Chinese Vendors, Not Apple Inc., Gained The Most From Galaxy Note 7 Disaster

Chinese Vendors, Not Apple Inc., Gained The Most From Galaxy Note 7 Disaster
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When Samsung announced that it had killed the fire-prone Galaxy Note 7, many analysts including Ming-Chi Kuo of KGI Securities estimated that Apple would benefit the most from the Note 7 disaster. Kuo predicted that the iPhone 7 and 7 Plus would attract an additional 5-7 million customers following the Note 7 discontinuation. However, latest data suggests that Chinese Android vendors, not Apple, gained the most from the Galaxy Note 7 fiasco.

Samsung still world’s No.1 smartphone maker

According to research firm Gartner, Chinese companies were only smartphone makers in top five that saw their sales increase in the third-quarter of 2016. Samsung remains the world’s largest smartphone vendor, but its sales plunged 14.2% during the quarter, the company’s worst performance ever. Its Q3 sales declined from 83.58 million units to 71.7 million units. The Korean company’s third-quarter market share also fell from 23.6% to 19.2%. Despite the decline, Samsung remains the world’s largest smartphone vendor.

Gartner said the decline in Samsung’s sales was mainly due to battery problems in Galaxy Note 7 that caused some of the handsets to overheat and explode. Gartner analyst Anshul Gupta said in a statement that the Korean company’s decision to kill Galaxy Note 7 was correct. However, Samsung will find it difficult to boost sales in the near-term until a problem-free Galaxy S8 launch.

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Most Galaxy Note 7 users chose to stick with Android

Apple sold 43 million smartphones during the September quarter, a decline of 6.6% compared to the same period a year ago. Apple’s sales plunged 31% in China and 8.5% in the United States. Its market share shrank from 13% to 11.5%, the company’s lowest share since 2009. Gartner analyst Roberta Cozza said the Galaxy Note 7 withdrawal could benefit the 5.5-inch iPhone 7 Plus only slightly.

Cozza believes that most of the Note 7 users are likely to stick with Samsung or with another Android vendor. It presents an opportunity for other Android vendors to capitalize on the issue in the short-term. Among the top five smartphone companies, only Chinese vendors Huawei, Oppo, and BBK Communication Equipment experienced sales growth.

Chinese vendors see huge jump in sales

Huawei, the world’s third largest smartphone maker, witnessed an 18.5% jump in sales during the third quarter. Its market share also went up from 7.7% in Q3, 2015 to 8.7% in the latest quarter, according to Gartner. Oppo’s market share almost doubled in the same period from 3.4% to 6.7%. It sold 24.9 million smartphones during September quarter. BBK Communication Equipment saw its market share going up from 2.9% to 5.3%.

According to Gartner, overall worldwide smartphone shipments rose 5.4% to 373 million units in the third quarter of 2016. Overall shipments of mobile phones declined by 1.3% due to the waning popularity of feature phones. Samsung is expected to launch Galaxy S8 in the first quarter of 2017, which could help the company regain the faith of customers. The Galaxy S8 is said to feature an edge-to-edge OLED display and an AI assistant.

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