Smartphone sales stagnate because the thrill is gone

Text size

There is no way out: the world of smartphones is flat.

While thousands of vendors and analysts are traveling to the Mobile World Congress in Barcelona from Monday, they are facing alarming numbers: global smartphone sales have barely budged that in the fourth quarter of 2018, up 0.1% to 408.4 million.

Most alarming, the two main suppliers –
Samsung Electronics

and
Apple

(ticker: APPL) – the least expensive Chinese quarters, Huawei and OPPO, continue to make significant progress in China, the largest smartphone market in the world.

What is happening on the market is nothing new for the besotted smartphone vendors, but the degree of development of it is the same. Consumers are opting for mid-range and mid-range models. At the same time, more expensive models lack convincing innovation to entice smartphone owners to upgrade, said Gartner's director of research, Anshul Gupta. Barron's in an email.

This creates a worrying backdrop for a sector that has experienced tremendous growth, as evidenced by the phenomenon of iPhone sales during most of the decade. IPhones sales were down 15 percent to $ 51.98 billion in Apple's earnings report for the December quarter. Apple attributed this decline to several factors: customers who keep their iPhone longer, unfavorable exchange rates in countries such as Turkey, lower subsidies from operators, and a change in the battery replacement program facilitating the maintenance of their customers. longer iPhones.

"The innovation is probably drought-free in the last few years," said Dan Hays, senior consultant at PricewaterhouseCoopers. "We are starting to see exciting things in industrial design that captivate the imagination of those who are willing to pay a premium."

Samsung (South Korea: 005930) has leapt forward in the big conference in Barcelona with sensational news: a collapsible smartphone tablet that costs nearly $ 2,000.

The radical design of the Galaxy Fold could foreshadow a multitude of flexible phones as the market tries to find a way to accelerate sales after a few mediocre years. rivals
Xiaomi

(Hong Kong: 1810), Huawei, LG,
Lenovo Group

(Hong Kong: 0992), and Motorola have also been linked to flexible phones. Last week, Apple updated a patent with drawings of a foldable flip phone.

If consumers can use Galaxy Fold to view and create content, it will have great value, despite its high price, said Gartner analyst, Werner Goertz, who attended the event. "I would like to see how not only consumer applications such as WhatsApp and Google Maps, but also productivity applications such as Google Suite and Office 365, work in dual mode," said Goertz. Barron's in an email.

The base price of the product, nearly $ 2,000, is "very high, but it is indicative of the confidence with which Samsung puts it on the market," he wrote.

Samsung, the de facto leader in global smartphone sales, saw its market share fall to 17.3 percent in the fourth quarter of 2018 from 18.2 percent a year earlier. The share of its rival for low-cost smartphones, Huawei, has risen from 10.8 percent to 14.8 percent over the same period, according to the Gartner market research. Apple recorded the largest decline, from 17.9% a year earlier, to 15.8%.

If foldable phones have created a craze in recent days, the next super-fast 5G telecommunications network is expected to dominate the news at the Mobile World Congress. The industry is placing its hopes in creating a wave of sales of 5G compatible phones.

AT & T Chief Technology Officer Andre Fuetsch spoke about the company's gradual roll-out of the company's 5G network – he announced the additions to Chicago and Minneapolis earlier this month – as part of a rolling strategy of thunder ", during a telephone interview. There are up to 21 cities in the United States.

The low latency of 5G will improve mixed reality applications, which will dramatically improve the user experience of virtual goggles, Fuetsch told Barron. He added that the high reliability of the 5G will in turn ensure that events broadcast live on mobile phones will not be interrupted.

PwC Hays warns that 5G is a next-generation technology that will take five to eight years to fully deploy because most mobile operators do not have the capital to make such an important upgrade. The deployment of its predecessor, 4G, took three to five years, he said.

Write to Jon Swartz at [email protected]