How Global Smartphone Sales Growth Ground to a Halt

How Global Smartphone Sales Growth Ground to a Halt

August 13, 2018 0 By news club

After years of rampant growth, the global smartphone market is slowing down as consumers wait for the next game-changing feature. That is bad news for the giants of the technology industry, including Apple Inc. and Samsung Electronics Co., as well as the crop of Chinese challengers that includes Xiaomi Corp., Oppo, Vivo and Huawei Technologies Co. While the industry has stopped growing, it still remains a vital part of the global economy with smartphone sales reaching $458 billion in 2017.

1. How has the smartphone industry evolved?

While Apple Inc. didn’t invent the smartphone, it certainly sparked the modern era of web-connected devices with the very first iPhone in 2007. The next year, the first device powered by Android made its debut and the era of rapid growth was ushered in. In 2013, the number of smartphones shipped surged 40 percent, in 2014 that growth slowed to 28 percent, according to IDC data. Last year showed the first contraction on record, with the market shrinking by 2.5 percent, in large part because of reduced shipments in China.

2. What drove this growth?

A mixture of technology and demographics. When the first iPhone hit the market, it used existing wireless networks, most of which were still on second-generation standards, the ones that power old-style feature phones. As wireless networks moved to third- and fourth-generation networks, typically offering much faster speeds for downloading videos, apps and other content, there was a natural inclination for consumers to upgrade. Vendors also innovated in more dramatic style, such as adding fingerprint technology, improved cameras, high-definition screens, digital assistants and bigger displays to lure consumers into forking out for the latest model. Another key factor was demographics, as countries including China and India became industrialized. That boosted incomes and hundreds of millions of consumers quickly found themselves able to afford a smartphone, and able to get their very first connection to the internet.

Smartphone Sales Losing Juice

Breakneck global growth turns to contraction

Source: IDC, Bloomberg Intelligence (2018 is IDC forecast)

3. So why is growth slowing down?

There are few major technology innovations coming through, the sort of must-haves that lead people to trade in a 1-year-old device that costs $800 for another that costs even more. Phones are also getting better — screens and cases are sturdier, vendors are offering more processing power and smartphones are coming with bigger memory capacity. All that means that phones are useful longer, before they become little more than a paperweight.

4. So it’s just about the features?

It’s also about maturing markets. After years of breakneck growth, most Chinese have a smartphone now, which means there isn’t a vast pool of untapped demand. Same in western countries, where smartphones have reached saturation levels. While there are still a core of users who will line up every September for the newest iPhone, many more are happy to stick with their handset until it stops working.

5. What about the future?

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