Surprise: Smartphone shipments just grew for the first time in two years

...but only by 1%.

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Global smartphone shipments grew 1% in Q3 2019, ending a two-year run of declining quarterly shipments year-over-year, analyst firm Canalys reports. 

Canalys reports worldwide smartphone shipments reached 352.4 million in Q3, up from 348.9 million. It's the first quarterly year-on-year growth in smartphone shipments since Q4 2017, which was also the first time analysts recorded a quarterly decline in shipments. 

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Apple shipments were down 7% over the year to 43.5 million units, leaving it in third place with a 12.3% share of the market. Apple on Wednesday reported iPhone revenues for its Q4 reporting period were $33.36 billion, down from $36.76 billion in Q4 2018. Still, it reported record overall revenues due to growth in services, wearables and iPad. 

Canalys says the fall in shipments was due to weak performance of the iPhone XR, XS and XS Max in the lead up to the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max.

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Canalys

Despite the US Department of Commerce's ongoing ban on US tech firms supplying Huawei, the Chinese smartphone giant saw shipments rise 29% year on year to 66.8 million for the quarter. Huawei is the second largest brand by shipments. 

Market leader Samsung's focus on mid-range Galaxy phones is paying off too, which includes the new Galaxy A90 5G. It shipped 78.9 million in Q3, up 11% on Q3 2018. Canalys says the Galaxy Note10 family out-shipped last year's Note 9 by more than 5% thanks to there now being models with two different screen sizes and a 5G variant. 

Canalys reckons Samsung might have an edge over rivals as more 5G handsets arrive, particularly if it moves faster than Qualcomm. 

"5G is the next battleground for Samsung," said Canalys research director Rushabh Doshi. 

"It is one of very few smartphone vendors to design its own chipsets and modems. It is not, therefore, restricted to the innovation cycle of a third-party component supplier like Qualcomm. If Samsung moves faster than Qualcomm, it can win the race to mid-range smartphones with 5G. Its recent announcement of the Galaxy A90 5G and the upcoming Exynos 980 chipset highlights its strategic priorities."

Canalys analyst Ben Stanton notes that despite Huawei's improved shipments, the company could still face problems in the future, since most Q3 shipments were made before the Commerce Department put it on the Entity List. 

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Huawei launched the Mate 30 and Mate 30 Pro without the Play Store, Gmail and Google Maps. The absence of Google services has harmed Huawei's chances in the European channel market. 

"Huawei does have the potential to rapidly bring [Google Mobile Services] to its devices if the political situation changes, but time is not on its side," said Stanton. "It is nearing the launch timeframe for new Y-series and P-series devices in early 2020. These families are major volume drivers for Huawei, and accounted for 64% of its volume in the first half of this year. It will be a major challenge to retain its overseas volume if the Entity List saga is not resolved in the coming months."

Meanwhile, Apple isn't expected to deliver a 5G iPhone until September next year. Canalys reckons this is why Apple is reportedly developing the 'iPhone SE 2', which is expected to arrive in early 2020 for $399

"Apple will need an unconventional strategy to keep its volume high in the early stages of next year, which makes rumours of an upcoming entry-level iPhone launch in H1 2020 unsurprising," said Canalys research analyst Vincent Thielke.