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Long-soaring smartphone market heading to earth
SAN FRANCISCO, June 3, 2018 (BSS/AFP) – After a decade of sizzling growth,
the smartphone market has suddenly cooled.
Surveys show smartphone sales last year shrank slightly for the first time
since the 2007 debut of the iPhone, and preliminary data this year suggests
further deceleration.
Analysts say several factors have hit the smartphone market including the
lack of new features that wow consumers, people holding their devices longer
and the saturation of key markets including China, which had been driving
growth.
“The market has peaked, that is the bottom line,” said Bob O’Donnell,
analyst and consultant with Technalysis Research.
“It is for sure not the death of the smartphone; it is the death of the
growth of the smartphone market.”
The smartphone market began to hit saturation in 2016 much the way the
tablet and personal computer markets did years earlier.
“It doesn’t mean it is not a strong market — it is a huge market — but
it means vendors have to think differently,” O’Donnell told AFP.
Smartphone sellers with slices of the market should no longer count on a
fast-growing pie and instead rely on shrewd competitive moves to ramp up
revenues, according to analysts.
Samsung remains the market leader, according to surveys, but its lead over
Apple has slipped.
China’s Huawei is holding the number three spot and rival Chinese maker
Xiaomi has been growing rapidly despite the lack of a US presence.
– China focal point –
International Data Corporation said 2017 smartphone sales fell 0.1 percent
to 1.472 billion devices, largely due to weak fourth quarter shipments.
IDC expects another decline in 2018 before a rebound from new phones for
5G networks and India’s vibrant market.
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The “biggest driver” of the downturn last year was said by IDC and others
to be the China market.
IDC forecast that the smartphone market in China would flatten out next
year, while sales in India were expected to continue to boom on low-priced
handsets.
“China remains the focal point for many given that it consumes roughly 30
percent of the world’s smartphones,” IDC analyst Ryan Reith said.
A catalyst for a smartphone rebound may be the arrival next year of
devices tailored for ultrafast 5G telecommunications networks, according to
IDC.
For now, the sector appears sluggish.
Counterpoint Research said the handset market dropped three percent in the
second quarter compared with a year earlier, a second straight quarterly
decline.
“The waning smartphone demand is due to a slowdown in developed markets
where replacement cycles are lengthening with overall smartphone features and
design reaching its peak,” said Counterpoint analyst Tarun Pathak.
“However, emerging markets still offer a sizeable opportunity.”
Handsets powered by Google-backed Android mobile were expected to continue
to dominate the smartphone market, with a share of about 85 percent remaining
relatively stable during the coming five years.
“There is no question that Android is the OS (operating system) of choice
for the mass market and nothing leads us to believe this will change,” IDC
said in its forecast.
– Whither Apple? –
While smartphone shipments will ebb this year, the average selling price
will rise more than 10 percent to $345 and remain on an upward trend, said
IDC research manager Anthony Scarsella.
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“This year will continue to focus on the ultrahigh-end segment of the
market as we expect a surge of premium flagship devices to launch in
developed markets,” Scarsella said.
As economies improve in countries around the world, more people can afford
to switch to premium models.
Premium smartphones, however, will be under pressure to show they are
worth the price paid to upgrade from budget-friendly models, according to
analysts.
Apple has weathered the market slump better than its rivals but remains
under pressure to impress consumers after introducing its iPhone X priced at
$1,000 and up.
“With its exclusive focus on premium smartphones, Apple needs to
significantly raise the overall experience of its next-generation iPhones to
trigger replacements and lead to solid growth in the near future,” Gartner
research director Anshul Gupta said.
Apple could unveil some of its strategy at its developers conference
opening Monday in California.
But some analysts warn that Apple is not thinking ahead to how consumers
will interact with technology beyond the smartphone.
ABI Research analyst David McQueen said in a December report that Apple is
lagging rivals like Google and Amazon in developing new kinds of devices and
that Apple will be a “follower” in the “post-smartphone era.”
“This next wave of innovation in the smart device ecosystem will be led by
Google and Amazon, as their apparent strength in major growth sectors,
notably computer science, allows for a more flexible approach to next-
generation user experiences,” said McQueen.
BSS/AFP/HR/1005