This Region Causes Goldman Sachs To Cut 2016 Smartphone Estimates Despite Strong Chinese Sales

Handset shipments declined 3 percent y/y and 15 percent q/q to 447mn in 1Q16, while smartphone shipments grew 4 percent y/y and were down 13 percent q/q to 349mn, according to Gartner. These numbers were worse than the 1 percent decline in handsets and 6 percent growth in smartphones that Goldman Sachs had estimated for the full year.

In-line with expectations, smartphones comprised of 78 percent of total handset shipments.

Smartphone Shipment By Region

While the performance of US was weaker than expected, China performed better than expected. The decline of smartphone shipments in Western Europe was higher than expected. The Brazil market continued to decline.

India was the fastest growing region, with shipments up 30 percent. Eastern Europe and Russia also witnessed strong growth of over 25 percent, while Rest of Asia was up 13 percent. Growth in the Middle East & Africa and the Rest of LatAm regions decelerated significantly.

Performance of Apple Versus Samsung

Apple Inc. AAPL and Samsung continued to be the top two by market share, although both witnessed contraction, mainly due to the growing popularity of Chinese vendors, with Huawei, OPPO and Vivo being the biggest gainers. Lenovo and Xiaomi lost share. Outside the top 5, the combined shipments of top 4 Indian vendors grew by 46 percent y/y.

Change In Estimates

Goldman Sachs analysts reduced their smartphone growth outlook for 2016 from 6 percent to 5 percent and from 7 percent to 4 percent, respectively. They mentioned that higher estimates for Greater China and Rest of Asia were more than offset by reduced expectations for Middle East and Africa and India. “MEA in particular is driving our reduced outlook, where we reduce our growth forecast to 1% from 30%,” the analysts wrote.

Goldman Sachs left its handset unit forecast unchanged at a decline of 1 percent for 2016 and 2017. This implies a reduction in the estimate for smartphone penetration [as a percentage of shipments] from 79 percent to 78 percent for 2016 and from 84 percent to 82 percent for 2017.