US$500-599 Still the Least-Crowded Smartphone Price Tier for Revenue Opportunities in Q1 2020

While the global COVID-19 outbreak was already a reality in the first quarter of 2020, the bigger economic impact was felt in Q2’20. smartphone price

Even so, smartphone shipments fell by 17% year-on-year and 27% quarter-on-quarter in Q1’20, with major vendors such as Samsung suffering nearly a 20% decline in shipments YoY.

In revenue terms, the decline was much smaller, just 12%, helped by an increase in ASP driven by Samsung’s strong 5G portfolio. Apple’s shipments declined by just 9% and revenues by 7% YoY, being the least impacted major global vendor. Xiaomi, on the other hand, barely felt any impact at all in terms of shipments or revenue, its geographical footprint being more focused than that of either Samsung or Apple.

In terms of top revenue-generating models, Apple was still firmly at the top, taking 7 out of the top-10 ranks in Q1’20. The iPhone 11 series was naturally at the top, but older models such as the XR and Xs Max continued to capture substantial revenue as well. In fact, even the iPhone 8 was still in the top-10, a remarkable feat for a device that was launched in 2017. Samsung’s S20 series, particularly the 5G variants of S20+ and S20 Ultra, helped maintain Samsung’s position in the top-10 revenue-generating models. The mid-range A51, although much lower priced, was also on the list.

According to recent research published by Strategy Analytics’ Smartphone Model Tracker (SMT) service, as for the ratio of revenue generated to the number of models in any given price tier, the ultra high end of US$600+ (wholesale) is the clear winner, no surprises there.  That’s the domain of Apple’s and Samsung’s latest flagships. But excluding that challenging price tier, it’s the US$500-599, and more recently, the US$400-499 price tiers where the ratio of revenue to models is the most favorable. While the US$400-499 price tier is slightly more crowded in terms of models on the market, the recently increased share of revenue captured by those models makes the price tier attractive, indeed almost as attractive as the US$500-599 price tier. These two price tiers offer the best revenue opportunities for smartphone vendors that are not quite capable of taking on Apple’s or Samsung’s flagship models in direct competition. smartphone price

As Counterpoint reserch reports earlier, within regions, Apple and Samsung remained in the top 2 spots in all the regions except China, where Huawei was the market leader in the premium segment. Notably, over 90% of Huawei’s premium segment sell-through in Q1 2020 were in China. Driven by the popularity of OnePlus 7 series, OnePlus also featured in top 5 players in the premium segment in all the regions except LATAM and China.

Exhibit 1: Premium segment market share (sell-through) by OEMs and Regional Rankings, Q1 2020

Within Models, iPhone 11 continued to do well and was the highest-selling model in the premium segment for 2020 Q1. Top four out of five highest selling models in the premium segment were from Apple. This was also the first time that a 5G device entered the top 5 bestselling models in the segment.

5G devices cornered one-fifth of the total premium segment during the quarter. Huawei with its strong push in China captured close to 42% of the total 5G device sell-through in the premium segment. The 5G portfolio is also trickling down the price bands, which is helping to drive growth.  39% of all 5G device sales are now in 400 to 600 USD price band, up from 35% in the previous quarter. Within the regions, 63% of all 5G devices in the premium segment were in China.

Exhibit 2: Premium segment share by wholesale price (US$) tiers and YoY Growth, Q1 2020

Exhibit 3: Premium segment share by wholesale price (US$) tiers and YoY Growth, Q1 2020

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