Market analysts may differ on the exact growth of smartphone shipments in the third quarter of this year, but they unanimously agree that the market is recovering from its post-pandemic slump.
Global market research firm Canalys reported on Monday that worldwide smartphone shipments increased by 5% in Q3 compared to the same period last year, marking the fourth consecutive quarter of growth.
In contrast, IDC estimates a 4% increase for the same timeframe, indicating the fifth straight quarter of growth.
Canalys attributed this upward trend to rising demand in emerging economies, as well as the initial stages of a replacement cycle in North America, China, and Europe.
IDC highlighted that the boost in Q3 shipments was primarily driven by robust performance from Chinese manufacturers such as Vivo, Oppo, Xiaomi, Lenovo, and Huawei.
Strong Quarter for Apple
IDC Research Director Nabila Popal noted that Chinese smartphone manufacturers weren’t the only ones achieving significant growth this quarter. “While Chinese brands have consistently excelled in emerging markets this year, Apple also saw a 3.5% year-over-year increase in shipments, driven by strong demand for previous models and the launch of the new iPhone 16 lineup,” she stated.
“In Q3 2024, older iPhone models, particularly the iPhone 15, performed exceptionally well due to robust promotions and enhanced marketing surrounding Apple Intelligence,” she added.
“Despite the gradual rollout of Apple Intelligence in markets outside the U.S., Apple is poised for growth in the upcoming holiday season, as many customers are expected to upgrade from the iPhone 13, iPhone 12, and earlier models to a new AI-enabled smartphone, securing their purchases for the long term,” Popal predicted.
According to Canalys, Apple’s growth in Q3 brought it close to overtaking Samsung as the market leader.
“Apple achieved its highest third-quarter shipment volume to date and has never been closer to leading the global smartphone market in a Q3 than it is now,” said Canalys Analyst Runar Bjørhovde.
“The market’s shift toward premium devices, combined with an ongoing refresh cycle of devices purchased during the pandemic, is benefiting Apple, especially in its stronghold regions like North America and Europe,” he noted.
“While the initial reception of the iPhone 16 was modest,” he added, “it is expected to help Apple finish 2024 on a high note and maintain momentum into the first half of 2025, especially as Apple Intelligence expands into new markets and supports additional languages.”
Samsung Maintains Market Leadership
“Samsung has retained its market leadership despite a decline in total units shipped,” said Francisco Jeronimo, IDC Vice President for EMEA Client Devices.
“Nonetheless,” he added, “the company is increasing its share in the premium segment, driven by higher average prices resulting from a stronger mix of Galaxy AI-enabled models.”
He noted that Samsung has begun rolling out Galaxy AI features to other models and launched the new Galaxy Z Fold6 and Galaxy Z Flip6 foldables with integrated Galaxy AI, which enhanced its performance in the premium market.
“I believe the improvement in AI capabilities is making more mainstream smartphones more appealing, and there’s a growing demand for AI across the board,” said Anshel Sag, a senior analyst at Moor Insights & Strategy, a technology advisory firm based in Austin, Texas, in a conversation with TechNewsWorld.
Industry Faces Existential Crisis
Canalys Analyst Le Xuan Chiew highlighted that the competition among the top five vendors has intensified, narrowing the gap between them.
“Vendors are entering the holiday shopping season with solid momentum and cautious optimism, seeking to attract consumers who have delayed upgrading their devices in anticipation of deals during major events like 11.11 and Black Friday,” he stated.
According to IDC, Samsung shipped 57.8 million phones in Q3, capturing 18.3% of the market share, down from 59.5 million units and 19.6% market share in Q3 2023. In contrast, Apple shipped 56.0 million units during the same period, achieving a 17.7% share, compared to 54.1 million units and a 17.8% share in Q3 2023.
“Effective supply chain management, maintaining healthy inventory levels, and optimizing sales and marketing funds are becoming increasingly crucial for market leadership,” Jeronimo noted.
Bjørhovde told TechNewsWorld that the smartphone industry is in an existential crisis. “They need to find a way to stimulate demand,” he remarked.
“Right now, it’s all about generative AI,” he continued. “A significant part of the focus on AI stems from vendors seeking new monetization opportunities.”
“However, many consumers don’t fully grasp what these AI features entail,” he explained. “From an analyst’s perspective, there are many exciting developments on the horizon that could lead to innovative products and solutions in the next few years. But for consumers today, an AI feature often just feels like a fancy editing tool, lacking the capacity to significantly differentiate smartphones.”
Projected Continued Growth in 2025
Bjørhovde noted that the smartphone market has become a tactical landscape, focusing on attracting switchers and identifying upselling opportunities as users increasingly hold onto their devices longer. “The goal is to encourage upgrades, but the trend is moving in the opposite direction,” he explained.
“In the U.S., carrier discounts and subsidies are not as substantial as they used to be. As a result, many smartphone vendors are concentrating on add-on features, new revenue streams, and in some cases, shifting focus toward B2B opportunities,” he added.
He pointed out that the industry has transitioned from a period of revolution to one of evolution. “From 2007 to 2015, every release was highly anticipated and full of surprises. Now, that excitement has waned,” he observed.
However, the urge to upgrade remains strong at the lower end of the market. “Two or three years ago, a $150 phone typically came with a 12-megapixel camera and a battery that lasted half a day, maybe a full day. Now, you can find options with nearly 50-megapixel cameras and two to three days of battery life. The upgrades in the budget segment are quite dramatic right now,” he said.
Looking ahead to 2025, Sag predicted the market will grow in the low single digits, a normal trend for a mature market.
Bjørhovde also anticipates continued growth, stating, “We’re likely looking at a year and a half of growth. If Apple Intelligence starts to introduce new features that capture attention, it could encourage more people to consider upgrading at that time.”
