Once red-hot smartphone market sees cooler trend

The smartphone market is down but not out, with high prices and other factors combining to chill what had previously been a red-hot sector.
Fresh surveys show global sales had their worst contraction ever in 2018, and the outlook for 2019 isn’t much better.
Still, analysts don’t see the sun setting any time soon on the smartphone era.
“They don’t have a viable replacement yet,” independent Silicon Valley analyst Rob Enderle said.
“There is always the possibility to go to wearables or head-mounted displays, but none of those have emerged as a real threat.”
Worldwide handset volumes declined 4.1 per cent in 2018 to a total of 1.4 billion units shipped for the full year, according to research firm IDC.
Another market tracker, Gartner, said its research suggested some stabilization in the smartphone market at the end of last year, said analyst Werner Goertz.
“Mobile phones are here to stay,” Goertz said.
“Foldable phones would represent a really nice disruptive feature,” he said.
“Markets will always have slow moments when companies have to spend more on marketing money to get people to go out and buy stuff,” Enderle said.
He said some consumers are holding off on replacing their devices amid price hikes for premium devices like Apple’s iPhone.
During a recent earnings call, Apple chief executive Tim Cook agreed that people were holding onto their iPhones longer.
Cook contended that another reason for slower iPhone sales was that telecom carriers were cutting subsidies of handsets tied to service contracts, meaning customers were faced with paying full price of $1,000 or more for high-end models.
Nonetheless, the latest data suggests the days of red-hot smartphone growth are over and that sluggish growth or contraction is likely in many saturated markets.
Apple recently reported a rare drop in revenue in the fourth-quarter. South Korea’s Samsung, the largest smartphone maker, reported a slump in fourth-quarter net profits, blaming a drop in demand for its key products.
“Globally the smartphone market is a mess right now,” said IDC analyst Ryan Reith.
“Outside of a handful of high-growth markets like India, Indonesia, (South) Korea and Vietnam, we did not see a lot of positive activity in 2018.”
The Chinese market, which accounts for roughly 30 per cent of smartphone sales, was especially hard hit with a 10 per cent drop, according to IDC’s survey. — AFP

Glenn Chapman