BB King

In 2018, we highlighted the momentum of BBK Electronics in the smartphone market (see BBK Vies for Pole Position in Smartphone Market). Other than dedicated industry followers, most people still haven’t heard of this Chinese company. And we suspect BBK is OK with that.

BBK Electronics is a mothership of a company, with five smartphone brands under its wings: Oppo, Vivo, Realme, OnePlus and iQOO. Each brand caters to a somewhat different consumer or geographical audience. The company’s products reflect a mix of value and innovation, rebellion and tradition.

BBK has been happy to highlight its ability to use open-market channels to challenge established smartphone players, while also working with wireless operators to distribute through their channels. Although its five brands seemingly operate independently, we believe they reap some benefits from being under the bigger BBK umbrella: BBK Electronics is believed to be optimizing its business, building synergies between its brands by sharing R&D and manufacturing.

Taking all its five brands into account, BBK now sits among the top three players in a smartphone market that has witnessed the most disruptive two quarters in its relatively short history. In 2Q20, smartphone shipments sank 18% to 281 million units (and demand for all mobile phones, including basic feature phones, collapsed by a whopping 24%), weighed down by store closures in many countries in the throes of the pandemic, as well as economic uncertainty throughout the world.

Within this difficult smartphone market, we estimate that BBK, with its five brands, shipped about 54 million smartphones during 2Q20, putting the company comfortably in the top-three club. Hardly any phone-maker reports exact numbers nowadays, but we believe that BBK just squeaked past Samsung’s estimated 53 million, falling only slightly behind the quarter’s top player Huawei, with its estimated 56 million shipments, including devices in its Honor brand. Apple shipped about 37 million phones, although it remained the unchallenged top dog when it comes to revenue.

This might sound like a great success story, but 2Q20 was certainly a tough quarter for BBK, with sales volumes down for all its top brands. In particular, Oppo and Vivo benefitted from the almost-recovery of the Chinese market (which declined a mere 5% in the quarter), but saw device sales plummet in India, first because of the slowdown caused by the pandemic and later because of anti-Chinese sentiment. It was also an unkind time for OnePlus in the US, where it launched its OnePlus 8 5G model through T-Mobile and Verizon in the middle of a quarantine that turned cities into ghost towns.

The rest of 2020 will remain difficult for smartphone makers. Most governments are lifting nationwide lockdowns and planning to manage any further waves through localized lockdowns and other measures. However, demand will remain subdued in the second half of the year as virtually every major economy plunges into recession. China will be among the markets that will bounce back fastest, and the transition to 5G networks there continues at an unbelievable pace, whetting people’s appetite for new generations of smartphones.

BBK is fortunate to not only have high exposure to its domestic market, but also good exposure internationally. Its brands are hungry for growth at the expense of rival Huawei, caught in the middle of the trade war between China and the US. In fact, this trade dispute might well be one reason for BBK to choose to not advertise its success, but rather let its brands, smaller on their own, fight on in the spotlight. The smartphone market is no longer simply about people’s need to be connected and desire to own a great gadget — geopolitics play a major role in it, and keeping a low profile can sometimes be a wise choice.

CCS Insight clients who subscribe to our Mobile Phones service suite can access our detailed analysis of the market in 2Q20 by clicking here. Get in touch with us if you’d like access to the report.