By David Meyer
November 2, 2018

The latest analyst figures for global smartphone shipments show the market for the devices is now in a recession.

IDC reported a 6% year-on-year decline in third-quarter shipments, down to 355.2 million units. Strategy Analytics put the total at 360 million units, down 8% from the 393.1 million units shipped the same quarter a year ago.

“The global smartphone market has now declined for four consecutive quarters and is effectively in a recession,” said Strategy Analytics director Linda Sui.

The figures confirm Counterpoint Research’s prediction that the global smartphone market will contract for the first time this year. Counterpoint reckons the decline will be around 1%—over the previous five years, the average growth was 16%.

So what’s causing the shrinkage? Counterpoint cited pricier handsets and a slowing global economy, as well as market saturation. Strategy Analytics had another few factors in mind.

“The smartphone industry is struggling to come to terms with heavily diminished carrier subsidies, longer replacement rates, inventory buildup in several regions, and a lack of exciting hardware design innovation,” said Sui.

IDC pointed to problems in the Chinese market, which accounts for around a third of all smartphone sales. The Chinese handset market has been declining continuously since the second quarter of 2017.

However, IDC said it still thinks the global market will return to growth next year, as people refresh their handsets.

Interestingly, the new figures also confirm that Huawei has powered past Apple in terms of shipments. The Chinese manufacturer occupied the number-two spot—after Samsung—for the second straight quarter, even though its market share of 14.6% was slightly down quarter-on-quarter. Year-on-year, Huawei’s market share was up almost a third.

Samsung is more seriously losing market share—down from 22.1% to 20.3% year-on-year—with its shipments down around 13% year-on-year.

“Samsung is losing ground to Huawei, Xiaomi and other Chinese rivals in the huge China and India markets. Samsung must solve its China and India problems before it is too late,” said Strategy Analytics executive director Neil Mawston.

As for Apple, the iPhone-maker’s market share is up from 12.4% to 13.2%, but that partly reflects the shrinking market. Sales were pretty much flat year-on-year, though the analysts expect a boost next quarter from the popular iPhone XR.

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