Gartner sounds the alarm over falling smartphone shipments

via Flickr © Linuxbear (CC BY 2.0)

via Flickr © Linuxbear (CC BY 2.0)

  • Research firm predict steepest ever fall in annual smartphone volume
  • 'Limited attraction' of new tech means people hold onto their handsets for longer
  • Warning signs appeared in June when display shipments contracted sharply
  • Panic not: 5G phones are expected to return the sector to growth next year

Further proof that all is not well in the smartphone market arrived this week with Gartner predicting the steepest ever year-on-year decline in annual sales.

The research firm expects smartphone global smartphone sales to end users to decline by 3.2 percent compared to 2018. According to Gartner figures from earlier this year, 1.56 billion smartphones were sold in 2018, so a 3.2 percent decline equates to expected sales in 2019 of around 1.51 billion.

"This is due to consumers holding onto their phones longer, given the limited attraction of new technology, said Ranjit Atwal, senior research director at Gartner.

While smartphone makers continue to add new bells and whistles to their flagship devices every year, Atwal said they aren't doing enough to convince quite so many consumers to upgrade.

"Unless the devices provide significant new utility, efficiency or experiences, users do not necessarily want to upgrade their phones," he said.

Indeed, the biggest recent leap in smartphone form factor is the foldable touchscreen, but given the teething trouble we have seen with the technology, and the astronomical price tag, it is unlikely to move the needle on sales any time soon. Other than that, the only developments really worth mentioning are the ongoing race to see how many cameras an OEM can fit on the back of their device, and the addition of fingerprint scanners to the touchscreen.

Display of weakness

While Gartner's warning is certainly stark, it isn't the only one we've had.

IHS Markit in June revealed that in Q1, smartphone display shipments fell 20 percent sequentially, and 9 percent annually. The implication is that as far back as the first quarter, vendors anticipated a weak 2019.

In August, Strategy Analytics noted that smartphone replacement cycles in the US have reached 33 months.

It's not just smartphones that Gartner warned about this week either. It expects the whole device market – which also includes basic mobile phones, tablets and PCs – will see sales shrink 3.7 percent on last year to 2.14 billion units.

via Gartner (September 2019)

via Gartner (September 2019)

5G to the rescue?

All is not lost though, because on the horizon is supposedly the next great leap that will encourage more people to upgrade their smartphones.

"As a result of the impact of 5G, the smartphone market is expected to return to growth at 2.9 percent in 2020," Atwal said. By 2023, 5G phones are expected to account for 56 percent of total phone sales, up from a predicted 10 percent in 2020.

"More than a dozen service providers have launched commercial 5G services in a handful of markets so far," Atwal said. "To ensure smartphone sales pick up again, mobile providers are starting to emphasise 5G performance features, like faster speeds, improved network availability and enhanced security. As soon as providers better align their early performance claims for 5G with concrete plans, we expect to see 5G phones account for more than half of phone sales in 2023."

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