Gartner Says Five of Top 10 Worldwide Mobile Phone Vendors Increased Sales in Second Quarter of 2016
Global Sales of Smartphones Grew 4.3 Percent Year on Year
Apple Had Three Consecutive Quarters of Slowing Demand as Sales Declined 7.7 Percent
Global sales of smartphones to end users totaled 344 million units in the second quarter of 2016, a 4.3 percent increase over the same period in 2015, according to Gartner, Inc. Overall sales of mobile phones contracted by 0.5 percent with only five vendors from the top 10 showing growth. Among them were four Chinese manufacturers (Huawei, Oppo, Xiaomi and BBK Communication Equipment) and South Korea’s Samsung.
“Demand for premium smartphones slowed in the second quarter of 2016 as consumers wait for new hardware launches in the second half of the year,” said Anshul Gupta, research director at Gartner. In addition, the decline in sales of “feature phones” (down 14 per cent) bolstered the decline in overall sales of mobile phones in the second quarter of 2016 (see Table 1).
All mature markets except Japan saw slowing demand for smartphones leading to a decline in sales of 4.9 percent. In contrast, all emerging regions except Latin America saw growth, which led to smartphone sales growing by 9.9 percent.
Table 1
Worldwide Smartphone Sales to End Users by Vendor in 2Q16 (Thousands of Units)
Company |
2Q16 Units |
2Q16 Market Share (%) |
2Q15 Units |
2Q15 Market Share (%) |
Samsung |
76,743.5 |
22.3 |
72,072.5 |
21.8 |
Apple |
44,395.0 |
12.9 |
48,085.5 |
14.6 |
Huawei |
30,670.7 |
8.9 |
26,454.4 |
8.0 |
Oppo |
18,489.6 |
5.4 |
8,073.8 |
2.4 |
Xiaomi |
15,530.7 |
4.5 |
15,464.5 |
4.7 |
Others |
158,530.3 |
46.0 |
160,162.1 |
48.5 |
Total |
344,359.7 |
100.0 |
330,312.9 |
100.0 |
Source: Gartner (August 2016)
In the second quarter of 2016, Samsung had nearly 10 percent more market share than Apple. Samsung saw sales of its Galaxy A and Galaxy J series smartphones compete strongly with Chinese manufacturers. Its new smartphone portfolio also helped Samsung win back share it recently lost in emerging markets.
Apple continued its downward trend with a decline of 7.7 percent in the second quarter of 2016. Apple sales declined in North America (its biggest market) as well as in Western Europe. However, it witnessed its worst sales decline in Greater China and mature Asia/Pacific regions, where sales declined 26 percent. Apple had its best performance in Eurasia, Sub-Saharan Africa and Eastern Europe regions in the second quarter of 2016, where iPhone sales grew more than 95 percent year on year.
Among the top five smartphone vendors, Oppo exhibited the highest growth in the second quarter of 2016 at 129 percent. This is due to strong sales of its R9 handset in China and overseas.
“Features such as an anti-shake camera optimized for selfies, and rapid charge technology, helped Oppo carve a niche market for itself and boost sales in a highly competitive and commoditized smartphone market,” said Mr. Gupta.
In terms of the smartphone operating system (OS) market, Android regained share over iOSto achieve an 86 percent share (see Table 2) in the second quarter of 2016. Android’s performance continued to come from demand for mid- to lower-end smartphones from emerging markets, but also from premium smartphones, which recorded a 6.5 percent increase in the second quarter of 2016.
A number of key Android players, such as Samsung with the Galaxy S7, introduced their new high-end devices, but Chinese brands like Huawei and Oppo are also pushing their premium smartphone ranges with more affordable devices.
“Google is evolving the Android platform fast, which allows Android players to remain at the cutting edge of smartphone technology,” said Roberta Cozza, research director at Gartner. “Facing a highly commoditized smartphone market, Google’s focus is to further expand and diversify the Android platform with additional functionalities, like virtual reality, enabling more-intelligent experiences and reach into wearables, connected home devices, in-car entertainment and TV.”
