With the shrinking of the global smartphone market, the force is being most felt by two of the biggest players.
Warnings of a drop in sale and consequently profits for the last quarter of 2018 have been issued by both Apple and Samsung. Additionally, another South Korean tech company LG issued warning of a drop in operating profits of 80 per cent in the same period year-on-year.
However, industry analysts are now predicting the industry would slowly return to a growth phase in 2019.
But the last year’s sale figures have been grim.
According to preliminary forecasts by tech consultancies Canalys and Counterpoint Research, there was a fall of about 1 per cent in the industry in 2018. This would be the first ever annual decline for the smartphone market.
A much steeper drop of about 3 per cent has been estimated by another research firm IDC.
There would be a drop in operating profits of as much 30 per cent in the fourth quarter of 2018, predicted Samsung.
The main downward pressure on the smartphone industry was delivered by the largest smartphone market of the world – China where sale of phones have been dropping for almost two years now. According to the estimates of Canalys, in 2018, there had been a drop of as much as 9 per cent in smartphone sale in China primarily because of a slowdown in itrs economy and a long and acrimonious trade war with the United States.
“[In] 2018 the market was so bad that it will be easy for 2019 to be a better year,” said Tom Kang, a research director at Counterpoint. “[The] first half looks gloomy but second half we can expect these things to pan out,” he added.
Kang says that trend of “feature phone” owners upgrading to better devices would be the driver for the recovery. Complete access to the internet is not provided by feature phones and therefore Kang predicts that in 2019, such feature phone users would upgrade to smartphones.
Despite the prediction of prolongation of the slowdown of the Chinese market, analysts predict that recovery would be driven by growth in the emerging markets which includes India and those in Africa – which together comprises a market where at least a billion consumers still do not own a smartphone.
“Those markets will continue to grow, to push up the global smartphone market size,” said Mo Jia, an analyst at Canalys. But the growth in the global smartphone market would be a “very slim growth in 2019”, added Jia.
A lot however also rests on the fate of the trade war between the US and China, which has already hit a number of companies on both sides including Apple, Huawei and ZTE.
According to analysts, as the two warring parties try and come to a trade agreement, the smartphone market in China would see a gradual bounce back.
For 2019, a growth of 2.6 per cent for the smartphone market has been predicted by IDC. But the prediction could be revised down with delay in the recovery of the Chinese economy and the Chinese smartphone market, analyst Ryan Reith said.
(Adapted from CNN.com)