Long-soaring smartphone market heading to earth
Long-soaring smartphone market heading to earth
By Glenn CHAPMAN AFP • June 2, 2018
San Francisco (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.
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.
"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.
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