Published on the 07/08/2018 | Written by Pat Pilcher

Being a trillion dollar company doesn’t make you top dog…

Apple’s golden glow reaching a market value of US$1 trillion has dimmed somewhat, with news its closet competitor, Huawei, has dethroned it from the number two spot in the world smartphone market. Samsung still holds the number one spot.

While investors, pleased with Apple’s Q2 results, may have sent Apple share prices skyrocketing, questions remain over whether Apple can continue to attract the same loyal customers and continue its growth. While they may still be growing and able to position their products at the high end of the market, there is also some not-so-good news: Apple’s lacklustre innovation may hold them back. During the second quarter, they shipped 41.3 million iPhones, just 0.7 percent up on the 41.0 million units shipped in Q2 last year. The premium-priced iPhone X may have carried Apple to its best quarter results ever, but slow growth saw Huawei topple Apple and take the number two spot in the world smartphone market.

“Vendors need to focus on new innovative features and form factors [and] incentives and promotions to drive growth.”

Despite a surge forward in smartphone vendor rankings driven by the well-received P20 Pro, 2018 has been an uphill battle for Huawei. They failed to secure a retail foothold in the crucial US market amidst security fears expressed by US intelligence agencies. Then there were also rumours that the Australian government may ban Huawei from bidding in 5G network build-outs.

Like their competitors, Huawei got buffeted by the headwinds in the global smartphone market. Boston-based IT market researchers, IDC said that although 342 million smartphones sold globally in Q2, the market shrank 1.8 percent on the same period last year when 348.2 million smartphones shipped. It was also the third consecutive quarter that the global smartphone market dropped in terms of year-on-year performance. This slow-down is attributable to several factors, including an increasingly saturated smartphone market and the rising sticker price for flagship devices.

Unsurprisingly, the acid is on the phone makers to innovate out of these doldrums, IDCs global research manager, Anthony Scarsella says. “Consumers remain willing to pay more for premium offerings in numerous markets, and they now expect their device to outlast and outperform previous generations of that device which cost considerably less a few years ago. To contest this slowdown, vendors will need to focus on new innovative features and form factors combined with incentives and promotions to drive growth in many of these highly competitive markets moving forward.”

Samsung at number one faces challenges after reporting sluggish Galaxy S9 sales. Profits from their mobile business for the second quarter declined even though Samsung posted a group profit of almost US$10 billion. Industry pundits cite the price difference between Samsung smartphones and more affordable Chinese devices from the likes of Huawei and Oppo as a factor. Further pressure comes in the form of rising marketing costs as Samsung also seek to foot it against rivals such as Apple and LG.

The Galaxy Note 9 gets announced later this week, and Samsung is doubtless hoping it’ll achieve stronger sales. Rumour has it that Samsung is looking to their display business for flexible OLED panels for what they hope is the next wave of innovation, foldable phones. Huawei also has their eye on the foldable prize and are rumoured to be working with Chinese display manufacturer, BOE, to create the flexible screen tech needed for foldable handsets. Watch this space.