Affordable Chinese Phones May Become Favored Over iPhone, Research Shows

Affordable Chinese Phones May Become Favored Over iPhone, Research Shows
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What you need to know

The struggling smartphone market is making a bit of a rebound thanks to a handful of Chinese companies.

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By Jonathan Vanian

Roughly 347 million smartphones were shipped worldwide in the first quarter of 2017, a 4.3 percent jump from the previous year, according to new research released Thursday by International Data Corporation.

Although Samsung and Apple (AAPL, +0.14 percent) remained the top shippers of smartphones, owning 23.8 percent and 15.4 percent of the market respectively, both companies saw relatively little growth in shipments for the first quarter.

Instead, Chinese companies Huawei, Oppo, and Vivo saw the biggest year-over-year growth in smartphone shipments for the first quarter, which IDC analysts attributed to the growing popularity of their cheaper phones compared to high-end models sold by Apple and Samsung.

"Despite all the popularity and media hype around premium devices, we continue to witness a shift in many companies' portfolios geared towards affordable devices with premium-type styling compared to flagship models,” said IDC research manager Anthony Scarsella in a statement.

Huawei is the third largest smartphone supplier, having shipped around 34 million phones in the first quarter—a 22 percent bump from the first quarter of 2016. However, despite Huawei’s phones have yet to catch on with U.S. consumers, which IDC said “is something they will need if they aspire to displace the two market leaders.”

Oppo shipped roughly 25 million phones in the first quarter, a nearly 30 percent year-over-year increase, which IDC attributed to the company’s “midrange, camera-focused” R9s model. Vivo’s shipments grew about 24 percent year-over-year to 18 million, helped by increased marketing in India and Southeast Asia, IDC said.

In response to IDC’s new research, Barclays said Thursday in an analyst note that the smartphone shipments in the latest quarter were “decent,” but “not as a good as expected.”

Barclays analysts seem concerned that most of the growth in shipments stems from companies selling cheaper phones instead of companies like Samsung and Apple that sell more feature-packed expensive models.

Barclays said that newly released premium phones like the Samsung Galaxy S8 could lead to more smartphone shipments in the next quarter. If there is not a big increase in shipments, then investors “could be concerned that demand for ‘latest and greatest’ premium devices could be easing.”

“This could have negative implications for Apple, which will release its tenth generation iPhone later this year,” the Barclays analysts wrote.

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TNL Editor: Olivia Yang