Global smartphone market to decline for 1st time in 2018: Counterpoint report

After years of growth, the global smartphone market has hit stagnation and would experience an annual decline of a little over 1% for the first time in 2018, Counterpoint Research has said.

According to Counterpoint's latest smartphone forecast report, smartphone growth will drop to a negative 1.3% in 2018. This is a first in the history of smartphones that the market has contracted Year-over-Year (YoY).

The smartphone market has been experiencing negative growth since the fourth quarter of 2017 and the negative trend is expected to continue in the September quarter and upcoming December quarter as well.

"Many markets have already hit a saturation point for new smartphone demand and are dependent on replacement demand. However, since last year consumers decided to trade up whenever they had the chance and are thus going for a better device, despite the price difference," said Tom Kang, Research Director, Counterpoint Research.

"This is evident in the introduction of Apple's iPhone X last year. But buying a more expensive device results in extending the length of replacement cycles, especially when your earnings are limited," Kang added.

The weak demand was attributed to multiple factors -- starting from the global economy slowing down and exchange rates in emerging markets fluctuating rapidly as in the case of Latin America.

"The US-China tariff wars aren't helping the situation either. Some markets are cooling down after years of overshooting caused by extreme competition. But at the core of the weak demand could be the change in consumer behaviour," the report added.

Next year is unlikely to be much different as the trend continues with the new Apple iPhone XS Max introduced at a higher price point and with Samsung's foldable smartphone coming soon and 5G devices on the horizon.

"Overall, smartphone revenue may grow 9% compared to last year. This is even higher than the 7% revenue growth of 2017," Kang added.