Top-end consumers are holding on to their phones; not enough are transitioning from feature phones at the opposite end.
Tech research firm Gartner says global smartphone sales have declined for the first time since 2004. It says smartphone shipments to end-users stood at 408 million units at the end of Q4 2017—this is a 5.6% decline over the Q4 2016 figure. Market-leader Samsung saw sales decline year-on-year by 3.6% in Q4 2017, while shipments of Apple’s iPhones fell by 5%, though the firm still holds on to its second-spot. Though Chinese smartphone makers Xiaomi and Huawei expanded their market-shares, another sector analyst, Canalys, highlighted in January that smartphone shipments to China declined for the first time in the years since it became the largest smartphone market after the Western markets got saturated.
Gartner believes the slowdown is because upgrades from feature phones to smartphones are hitting the price barrier, among other hiccups, including poor network infrastructure. With quality ultra-low-cost smartphones having a microscopic presence in the market, potential first-time smartphone buyers in price-sensitive Asian economies are not making the transition. In India, which is seen as a smartphone market with immense room for growth, telecom companies tied up with low-end smartphone makers. While this may have been a shot in the arm for the Indian market, clearly this hasn’t made much of a dent in global smartphone shipments. Another reason for the decline is that users are holding on to high-quality models for longer, thereby by lengthening the replacement cycle. It is difficult to say whether this trend will persist, given many smartphone-makers are expected to resolve supply glitches and bring out significantly superior offerings this year. But, keep in mind, this might not be a strong enough factor—it is at the bottom of the pyramid that the real room for growth is.