European smartphone market returns to growth but analysts remain wary

Smartphone shipments increased by 10% year-on-year in the first three months of 2024, according to Counterpoint Research. But while a double-digit growth figure after many quarters of decline – the European market last posted growth in the third quarter of 2021 – should be cause for celebration, there's an important caveat: Q1 last year was particularly weak and therefore that 10% hike might be artificially high.

"The European market is showing signs of a recovery and consumer confidence is improving, helped by some interesting innovations around on-device AI," said Jan Stryjak, Associate Director at Counterpoint Research.

"But we are not out of the woods yet," Stryjak warned. "Although we expect the market to grow by low single digits for the rest of 2024, this is still off the back of an extremely poor 2023, and we do not expect to return to pre-pandemic levels anytime soon."

Indeed, although Counterpoint does not share volume figures, it noted that Q1 shipments in Europe were "well below" the level they hit before Covid-19 and pointed out that in the year-earlier comparative quarter shipments were the lowest they had been for more than a decade. Hence the note of caution.

Nonetheless, growth is growth, and it will come as a relief to the major equipment makers, most of whom have been recording falling sales volumes. Macroeconomic conditions are improving, the analyst firm said, and some vendors have rejuvenated the market with new device offerings. It highlighted Samsung, Xiaomi and Honor in particular.

Samsung had what the analyst firm described as a "return to form" in Q1 on the back of its Galaxy S24 series; overall, it reported shipment growth for the first time since the last quarter of 2021. Its market share dropped by a percentage point to 32%, but a 7% increase in shipments will doubtless offset that (see chart). It regained the lead of the market from now second-placed Apple, which saw declines in both shipments and market share in Q1.

Counterpoint gave special mention to Honor, whose "relentless march" propelled it into fifth position in the market for the first time, ahead of Oppo. Its starting position was low, but it recorded 67% on-year shipment growth in Q1. Honor's growth came as a result of growth in Western Europe, where its shipments more than doubled.

Fellow Chinese brands Xiaomi and Realme also performed well in Western Europe, especially in Italy and Spain. The former struggled in Central and Eastern Europe, but Realme gave a stronger showing there, especially in Turkey, Ukraine and Hungary; its shipments in Europe as a whole increased by 59%.Overall, Counterpoint's data does show reasons for optimism in the European smartphone space. But vendors would do well to heed its warning and not get too carried away.