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Sunday, June 3, 2018

The global smartphone market is now saturated

The party is over: after years of double-digit growth, the smartphone market is saturated and sales are stalling, forcing manufacturers to change their strategy to hope for a rebound that should in any case remain limited.
The party is over: after years of double-digit growth, the smartphone market is saturated and sales are stalling, forcing manufacturers to change their strategy to hope for a rebound that should in any case remain limited.

All the studies make the same observation: even though it still flows almost 1.5 billion a year, smartphone sales slow down and have even dropped in 2017. According to International Data Corporation (IDC), they could still a little decline this year to 1.462 billion units.
"The market has peaked," said analyst Bob O'Donnell of TECHnalysis, which estimates that the saturation point was reached in 2016. "In the near future, the maturity and stability (market) smartphones are going to make them look like old + technology, "he says. "It's a phenomenon we've already seen" with tablets or PCs, says O'Donnell. For him, manufacturers will have to "think differently".

Chinese air hole
The reason is the reversal of the Chinese market - which accounts for almost one-third of global volumes - and the pace of smartphone replacement that is slowing down.

In many areas, "just about everyone who wants a smartphone already has one," Bob O'Donnell says, noting that people now often keep their devices three years to two. Linda Sui (Strategy Analytics) also emphasizes "the lack of innovation in terms of design" from manufacturers, who struggle to bring breathtaking novelties more than ten years after the birth of the iPhone.

Apple, which is struggling to keep its image of innovator-in-chief, will also be expected again next week at its turn in the conference developers, where he must announce new features. As for China, "there is an impression of fatigue," note analysts Canalys, who noted a slump of more than 21% of sales in the first quarter to 91 million units, its level of end 2013.

But the Chinese air gap should only be temporary, allowing the global market to return to growth even if it should remain moderate - around 3% per year - in the coming years. For Mo Jia (Canalys), China "should experience a short period of stagnation while manufacturers refocus on research and development" rather than marketing to boost sales. IDC expects a further decline this year and a stabilization of the Chinese market in 2019.

Hence the need, say analysts, for big Chinese manufacturers (Huawei - number three worldwide behind Samsung and Apple--, Oppo, Vivo or Xiaomi) to target other countries or to bet on a wider range of products. devices, from high-end to low cost. "Now that 2017 is behind us, a lot of exciting new dynamics are emerging on the global market," says IDC's Ryan Reith, quoting India in particular.

With consumers attracted by cheap Chinese smartphones and more local production, the Indian market could jump 14% this year, according to IDC. Another factor is the arrival of 5G, the ultra-fast mobile internet. IDC expects the first compatible models in the second half of 2019 before accelerating in 2020. This could boost the appeal of ultra-high-end and / or widescreen smartphones, modeled on Apple's iPhone X or of Samsung's latest Galaxy Note, sold for around $ 1,000 and 2017 landmarks.

Some manufacturers are also able to offset the sluggish volumes by raising the average price of smartphones (+ 10% to 345 dollars this year according to IDC), a strategy that for the moment is appropriate for Apple, which manages to advance its recipes faster than sales. But again, prices should stabilize around + 3% per year according to IDC. As a result for Apple in particular, try to be less dependent on smartphones, including its connected speakers or streaming services or electronic payment.

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