Table 2
Worldwide Smartphone Sales to End Users by Operating System in 2Q16 (Thousands of Units)
Operating System |
2Q16 Units |
2Q16 Market Share (%) |
2Q15 Units |
2Q15 Market Share (%) |
Android |
296,912.8 |
86.2 |
271,647.0 |
82.2 |
iOS |
44,395.0 |
12.9 |
48,085.5 |
14.6 |
Windows |
1,971.0 |
0.6 |
8,198.2 |
2.5 |
Blackberry |
400.4 |
0.1 |
1,153.2 |
0.3 |
Others |
680.6 |
0.2 |
1,229.0 |
0.4 |
Total |
344,359.7 |
100.0 |
330,312.9 |
100.0 |
Source: Gartner (August 2016)
Additional information is available in the Gartner report “Market Share Alert: Preliminary, Mobile Phones, Worldwide, 2Q16.”
“The top five smartphone manufacturers together continued to gain market share in the second quarter of 2016 — up from 51.5 percent to 54 percent year on year, led by Oppo, Samsung and Huawei,” said Mr. Gupta.
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 8,100 associates, including more than 1,700 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.
Electronics Ranks High in Conflict Minerals Compliance
In a very short period of time the electronics industry has moved from grudging acceptance of the so-called U.S. “conflict minerals” rule to a leadership position in compliance, research concludes. Moreover, companies that have embraced the measure to boycott materials mined in certain regions of the world are driving positive change throughout the supply chain.
A portion of the Dodd-Frank Act of 2010 requires that publicly traded companies disclose the presence of minerals mined from the Democratic Republic of Congo (DRC) and several other regions that are embroiled in civil war. Rebel forces that control mines yielding tin, tantalum, tungsten and gold (3TG) are exploiting mine workers and funding terror campaigns through mineral sales. These materials are used extensively in electronics manufacturing.
Quite a number of electronics companies aren’t simply focused on compliance, according to Dr. Chris Bayer of Development International, who conducted the Conflict Mineral Benchmarking Study RY2015. “They ‘own’ the due diligence process. These companies want to know for themselves if they are possibly funding armed groups. They not only want to know themselves but they feel they owe it to their employees and their shareholders.” In short, many public companies are embracing the spirit of Dodd-Frank in an effort to “do the right thing,” and for them conflict mineral due diligence has become a standard operating procedure (SOP).
The top 13 compliance leaders – companies that met all compliance criteria outlined by the U.S. Securities and Exchange Commission (SEC) and the Organization for Economic Co-operation and Development’s (OECD) – were Qualcomm, Intel, MSC Industrial Direct, China Mobile, Curtiss Wright, Chicago Bridge Iron, Hughes Satellite Systems, Internet Initiative Japan, Aptargroup, Key Technology, Hasbro, Cree and Nvidia.
High scores for component makers
Overall, component companies did particularly well, according to Assent Compliance Inc. Program Manager Jonathan Nauth. Assent, which sat on the advisory board of the study, provides compliance software and services to business and industry.
“This is not just an opinion—there is data that reflects overall these companies are passionate about conflict mineral compliance. Many of these companies have been at the ground level—even involved in documentaries about the exploitation of mine workers—they care about this program,” Nauth said. Among the top 25 compliance leaders of 2015 –with combined SEC/OECD scores above 96 percent — were component makers Qualcomm, Intel, Cree, Nvidia, Microchip and QuickLogic.
There are, of course, business advantages: companies that embrace corporate social responsibility (CSR) efforts are viewed favorably by conscientious consumers and investors. Research also finds that millennials, who are becoming an economic force, want to work for and buy from socially-conscious businesses. And overall, purchasing decisions—whether they are b2b or b2c—are increasingly based on more than just an item’s price and availability.
