Led By iPhone 6, Apple Passed Samsung In Q4 Smartphone Sales, 1.9B Mobiles Sold Overall In 2014

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If 2014 goes down as the year when smartphone sales globally passed the 1 billion mark (1.2 billion, to be exact, from a total of 1.9 billion mobile phones overall), Q4 will go down as the quarter when Samsung lost its footing as the world’s leader in the category for the first time since 2011. Today, Gartner published its figures for smartphone sales for the year and final quarter of 2014, and the numbers point to the juggernaut of the moment that is Apple.

In a period when overall there were 367.5 million devices sold, the iPhone maker overtook Samsung to sell the most smartphones in Q4, selling nearly 75 million devices compared to Samsung’s 73 million. While the margin between them does not seem particularly wide — it works out to a difference of 0.5 percentage points — it’s a significant reversal for the two.

The year before, Samsung sold over 83 million smartphones led by its Android-based Galaxy line, while Apple sold only 50 million devices. Samsung’s market share dropped 10 percentage points over the year. But with the introduction of the iPhone 6, things have changed.

Worldwide Smartphone Sales to End Users by Vendor in 4Q14 (Thousands of Units)

Company 4Q14Units 4Q14 Market Share (%) 4Q13Units 4Q13 Market Share (%)
Apple 74,832 20.4 50,224 17.8
Samsung 73,032 19.9 83,317 29.5
Lenovo* 24,300 6.6 16,465 5.8
Huawei 21,038 5.7 16,057 5.7
Xiaomi 18,582 5.1 5,598 2.0
Others 155,701.6 42.4 111,204.3 39.3
Total 367,484.5 100.0 282,866.2 100.0

Source: Gartner (March 2015) *Results for Lenovo include sales of mobile phones by Lenovo and Motorola.

“Samsung continues to struggle to control its falling smartphone share, which was at its highest in the third quarter of 2013,” writes Anshul Gupta, principal research analyst at Gartner. “This downward trend shows that Samsung’s share of profitable premium smartphone users has come under significant pressure.”

Indeed, the profits have been an important measure of how mobile handset makers have been faring. Strategy Analytics points out that Apple accounted for nearly 90% of all smartphone profits in Q4.

Other notable movers in the quarter were Lenovo, Huawei and Xiaomi. The last of these more than tripled the number of units that it sold between Q4 2013 and Q4 2014, with its most recent figure of 18.6 million quickly catching up to Huawei’s 21 million and Lenovo’s 24 million handsets. Still, even combined, the three are not yet at the same market share as Samsung or Apple at the moment.

The overall figures for the year point to Samsung’s problems starting directly in the wake of Apple’s renewed energy in the market after the launch of its two iPhone 6 models. There, Samsung still more than dominated, with 307.6 million handsets sold and a 24.7% share of the market, compared to Apple’s 191.4 million and 15.4%.

Worldwide Smartphone Sales to End Users by Vendor in 2014 (Thousands of Units)

Company 2014Units 2014 Market Share (%) 2013Units 2013 Market Share (%)
Samsung 307,597 24.7 299,795 30.9
Apple 191,426 15.4 150,786 15.5
Lenovo* 81,416 6.5 57,424 5.9
Huawei 68,081 5.5 46,609 4.8
LG Electronics 57,661 4.6 46,432 4.8
Others 538,710 43.3 368,675 38.0
Total 1,244,890 100.0 969,721 100.0

Source: Gartner (March 2015) *Results for Lenovo include sales of mobile phones by Lenovo and Motorola.

So what will Samsung have to do differently to try to reverse course? Gartner suggests a more exclusive and unique approach for the handset maker, not unlike what Apple and OEMs like Xiaomi working on forked Android devices are doing.

“With Apple dominating the premium phone market and the Chinese vendors increasingly offering quality hardware at lower prices, it is through a solid ecosystem of apps, content and services unique to Samsung devices that Samsung can secure more loyalty and longer-term differentiation at the high end of the market,” writes Roberta Cozza, research director at Gartner.

