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Sales of smartphones set to fall in Western Europe

Sales of smartphones in Western Europe are set to fall by 7% to 141 million this year, as consumers reject expensive upgrades that, in reality, offer little more than incremental updates.

The predicted decline follows on from the continued falls in demand seen in 2016 and 2017 in what some believe is a worrying trend.

According to analyst firm CCS Insight the demand for smartphones globally will rise by just 0.2% this year to 1.95 billion. And estimates are that growth will remain slow until 2022, when 2.02 billion phones will be sold worldwide.

The global market is being buoyed by emerging markets such as Asia Pacific which masks the continued decline in mature markets including North America. Estimates are that sales in the US will fall 3% this year. It is also significant that sales in China are expected to remain flat.

A substantial reason for the fall in sales in Europe and America is that consumers are becoming a lot savvier and discerning when it comes to mobile phones.

People used to sleepwalk to an operator and would spend £30 per month for a phone they’d keep for a short time and then upgrade. But they’ve started doing the maths, that if they buy outright and get SIM-only deal it can be far more economical.

If you look at devices competing for consumers’ discretionary budget, there is less incentive to upgrade smartphones than ever before.

- Ben Wood: Analyst, CCS Insight

Smartphone manufacturers and operators are placing their hopes in the boost that 5G will bring to revive flagging sales. CCS Insight predicts that after 2020 over 600 million 5G-enabled phones will be sold.

If you look at any consumer electronic tech, much of the upgrade path is predicated on saying ‘you’ve got the old one, you need the new one.’ Absolutely 5G is going to be the carrot that phone makers are going to anchor sales with.

If network operators, phone makers and retailers are betting on 5G there is a real urgency to come up with reasons why we need that technology. I’m not questioning the arrival of the technology, but we will have to question the business case.

- Ben Wood: Analyst, CCS Insight

In Ofcom’s recent auction for 5G, O2 spent £317 million on 40MHz of 3.4GHz spectrum, key to rolling out 5G in the next couple of years. Likewise, Vodafone paid £378 million, EE spent £303 million and Three paid £151 million.

Ofcom has set a 2020 timetable for the launch of 5G, with trials to take place next year. But recently, BT’s chief executive, Gavin Patterson admitted they were struggling to make a business case for 5G investment simply because of the huge costs associated with it.

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A veteran freelance journalist writing extensively on internet news and cybersecurity.
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