Smartphone makers shipped fewer phones in the third quarter of 2018 than they did during the same period a year earlier.

If that statement sounds familiar, it’s because you could say the same thing about the last four quarters, according to reports out this week from IDC and Strategy Analytics.

While the two reports differ on numbers and methodology a bit, they seem to agree on the trend — Strategy Analytics goes so far as to say “the global smartphone market… is effectively in a recession.”

That said, there have been some high points, and IDC’s prediction that the market will return to growth next year seems entirely plausible.

For now, IDC and Strategy analytics report that among the top 5 smartphone vendors (in terms of shipments), Samsung and Oppo both show year-over-year declines in shipments. Apple saw a small uptick. But the biggest gains came from Huawei and Xiaomi.

The biggest declines came in the “other” category, which saw a dip of 20 to 24 percent in shipments, depending on which report you’re reading.

Top 5 Smartphone Companies, Worldwide Shipments, Market Share, and Year-Over-Year Growth, Q2 2018 (shipments in millions of units)
Company3Q18 Shipment Volumes3Q18 Market Share3Q17 Shipment Volumes3Q17 Market Share3Q18/3Q17 Change
Samsung72.220.3%83.322.1%-13.4%
Huawei52.014.6%39.110.4%32.9%
Apple46.913.2%46.712.4%0.5%
Xiaomi34.39.7%28.37.5%21.2%
OPPO29.98.4%30.68.1%-2.1%
Others119.933.8%149.839.6%-19.9%
Total355.2100.0%377.8100.0%-6.0%
Source: IDC Quarterly Mobile Phone Tracker, November 1, 2018

But here’s the thing about growth in smartphone shipments — it was easy to get year-over-year growth in the early years, because most people didn’t have a smartphone 10 years ago.

Over the past decade the market has become significantly more saturated. Sure, there are still some folks who don’t have a smartphone and might want one, but those numbers are dwindling.

So if phone makers want to continue selling huge numbers of phones, they need to convince existing smartphone users to upgrade. And with phone hardware getting pretty dang good, there’s less and less reason to upgrade every year or two… at least when it comes to hardware.

Unfortunately many phone makers have a nasty habit of failing to push regular software updates even to their newest phones… nevermind aging ones. I wouldn’t go so far as to say it’s a strategy to convince users to upgrade, but it’s certainly one of the key reasons I rarely hold onto the same phone for more than 2-3 years.

Anyway, that’s one of the reasons phone makers have been rushing to adopt new designs such as phones with bezel-free designs folding displays, or other odd new design features: they make your old phone look, well… old.

I’m not entirely convinced it’ll work… but even folks who love their current phones have gotta replace them sometime. While it’s easy to hang onto a desktop or notebook computer for five years or longer, smartphones go everywhere with you, get dropped from time to time, and generally put on a lot of wear and tear. The batteries run down and aren’t easy to replace. And the software goes out of date.

So unless the estimated 2.5 billion smartphone users around the world decide to give up their phones altogether, I suspect we’ll see a boom/bust cycle in the coming years as new trends emerge and old phones die, occasionally prompting surges in smartphone shipments and sales, and occasionally causing dips like we’ve seen over the last year.

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3 replies on “Smartphone shipments are falling, but Chinese brands are picking up steam”

  1. How can a manufacturer get old/previous customers to upgrade?
    – software upgrade limitations
    – throttling older devices
    – making it impossible to upgrade or fix your current device
    – reducing build quality to break after 3 years of normal use
    – simply stopping some features from working (AppStore / PlayStore)
    – creating new fashion trends
    – improving new device performance
    – improving camera quality
    – improving battery life
    – adding features

    If the market is in a recession, how has it responded?
    – Almost all phones, sans iPhone
    – Both Samsung and Apple do this, some others too, governments are beginning to take action
    – Apple is leading here, with others following behind, and software-openness becoming a niche
    – The move to a slippery, fragile material on both sides with little impact protection attests to this, as well as some concessions being taken inside the board
    – This is highly illegal, and hasn’t been done except justifiably for really old/primitive phones. But never say never.
    – The shinier cases, curved glass, the display cutouts, the worse aspect ratio, and the emoji movement… basically
    – Apple has been generous here, Android lagged in 2015 and again in 2018, but overall this is an advertised point
    – Since 2016 the industry has stalled, cameras have newer features sure but they don’t actually take (much) better photos. Apple has merely played catch-up.
    – This is a slowly improving point. We’ve gone from 28nm/3,000mAh from 2014… and finally to 10nm/3,500mAh in 2018 (with more bloat). 2019 seems to be pushing for 7nm/4,000mAh, with hopefully a focus on 20W fast-charging. And maybe the year after we can reverse much of the bloat, and have greater ecosystem focus on efficiency.
    – I haven’t seen any feature additions. In-screen fingerprint scanner is more of an alteration of an existing feature. If anything we have reverted in features, with the removal of the headphone jack and front-firing speakers and sturdy build construction (Samsung S7 Active). I guess you can count “RGB” as an added feature, but its more of a distracting gimmick that sucks your already small battery life.

    I think that there captures the entire smartphone market in a nutshell.
    The perfect smartphone could have been built in 2013, and it would’ve only gained technological upgrades in chipset, camera, and battery density over the years. But “that’s not sexy” and these intelligent corporations know for your average gullible consumer… that sex sells, so they’ve prostituted the smartphone!

  2. …. And you forgot to mention the move to non-replaceable batteries in smartphones, – so when the battery wears out the phone becomes obsolete too.

    The only thing really driving phone-upgrades to a new model is the power of the camera, and improvement in selfie-quality can only go so far!

    A good phone cost more than a PC’s now but they are somewhat different with regard to replacement, because you still tend to keep an old pc for storage and find other uses, but an old phone has no fallback use – unless you have children to hand it on to (and who don’t turn their nose up at an old model!).

    So phones will gradually revert back to being standard electrical appliances, like everything else.

  3. Would be interesting to see how the sales/shipments in emerging regions compare to the figures above. I suspect that companies that are selling well in growth markets are the same ones that are seeing global shipments increase or remain steady.

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