Brief:
- Smartphone sales continued to dip worldwide with a drop of 2.7% to 373 million units in Q1 from a year earlier, consulting firm Gartner estimates. China and the U.S., the two biggest markets for smartphones, saw declines of 3.2% and 15.8%, respectively, as consumers held onto their mobile devices for longer.
- Samsung, the world's largest smartphone maker, saw its market share dwindle to 19.2% from 20.5% a year earlier as its unit sales dropped 8.8% to 71.6 million. Apple's market share fell to 11.9% from 14.1% amid an 18% decline in iPhone sales to 44.6 million units, Gartner estimates.
- Huawei, the Chinese electronics firm that has been part of a trade dispute with the U.S., boosted its global market share to 15.7% to 10.5% as unit sales surged 45% to more than 58.4 million in Q1.
Insight:
The smartphone market has shown signs of maturing in the past few years as developed markets have reached saturation. The pace of innovation also has slowed, as Gartner notes, giving smartphone users fewer reasons to buy the latest high-end models that offer incremental improvements to popular features like digital cameras. The industry is unlikely to see a massive replacement cycle until next-generation 5G service expands in more regions, compelling consumers to upgrade their smartphones to gain access to faster downloads of videos, games and apps.
Samsung's shipment numbers may show improvement in future studies, as the electronics giant started selling its Galaxy S10 smartphone late in Q1. It also expanded its product line for mid-tier and entry-tier price ranges, but faces intense competition from Chinese manufacturers like Huawei. The U.S. this month put Huawei on a trade blacklist that requires U.S. companies to obtain a special license to do business with the company. Google this month pulled Huawei's license to its Android mobile operating system, while chipmakers Intel and Qualcomm banned the company. The U.S. government has cited security concerns about Huawei's products, while the company has accused the Trump administration of breaking the law.
Meanwhile, Apple's slumping iPhone sales are a major reason why the tech giant is expanding its services business, which includes the App Store, Apple Music, Apple Pay and iCloud storage. Apple this year will introduce Apple TV Plus, an ad-free video-subscription service that carries original programming for a flat monthly fee. The company also rolled out Apple News Plus as a digital newsstand that charges $9.99 a month for access to more than 300 magazines and newspapers. Apple's high-margin services business showed healthy growth of 19% to $10.88 billion in Q1, putting the company on track to reach its of annual goal of $50 billion by 2020.
