Smartphone vendors facing tough times as sales flatten

Smartphone sales are set to fall in developed markets, leading to flat mobile phone sales growth overall this year as vendors await the arrival of 5G to reignite the market, according to research group CCS Insight.

According to CCS Insight, global mobile phone sales will grow by just 0.2% this year to reach 1.95 billion units, with growth from emerging markets in the Asia Pacific region and Africa offsetting a 7% decline in western Europe and a 3% drop in North America.

While North American sales have been cushioned by upgrade offers from operators so far, this cycle is set to end, driving sales in that market down further, according to CCS Insight.

Lack of further innovation in the current generation of handsets is a key factor in the leveling of demand for phones, according to the research group. Sales of smartphones in emerging markets are also increasing more slowly than expected, with the rising cost of components and the availability of cheaper 4G-enabled feature phones having an impact.

Sales of smartphones are nevertheless expected to top 1.5 billion for the first time this year, rising to 1.8 billion by 2022.

While vendors are looking to 5G to enliven the market, CCS Insight expects sales of 5G devices to gain momentum only from 2022, with sales of 600 million 5G-enabled units expected by this date.

“Consumers in mature markets have been underwhelmed by the latest crop of flagship smartphones. Price hikes for top-end devices, with some of the latest and greatest devices hitting $1,000 or €1,000, have certainly not helped, and it’s little surprise more customers have decided they might as well stick with the device they already own,” said CCS Insight VP of forecasting Marina Koytcheva.

“Although we expect the first 5G smartphones will hit the market in 2019, really significant demand won’t start until 2021, eventually having a positive impact in 2022, when we expect over 600 million 5G phones will be sold, accounting for 31% of the global market,” she said.