It is becoming ever clearer that the smartphone market is in a recession. The contraction trend first became apparent in November, when analyst figures showed shipments had declined for four straight quarters, and now new data from China adds more color to the picture.
According to the state-run China Academy of Information and Communications Technology (CAICT), 2018’s smartphone shipments in the country were down by a worrisome 15.5%. As reported by Reuters, shipments were down 17% year-on-year. These figures are worse than those provided by analyst house Canalys, which reckoned Chinese smartphone shipments were down 12% last year.
Canalys also forecast more contraction this year, in the region of 3%.
The figures back up Apple’s explanation for its lowered revenue guidance for Q4 2018, which was a slowdown in Chinese sales — shipments do not equal sales, of course, but there is an obvious correlation.
The smartphone slowdown hasn’t just hit Apple — both Samsung and LG issued dire profit warnings on Tuesday, largely due to that element of the landscape.
Samsung, the most prolific phone maker in the world, isn’t hugely exposed to contraction in the Chinese market because it has an overall share of less than 1% — indeed, it is competition from Chinese rivals such as Xiaomi that’s reducing Samsung’s global market share, as well as that of Apple.
Despite this, Samsung gets indirectly hurt by Apple’s falling share of the Chinese market, as the U.S. firm is a major customer for its components.
Why is the smartphone market contracting? Largely because smartphones haven’t evolved much in recent years. Even cheap phones are powerful enough for most tasks these days, while further increases in screen resolution won’t mean much to the human eye. There are also no new “killer apps” that require an upgrade. So, in short, your phone from a couple years back is probably still serving you just fine — and for the industry, that’s a big problem.
