Samsung retains leadership in smartphone shipments as Huawei gains

Smartphone sales may be slowing from their meteoric growth as developed countries become saturated. But demand remains high.

Manufacturers shipped over 355 million smartphones in the third quarter, or 6.8% more than the same period last year, market researcher IDC said on Wednesday. Still, that number was lower than previous forecasts, largely due to slightly lower than expected iPhone shipments and the fact that many new Android devices released during the period were pricey phones that sell in low volumes.

Samsung nabbed the biggest piece of the pie by shipping over 84 million smartphones in the three months ending September, good for 23.8% market share. Apple remained number two, shipping 48 million iPhones during the same period while collecting the biggest profits of any other smartphone vendor.

Samsung and Apple have been the two best sellers for years. That shows no sign of changing.

But the third largest smartphone maker, Huawei, may be less familiar to North American consumers. Best known for selling telecommunications equipment, it shipped 26.5 million smartphones in the quarter to beat its fellow Chinese smartphone manufacturers Lenovo (including the Motorola brand) and Xiaomi for the second consecutive quarter.

Of all major smartphone makers, Huawei’s shipments grew the fastest — 60.9% — versus the same quarter last year. The company is an emerging giant in the smartphone world based on its strength in its home country of China. Last quarter, Huawei topped the Chinese market share rankings for the first time. In fact, Huawei could become the first Chinese smartphone company to ship 100 million smartphones in a calendar year.

And Huawei’s growth wasn’t fueled solely on cheap phones, which drive the bulk of its smartphone shipments, especially in emerging markets. Sales of its mid-to-high range phones, including the Honor 6 Plus (which costs around $410) and Ascend P8 (nearly $530) grew 25% from last year, according to the company.

One anomaly to Huawei’s growth is that it has next to no U.S. presence. But even that is starting to change. Huawei teamed up with Google to develop the Nexus 6P, which first went on sale earlier this month and is being promoted by Google online and in television commercials.

Like Samsung and Apple, the two market leaders, Huawei designs its own microchips. Its Chinese rivals usually buy chips from vendors like Qualcomm and MediaTek, which adds to the total cost of materials, and may make it harder for Xiaomi and Lenovo to compete on price.

One major takeaway from the report is that the high-end phones that American consumers tend to buy, like Samsung’s Galaxy S6, are increasingly priced “outside the consumer sweet spot,” which is under $500, says IDC, because more consumers in mature markets are buying phones on installment plans. Apple remains an anomaly, shipping 22% more iPhones than last year while keeping its prices high.

What company stands to benefit from this trend? Huawei, of course, with its premium devices like the Nexus 6P, priced at $499, just at the upper bound of what IDC considers to be the consumer sweet spot. Huawei might not be close to overtaking Apple or Samsung, but it clearly leads the rest of the market.

How phone makers ranked in third quarter shipments:

1.) Samsung:

84.5 million phones

Up 6.1% from the same quarter a year ago

23.9% global market share.

2.) Apple:

48 million phones

Up 22.2%

13.5% global market share

3.) Huawei:

26.5 million phones

Up 60.9%