There are also positive risk-management aspects to compliance, Bayer said. Although there are no punitive damages attached to SEC non-compliance at this time, companies are effectively staking their reputations on being DRC conflict-free. “These companies can say ‘we are effectively managing our risk and we can be recognized by our stakeholders that we are doing our part.’ These companies are applying sensible policies [toward CSR] to make sure they are not doing more harm than good.”
General findings:
The 2015 study not only measured compliance to the U.S. SEC requirements but also conformity to the OECD 5-step Due Diligence framework. The OECD is an international organization that counts the U.S. among its members. The research found:
Among companies filing SEC disclosure (SD) or conflict minerals reports (CMR):
Among companies reporting OECD DD guidance:
Manufacturing companies represented 77 percent of the 1,216 companies that filed compliance documentation in 2015 and were the largest segment in terms of revenue. Semiconductor and related device businesses made up the biggest portion of manufacturers. Among manufacturing companies filing SEC compliance documents, 89.1 percent of computer and communications companies were compliant and 83.6 percent of semiconductor and related device manufacturers were. Other industries, including media, automotive, broadcast and medical were all above 78 percent compliance.
The 2015 report paid special attention to gaps in the reporting in an effort to help companies improve compliance. Benchmarking studies have been done for three consecutive years since Dodd-Frank took effect; 2015 was the second consecutive year Development International conducted the study. Some companies still misunderstand the basic guidelines and filing procedures, the research found. And, although many companies declared themselves conflict-minerals free, not all companies verified that status through an independent audit (or IPSA).
Regarding the SEC rule:
Regarding the OECD DD Guidance:
Assent Compliance also noted data it deemed as “interesting:”
Among companies that filed as “DRC conflict free” and that filed an IPSA are AMD, Arrow Electronics, AVX, Canon, China Mobile, Intel, Kemet, Philips NV, M/A-COM, Siliconware Precision, Skyworks, Smart Technologies and Texas Instruments.
Impact of legal challenges and the EU
Perhaps the most significant finding of the study was that many companies have accepted that conflict minerals compliance is now standard operating procedure (SOP) for public companies. Moreover, the EU will be joining the U.S. in its efforts and is likely to exceed the parameters of the U.S. rule.
Bayer and others maintain that even in the face of a U.S. Appeals Court ruling that Dodd-Frank requirements violate the First Amendment right of freedom of speech, the bulk of the SEC rule still stands. “[The suit] did complicate matters,” said Bayer, “but it did not comprehensively undermine the rule. There are a series of things a company must do to demonstrate compliance. The ruling did do away with the requirement that companies publicly disclose the conflict status of the 3TG in their necessary products. But all other elements of the SEC rule are in effect.” Moreover, the EU will be joining the U.S. in its efforts to hold companies accountable on conflict minerals. “I think the EU [proposal] is a confirmation that this isn’t going anywhere,” said Bayer. “The sense is that conflict minerals due diligence is here to stay.”
The benchmarking studies also establish that it is possible to be compliant with the conflict minerals rule, Bayer argues, and there is very little reason why companies should not comply. “The technology is there – there are sophisticated IT and logistics systems that can compile and track anything. Companies are putting their cards on the table with their SEC filings. And the best-in-class performers among them need to be recognized. In essence these companies are saying they can’t turn a blind eye to these armed groups. Now there is more than anecdotal evidence that establishes the link [of rebel activities] to 3TG. The problem is real, and it is time to achieve critical momentum.”
In fact, the study notes that compliance leaders can positively influence their supply chains. Based on a company’s purchasing power and its due diligence performance, the study found Apple, General Motors, Honda Motor, HP, China Mobile, Cardinal Health and Microsoft exercised the most influence in 2015.
“Once issuers have performed due diligence on their supply chain and ensured that they are only consuming clean 3TG while not boycotting the region, at that point you’re done,” Bayer stated. “That is all a reasonable stakeholder can ask them to do, and anything more than that is above and beyond.”
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