The phenomenon that has been the global conquest of the smartphone may well have come to an end. According to research company Strategic Analytics this year’s worldwide third quarter sales figures has seen the handset segment ‘effectively in a recession.’
Economists count a recession if there are two successive quarters of negative growth. And, according to Counterpoint Research, the smartphone market will decline by the end of 2018. Down, they say, by 1.8% when compared to 2017. This is in stark contrast to the compound growth of 16% for the five years between 2012 and 2017.
Experts have pointed to a number of factors that has led to this unprecedented situation. For instance, Counterpoint cited currency volatility in Latin America, where depreciation has caused potential buyers to defer purchases of new phones.
Counterpoint also highlighted the continued use of the dollar by Apple and Google for app store purchases having had a knock-on effect on declining software sales.
Another has been the global impact of Apple’s decision to contentrate on increasing profit margins through higher prices. This has dampened people’s enthusiasm to purchase new phones, instead keeping their older models far longer than previously.
Apple’s relentless focus on price increases is capping its overall volume growth.- Neil Mawston: Executive director, Counterpoint Research
According to Strategic Analytics, Samsung managed to cling-on to first place with 20% of the global market but saw shipments of handsets fall 13.3% year-on-year. Meanwhile Huawei and Xiaomi continued to grow faster than their rivals while Apple remained in third place with a 13% market share.
Apple’s focus on price has led to it announcing that iPhone revenue increased 29% over the year but not because they are selling more phones. In its last quarter Apple shipped 46.9 million units, which represented stagnant growth compared to last year’s sales.
This now means that the iPhone units are going to start going negative year-on-year growth because it’s easy to talk about great things and not show details that aren’t so great.- Jim Suva: Analyst, Citigroup
Despite flat volume sales Apple did see some impressive figures for service revenues with subscriptions a particular highlight where, they said, paid subscriptions reached 330 million.
Apple accessories such as the Apple Watch, Beats headphones and AirPods have been another huge success for Apple as their wearable range has become, they boast, an essential part of people’s everyday lives. Still investors were not impressed, and Apple’s stock price fell a full 7%.
Image: Marc Smith