“Demand for entry-level and midprice smartphones remained strong across markets, but demand for high-end smartphones continued to slow in the fourth quarter of 2018,” said Anshul Gupta, senior research director at Gartner. “Slowing incremental innovation at the high end, coupled with price increases, deterred replacement decisions for high-end smartphones.” This led to a flat-growth market in the fourth quarter of 2018.

In 2018 as a whole, global sales of smartphones to end users grew by 1.2 percent year over year, to 1.6 billion units. North America, mature Asia/Pacific and Greater China recorded the worst declines of the year, at 6.8 percent, 3.4 percent and 3.0 percent, respectively. “In mature markets, demand for smartphones largely relies on the appeal of flagship smartphones from the top three brands — Samsung, Apple and Huawei — and two of them recorded declines in 2018,” added Mr. Gupta.

At the high end, Samsung smartphones such as the Galaxy S9, S9+ and Note9 struggled to drive growth in the fourth quarter of 2018. In the midtier, Xiaomi and Huawei continued to grab more market share. As a result, Samsung’s smartphone sales declined by 4.4 percent in the fourth quarter of 2018. Samsung lost market share in Greater China, Western Europe and Latin America, which contributed greatly to an overall 8.2 percent fall in its smartphone sales in 2018. “Although Samsung is strengthening its smartphone offering at the midtier, it continues to face growing competition from Chinese brands that are expanding into more markets. It also faces difficulty bringing significant innovation to high-end smartphones,” said Mr. Gupta. Samsung introduced new midtier-focused M series smartphones in the first quarter of 2019 to compete with aggressive Chinese manufacturers in emerging markets, and to expand into the online sales channel.

Sales of Apple iPhones came to 64.5 million units in the fourth quarter of 2018, a decline of 11.8 percent year over year. This double-digit decline made Apple the worst performer of the quarter among the top five global smartphone vendors. Apple saw iPhone demand weaken in most regions, except North America and mature Asia/Pacific. Apple’s sales declined most in Greater China, where its market share dropped to 8.8 percent in the fourth quarter of 2018 from 14.6 percent in the corresponding quarter of 2017. For 2018 as a whole, iPhone sales were down 2.7 percent, to just over 209 million units.

“Apple has to deal not only with buyers delaying upgrades as they wait for more innovative smartphones. It also continues to face compelling high-price and midprice smartphone alternatives from Chinese vendors. Both these challenges limit Apple’s unit sales growth prospects,” added Mr. Gupta.

In the fourth quarter of 2018 Huawei sold over 60 million smartphones and achieved the strongest growth of the quarter among the top five global smartphone vendors (37.6 percent). Huawei grew throughout 2018, to close the gap with Apple. “Beyond its strongholds of China and Europe, Huawei continued to increase its investment in Asia/Pacific, Latin America and the Middle East, to drive further growth,” said Mr. Gupta. “Huawei also exploited growth opportunities through continued expansion of the Honor series in the second half of 2018, especially in emerging markets, which helped Huawei grow its market share to 13.0 percent in 2018.”