018, and not only picking up where Samsung has lost out, but also gaining beyond the percentage points dropped by Samsung. Gartner details that during the same quarter where Samsung saw its “biggest decline” Huawei managed to increase its market share from 9.5-percent (Q3, 2017) to 13.4-percent, and while not quite as impressive, Xiaomi saw its market share increase from 7-percent to 8.5-percent year-over-year.
Samsung’s not alone
What might be considered a softening of the blow represented in these numbers is that Samsung does not seem to be alone in seeing its market share affected as the data also showed Apple failed to ignite demand enough to generate any increase in market share. Which is even more revealing considering Apple was unable to do this during a period where Samsung has so visibly been affected – under normal circumstances it might be expected as one drops, the other picks up, although that does not seem to have been the case here. With Gartner attributing the same two primary reasons — premium saturation and increased competition — as to why Apple failed to capitalize on Samsung’s quarterly decline. This is where the similarities end, however, as when comparing the two major players, Apple did not see any decline either, let alone the level noted for Samsung with Apple’s market share flat year-over-year for the third quarter, holding at 11.8-percent.
Should Samsung be worried?
Well, yes in the sense that this latest report adds to what has become a continued problem for Samsung. One which the company does need to mitigate against to further stop, or at least slow the decline going forward. How Samsung goes about that is a different matter entirely. For example the report does pick up on two trending aspects that are going to be in play during 2019 and beyond, and that’s 5G and less-than-usual form factors – aka foldable phones. Both of which Samsung is currently investing in and expected to release smartphones reflecting these trending aspects. Although these are not necessarily going to bolster Samsung’s position and certainly not in the near-term as 5G phones are not really expected to be shipped in decent numbers until 2020, while atypical forms like foldable phones remain an unproven quantity at the moment. One which will likely at first receive little consumer purchase attention due to the high prices that will be attached to the first-generation devices.
On the other hand, Samsung itself is not feeling the impact probably as much as it might have if it was solely dependent on smartphone sales in the same way other brands in a similar situation might be. Samsung recently released its own results for the third quarter of 2018 and in spite of stagnating smartphone sales, the company posted impressive results overall, bolstered by the increase in demand for its memory products. So although there’s definitely a issue with smartphones sales for Samsung, the issue has yet to manifest itself as an actual financial concern for the company, and is unlikely to anytime soon. Not to mention, in spite of seeing the level of decline noted here, and this representing a continued quarter-over-quarter issue, Samsung still remains the number one vendor worldwide overall.
What’s bad for Samsung is no longer bad for the industry
From the wider and a more independent viewpoint, the failure of Samsung and Apple to increase their respective market shares are no longer aspects that seem to directly affect the market as a whole in the same way they would have before. Previously, it would have been largely unheard of for both brands to see a lack of market share increase at the same time, and in particular Samsung’s “biggest decline” without the overall market also seeing a similar big and substantial decline. But, that’s the difference in the new era of smartphone leadership as the likes of Huawei and Xiaomi not only increased their own market share by notable margins, but also helped to ensure the market as a whole continued to operate at a similar level. In fact, thanks to Huawei and Xiaomi, the market in the third quarter of 2018 was not adversely affected at all by Samsung and Apple, with the data here showing worldwide smartphone sales grew to 389 million units – representing a 1.8-percent increase compared to the same quarter in 2017. To put this further into perspective, Gartner’s Anshul Gupta stated that if Huawei and Xiaomi’s figures were removed from the list, it would have resulted in the market experiencing a 5.2-percent decline in smartphone sales.