This is a bit of a broken record, of course: people have been talking for years about how Samsung and others like HTC need to create more differentiated experiences for its Galaxy devices to avoid the fate of being me-too Android acolytes. But despite its work on Tizen and other developments such is its Knox security suite aimed at enterprises, I’d argue that Samsung has yet to take that kind of strategy to heart, considering that its Galaxy line continues to be the mainstay and core of its smartphone strategy.

The reason for this is because Android continues to be a have a very powerful pull in the market. In 2014, Google’s operating system saw its share inch up past the 80% mark of all devices sold, or over 1 billion units (a figure that echoes those from other analysts).

This not only drives stickiness and familiarity with the operating system among consumers, but there is a whole ecosystem around Android apps, by way of the Google Play store, and native services that Google itself develops. Part from Google’s Android implementations, and you part ways with these services — a prospect that is not insurmountable but requires years of effort and investment to do so.

The bigger picture for other operating systems, in comparison to Android, is of shrinking market share even amidst wider growth. Apple’s and Windows’ market shares declined even as volumes respectively rose to 191 million and 35 million units. And BlackBerry continued to drop, now with only 0.6% of all smartphone sales on unit sales of 8 million — a drop of 10 million units.

Worldwide Smartphone Sales to End Users by Operating System in 2014 (Thousands of Units)

Operating System 2014Units 2014 Market Share (%) 2013Units 2013 Market Share (%)
Android 1,004,675 80.7 761,288 78.5
iOS 191,426 15.4 150,786 15.5
Windows 35,133 2.8 30,714 3.2
BlackBerry 7,911 0.6 18,606 1.9
Other OS 5,745 0.5 8,327 0.9
Total 1,244,890 100.0 969,721 100.0

Source: Gartner (March 2015)

Drilling into Apple’s performance geographically, Gartner says that sales in China were up 56% while those in the U.S. were up 88% as the company finally played to the big screen crowd.

“Apple’s strong ecosystem and its new iPhone 6 and iPhone 6 Plus drove strong replacements within the iOS base. These new smartphones also offered new users, who are looking for larger screen phones, a strong alternative to Android,” Gartner writes.

The bigger picture for mobile phone sales points to another interesting trend. While smartphones are now at 1.2 billion in annual unit sales, there is still a very sizeable feature phone market, with 700 million of these sold in 2014. And with the exception of Samsung, Apple and Microsoft — which now also counts Nokia’s legacy feature phone business among its total sales — we have a very even and long spread of other handset makers.

And “others” accounted for 33.5% of all sales, the biggest category of all — a timely reminder of the long tail of the industry, given this week’s Mobile World Congress event in Barcelona. “All regions recorded growth in 2014, except Japan and Western Europe, which recorded declines of 2.8 per cent and 9.1 per cent, respectively,” Gartner notes.

As with smartphones, Samsung is also leading in the overall mobile category, with 20.9% market share although that is down by about four percentage points over 2013.

Worldwide Mobile Phone Sales to End Users by Vendor in 2014 (Thousands of Units)

Company 2014Units 2014 Market Share (%) 2013Units 2013 Market Share (%)
Samsung 392,546 20.9 444,472 24.6
Apple 191,426 10.2 150,786 8.3
Microsoft 185,660 9.9 250,835 13.9
Lenovo* 84,029 4.5 66,463 3.7
LG Electronics 76,096 4.0 69,094 3.8
Huawei 70,499 3.8 53,296 2.9
TCL Communication 64,026 3.4 49,538 2.7
Xiaomi 56,529 3.0 13,423 0.7
ZTE 53,910 2.9 59,903 3.3
Sony 37,791 2.0 37,596 2.1
Micromax 37,094 2.0 25,431 1.4
Others 629,360 33.5 587,764 32.5
Total 1,878,968 100.0 1,808,600 100.0

Source: Gartner (March 2015) *Results for Lenovo include sales of mobile phones by Lenovo and Motorola.