Are smartphones reaching the saturation point, where everyone who wants one already has one? It might be a bit too soon to say for certain, but research firm Gartner says that it saw the first year-over-year decline in smartphone sales since it started tracking the smartphone market in 2004.
According to Gartner, people bought about 408 million smartphones in the fourth quarter of 2017, which sounds pretty good until you realize it’s a 5.6 percent decline from the same period in 2016.
Gartner says two factors may help explain the trend:
- There’s less incentive for feature phone users to upgrade due to a limited selection of decent low-end smartphones.
- People buying higher-priced phones are opting for “quality models and keeping them longer, lengthening the replacement cycle of smartphones.”
In other words, there may not be enough new customers to make up for the fact that people are holding onto their existing phones longer.
That’s not necessarily a bad thing for consumers. But it could be troubling for phone makers who are used to being able to convince shoppers to upgrade every year or two.
Gartner’s numbers suggest Huawei and Xiaomi were the only two of the top 5 smartphone companies to see growth between Q4, 2016 and 4, 2017. Samsung, Apple, and Oppo all saw declines… although the biggest drop may be in the “others” category, where all other smartphone makers combined saw a decline in sales from 195 million units in the fourth quarter of 2016 to 163 million units a year later.
That said, it’s worth noting that these figures only compare fourth quarter sales. When you look at the full year, Gartner says phone sales were up 2.7 percent in 2017 compared to 2016 with total global sales of about 1.54 billion units.
I recently upgraded from my OnePlus One to an Alcatel flip phone. Guess I’m not in the statistics 🙂
I think the primary issue is carriers eliminating the free/discounted upgrades. I used to get an upgrade credit and buy a flagship phone at verizon every two years for about $299, or last year’s flagship for $199. $700 to $1,000? I’ll pass. This year I got a used Nexus 5X on ebay for $109 and switched to Project Fi. Nexus 5X is fast enough to be a decent phone, the battery lasts all day, the Camera is decent, and Project Fi service has been excellent at a reasonable price. Sorry verizon.
Man, around 7% of the entire world’s population over the age of 10 got a new mobile phone in one three month period. Even if you assume 4Q is the best sales quarter, that’s around 20% to 25% of the world’s population (over 10) getting a new mobile phone over a one year period.
How on earth could we not be reaching saturation point?
I’m sitting here pondering the same thing.
I think we discard them into the Pacific as its easier than recycling, so I’m thinking of taking a boat and looking for an island made up of discarded phones. If I plant my flag, its mine.
Saturation probably isn’t the best term, but I think we all know what the author meant.
“When you look at the full year, Gartner says phone sales were up 2.7 percent in 2017 compared to 2016 with total global sales of about 1.54 million units.”
Don’t u mean 1.54 Billion units??
Hm.
trend 1. completely false. (less incentive for feature phone users to upgrade due …)
Clearly lot of people are buying Xiaomi. These phones are decent low-ends. Very decent.
trend 2. I think the whole segment of phones got “mad” (in certain sense).
High-end phones have unbelievable prices. The rest of the phones are just compromise
of features. Most of the people already have phone packed with compromises.
They would buy a new one – and they do actually (as sales for the whole year got up),
it’s just impossible to buy a phone as a Christmas gift (or whatever).
The decline is still not here. Manufacturers are stretching it into the future.
But it can be soon. Consider this:
Xiaomi had only 1 phone with QHD resolution (back in 2015 Jan). Since then, they only produce HD,FHD screens.
If they ever make usable camera or QHD resolution or even stylus in their high-end sector,
lot of people will go for it. Or maybe NFC, wifi-ac, usb-c in their low-ends.
Maybe lot of the people are actually waiting for something like this to happen.
(and if it happens, then the year after – that will be decline)
Right now there is only decline of trust into traditional manufacturers. And rightfully so.
With the advent of $1,000 phones it is no wonder people are hanging on to them longer.
I doubt that’s got much to do with it. The volume market is and will remain at a much lower price point than $1000, and not all the flagships are $1000 anyway.
Even at $600 people would need a good reason to upgrade, and with the technology maturing that reason just doesn’t exist as frequently.
It’s memory prices pushing the mid and low end backwards.Why replace a 2 years old phone with a lesser device today at same price.
You can pick up a new 32GB Moto G4 new for $129 at the moment. No way could you get anything remotely that good for that price a couple of years ago (at least not without resorting to eBay or buying a resold phone in new condition.
It’s not the memory.
You can take any 2 years old phone and argue that but those are cheaper because they are older. Two years ago you had such deals for outdated devices too.
The reality is that, if you take a phone with 3GB of RAM and 32GB of NAND, cost is up maybe around 20$ vs bottom in 2016. That’s a hell of a lot for any phone that is mid range or less. That SD617 in the Moto G4 is worth less than 10$.
DRAM prices somewhat tripled and NAND prices are let’s say around 50% higher- not gonna look for the data right now but feel free to verify.
And this is much worse that impact phone sales, it kills smaller phone makers that tend to play in the budget segment. They can’t make a better phone than what they had 2 years ago at same costs. Other components have improved a bit but memory is killing them and they are going under.
Brad, I think you said it better–people are holding onto their phones longer. I don’t see that the availability of low-end phones has anything to do with it. The technology has matured where it’s not as necessary to upgrade as often. The same thing happened with desktop computers years ago.