Huawei upsets the Apple cart

Chinese telecom giant outsells US rival for first time, taking second place globally

Leading telecom company Huawei Technologies Co Ltd shipped more handsets worldwide than archrival Apple Inc, for the first time, in the second quarter of 2018.

The achievement breaks the seven-year dominance of Samsung Electronics Co Ltd and Apple as the top two vendors in terms of smartphone shipments. But, more efforts are still needed for Huawei to beef up its profit margins, which still lag far behind Apple, analysts said.

Huawei shipped 54.2 million smartphones in the three months ended June, moving into second position with a record high market share of 15.8 percent.

In comparison, Apple dropped to third place for the first time, despite growth in the second quarter. The California-based company shipped 41.3 million iPhones, representing modest growth of 0.7 percent from a year ago, according to data from market research company International Data Corp.

"The continued growth of Huawei is impressive, to say the least, as is its ability to move into markets where, until recently, the brand was less unknown," said Ryan Reith, program vice-president with IDC's Worldwide Mobile Device Trackers.

According to IDC, in the first half of the second quarter, Huawei's P20 and P20 Pro smartphone series found strong demand in the $600-$800 price segment, helping it to build a high profile in the market.

In the second half, a major e-commerce promotion in June led to strong sales for Huawei's Honor models via online channels, as the Honor brand continues to be a key driver of growth for the Chinese tech giant.

Tarun Pathak, associate director at market research company Counterpoint Technology Market Research, said Huawei achieved such robust growth by launching smartphones in the premium segment and capturing the mid-tier segment with its fast-growing Honor brand.

"Huawei, with its Honor brand, is offering a broad and recently refreshed portfolio at affordable prices that is driving growth in the overseas market. Honor, which is already strong in the e-commerce segment, is now adopting a multichannel strategy through branded stores in the Southeastern Asian market. We expect store counts to increase in the future," Pathak said.

However, it is worth noting that Apple has moved into the top position in each of the last two holiday quarters following its product refresh, so it is likely there will be continued movement among the top ranked companies in 2018 and beyond, IDC analysts highlighted in their report.

Apple also unveiled its latest financial data on Thursday, beating analysts' expectations. Sales rose 17 percent to $53.3 billion, with profit coming in at $2.34 per share. Analysts expected revenue of $52.4 billion and earnings of $2.18 a share.

Currently, Apple derives most of the profits in the world smartphone market because of its brand value and high average selling prices, which stood at $724 in the quarter ended in June, according to analysts from IDC and Counterpoint.