2018 the worst year ever for smartphone market: Report, Latest Business News - The New Paper

2018 the worst year ever for smartphone market: Report

This article is more than 12 months old

SAN FRANCISCO The smartphone market is down but not out, with high prices and other factors combining to chill what had previously been a red-hot sector.

Fresh surveys show global sales had their worst contraction ever last year, and the outlook for this year is not much better.

Still, analysts do not see the sun setting any time soon on the smartphone era, seen as a must-have device for many people around the world.

"They don't have a viable replacement yet," Silicon Valley analyst Rob Enderle said of the smartphone. "There is always the possibility to go to wearables or head-mounted displays, but none of those have emerged as a real threat."

Worldwide handset volumes declined 4.1 per cent last year to a total of 1.4 billion units shipped for the full year, according to research company IDC, which sees a potential for further declines this year. Another market tracker, Gartner, said its research suggested some stabilisation in the smartphone market at the end of last year, said analyst Werner Goertz.

"Mobile phones are here to stay," Mr Goertz said, suggesting consumers may be waiting for some devices with new features. "Foldable phones would represent a really nice disruptive feature."

Analysts pointed out that other tech products such as personal computers have seen similar ebbs and flows.

"Markets will always have slow moments when companies have to spend more on marketing money to get people to go out and buy stuff," Mr Enderle said.

He said some consumers are holding off on replacing their devices amid price hikes for premium devices like the iPhone.

During a recent earnings call, Apple chief executive Tim Cook agreed that people were holding onto their iPhones longer.

Mr Cook contended another reason for slower iPhone sales was that telecom carriers were cutting subsidies of handsets tied to service contracts, meaning customers were faced with paying full price of $1,000 or more for high-end models.

"People don't want to spend another thousand bucks to replace something that isn't broken," Mr Enderle maintained.

"In emerging markets you can't get people to pay a quarter of their monthly income for a phone; they are not giving up food for texting."

In an unusual move, Apple lowered prices in some emerging markets to offset the effects of a strong US dollar on local pocketbooks.

Mr Cook said that last month, in some locations and for some products, Apple "absorbed part of the foreign currency move" to "get close or perhaps right on" prices in those respective markets a year ago.

"So yes, I do think that price is a factor," Mr Cook said.

The latest data suggests the days of red-hot smartphone growth are over and sluggish growth or contraction is likely in many saturated markets.

Apple recently reported a rare drop in revenue in the fourth quarter South Korea's Samsung, the largest smartphone maker, reported a slump in fourth-quarter net profits, blaming a drop in demand for its key products.

"Globally the smartphone market is a mess right now," said IDC analyst Ryan Reith.

"Outside of a handful of high-growth markets like India, Indonesia, (South) Korea and Vietnam, we did not see a lot of positive activity in 2018." - AFP