Huawei was well on its way to overtaking Samsung and becoming the number one smartphone maker in the world until the US Department of Commerce threw a spanner in the works in May by adding the Chinese telecoms giant to the Entity List. That threw a dark cloud over the company’s ability to do business with critical US technology suppliers.
The Q2 2019 EU figures reflect the adverse effect that this has had on Huawei, while simultaneously providing huge boosts to market leader Samsung and fast growing Chinese smartphone maker Xiaomi (yet to be added to the Entity List).
With Huawei in the doldrums, Samsung surged to more than 40% market share, representing an amazing growth spurt of 20% compared to the corresponding quarter in 2018, and putting a clear distance between it and second placed Huawei which dipped 16% for the same period.
As a result, Samsung had an almost dominant 40.6% market share (18.3 million units sold) compared to Huawei’s far distant 18.8% (8.5 million units). The figures for the previous corresponding quarter were a much closer 33.9% (15.3 million units) and 22.4% (10.1 million units) respectively.
Meanwhile, fourth placed Xiaomi, coming off a relatively low base, soared into the stratosphere, recording an impressive 48% growth to capture 9.6% market share (4.3 million units).
If there was any consolation at all for Huawei in Europe, it may have been third placed Apple, which had an even sorrier tale to tell about its iPhone sales, which dropped 17% compared to the corresponding quarter in 2018, falling to 14.1% market share (6.4 million units) from 17% (7.7 million units) in 2018.
Canalysis did not offer any reason for the iPhone’s dismal decline in the EU. However, it is interesting to note that the lower priced iPhone XR was identified as one of the better selling smartphone handsets handsets, suggesting that consumers are price sensitive in the current market.
“Samsung obviously had enough of losing share in Europe,” said Canalys Senior Analyst Ben Stanton.
“For years, a focus on operating profit has stifled its product strategy. But this year, the shackles are off, and winning back market share is its clear priority. But its success is not solely due to product strategy.
“Samsung has been quick to capitalise on Huawei’s US Entity List problems, working behind the scenes to position itself as a stable alternative in conversations with important retailers and operators.”
The price sensitivity of EU buyers was also identified as a major reason for the success of Xiaomi plus the fear of the channel and operators that any one brand becomes too dominant.
“Xiaomi is now a major force in Europe,” said Canalys Analyst Mo Jia.
“Its core strength remains price-sensitive countries across Europe, in online and open market channels, but it is increasingly being trusted and ranged by important mobile operators.
“It is not necessarily in the interests of the channel for Samsung to get stronger. If Samsung consolidates its power against a weakened Huawei, it can negotiate harder on margin. For this reason, distributors, retailers and mobile operators are actively seeking alternative brands to fill the gap and reduce their dependence on Samsung.”
With the US-China trade war showing no signs of abating, a question that has yet to be considered is whether other Chinese smartphone brands besides Huawei will be drawn into the fray and placed on the Entity List.
After all, the US may with some justification claim that all Chinese companies are at least to some extent tied to the government of that country. Then again, with the way big tech and corporate media in the US are overtly trying to manipulate political outcomes in that country, China could with equal justification claim the same.