Wednesday, 27 November 2019 11:33

Quarterly smartphone sales decline as consumer demand weakens Featured

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Global smartphone sales to end users declined slightly in the third quarter of 2019, with demand remaining weak as consumers became more concerned about getting value for money, according to a new report.

Worldwide smartphones sales in the quarter contracted by 0.4% compared with the third quarter of 2018, and were down by 6.5% for the quarter in Australia. according to the report from Gartner.

Apple recorded another double-digit decline in sales, year over year, while Samsung bucked the sales contraction, managing to retain the No. 1 position globally in the quarter, increasing its smartphone sales by 7.8%, year over year.

“Samsung’s aggressive revamp of its portfolio, with a focus on mid-tier and entry-tier segments, strengthened its competitive position,” said Anshul Gupta, senior research director at Gartner.

And Chinese telco giant Huawei was the only one of the top-five global smartphone vendors to achieve double-digit growth in smartphone sales in the third quarter.

peter gartner one

“For most smartphone users, desire has shifted away from owning the least expensive smartphone. Today’s smartphone user is opting for mid-tier smartphones over premium-tier ones because they offer better value for money,” Gupta said.

“In addition, while waiting for 5G network coverage to increase to more countries, smartphone users are delaying their purchase decisions until 2020.”

According to Gartner, this shift has led brands such as Samsung, Huawei, Xiaomi, OPPO and Vivo to strengthen their entry-level and mid-tier portfolios.

And Gartner says this strategy helped Huawei, Samsung and OPPO grow in the third quarter of 2019, but by contrast, Apple recorded another double-digit decline in sales, year over year.

Apple’s iPhone sales continued to decline in the third quarter of 2019, with the company selling 40.8 million iPhones, a year-over-year decline of 10.7%.

peter gartner two

“Although Apple continued its sales promotions and discounts in various markets, this was not enough to stimulate demand globally,” said Gupta.

“In the Greater China market sales of iPhones continued to improve, however, it follows a double-digit decline recorded at the beginning of the year. The iPhone 11, 11 Pro and 11 Pro Max saw good initial adoption, which suggests that sales may be positive in the remaining quarter.”

Huawei sold 65.8 million smartphones, an increase of 26%, year over year, with the company’s performance in China the key driver of its global smartphone sales growth. It sold 40.5 million smartphones in China and increased its share of the country’s market by almost 15 percentage points.

“While the ban on Huawei to access key U.S. technologies is yet to be fully implemented as a three-month extension was just announced, the proposed ban brought negativity around Huawei’s brand in the international market,” according to Gartner.

“Nevertheless, Huawei’s strong ecosystem in China continued to show growth. The current situation with the U.S. has also fostered patriotism among Huawei’s partners, which are now keener to promote its smartphones in China — a development that makes it difficult for local competitors to compete aggressively against Huawei.

“Huawei’s long investment in sub-brands (Honor and Nova), in multichannel operations (online and retail), and in 5G and other technological innovation forms the basis of its success in China.”

With Black Friday and Cyber Monday approaching, Gartner says smartphone deals are likely to spur consumer demand in the fourth quarter of 2019.

“Vendors including Google and Samsung are likely to offer aggressive price promotions not just for their older smartphones but also for new devices such as the Google Pixel 4 and Samsung Galaxy Note 10,” Gartner notes.

Garrtner also says that ompetition between mobile phone manufacturers will increasingly focus on more intelligent smartphones, with these devices delivering increasingly personalised content and services that draw on users’ contexts and preferences.

“To deliver relevant personalised experiences, manufacturers will need to improve the integration of artificial intelligence (AI) in smartphones and make security capabilities and privacy key aspects of their brands,” said Roberta Cozza, senior research director at Gartner.

“At a time of limited technology-led innovation, product managers should focus on offering attractive features at low prices as quickly as possible. By offering better value for money, they can increase demand for smartphones,” Cozza said.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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