Categories Analysis, Markets

Smartphone market suffers as customers await the 5G era

The global smartphone market is experiencing a declining trend and one of the reasons is the ongoing transition to the 5G network. A recent study by the International Data Corporation (IDC) revealed that smartphone shipment volumes totaled 310.8 million units in the first quarter of 2019, down 6.6% year-over-year.

The results marked the sixth consecutive quarter of decline and are an indication that global smartphone shipments will continue to face pressures throughout 2019. In the first quarter of 2018, shipments had declined only 3.5%, half of this year’s number.

The report states that the US market was hurt the most by the downturn in the current-year quarter. Smartphone volumes were down 15% year-over-year due to a slowdown in replacement rates. Customers seem reluctant to upgrade their phones as the new models are costlier and lack meaningful innovation.

Smartphone shipments and volume

Another reason the report points out is the transition to the 5G network which will see new 5G devices come to the market as early as next year. Customers might prefer to wait for the new technology to gain ground before spending huge amounts of money to upgrade their phones.

The study shows that, of the top four smartphone companies – Samsung, Huawei, Apple (NASDAQ: AAPL) and Xiaomi – Huawei was the only one that registered a growth of 50% versus last year, while the remaining three posted declines.

Huawei has managed to overtake Apple in terms of shipment volumes and market share and although Samsung continues to retain its top position in the market, Huawei is fast catching up and could dethrone Samsung at any time. The report gives credit for Huawei’s success to “a well-rounded portfolio targeting all segments from low to high.”

Apple’s shipments dropped 30.2% year-over-year to 36.4 million units in the first quarter of 2019. The study pointed out that the company continues to face tough competition which is hurting its market share, and that price cuts and trade-in deals failed to lure in customers as expected.

The report says Apple’s iPhones could continue to face challenges as the competition thickens with 5G phones and foldable devices set to enter the market.

On Tuesday, Apple reported its second quarter 2019 results, which topped analysts’ projections despite declining on a year-over-year basis. Overall product sales fell 9%, driven mainly by the iPhone. The company posted a 17% decline in iPhone sales for the quarter.

However, Apple said in its conference call that its active installed base of devices continues to grow in each of its geographic segments and that the active installed base of iPhone reached a new all-time high at the end of March.

The company also stated that the latest survey of US consumers from 451 Research indicates customer satisfaction of 99% for iPhone XR, XS and XS Max combined, and among business buyers who plan to purchase smartphones in the June quarter, 81% plan to purchase iPhones.

 

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