Phone-Makers Betting on 5G Devices to Overcome Smartphone Slump
Global demand for mobile phones is stalling, growing by just 0.2 percent in 2018 to 1.95 billion, according to the latest forecast published by technology research firm CCS Insight. This assessment comes from the combination of a gloomy picture in developed markets and a more positive outlook for some emerging markets, notably in Asia-Pacific and Africa.
Commenting on the latest forecast, Marina Koytcheva, CCS Insight's VP, Forecasting, notes, "After a challenging 2017, our analysis suggests it's going to be a rough ride for phone-makers in 2018, particularly those targeting Western markets. In 2018 we expect the Western European market to drop a further 7 percent and the North American market is starting to slow down too, dropping 3 percent year-on-year".
With new smartphones offering little more than an incremental update on previous models, CCS Insight fears demand is unlikely to grow significantly for the next few years. Koytcheva adds, "Consumers in mature markets have been underwhelmed by the latest crop of flagship smartphones. Price hikes for top-end devices, with some of the latest and greatest devices hitting $1,000 or €1,000, have certainly not helped, and it's little surprise more customers have decided they might as well stick with the device they already own".
The research firm notes that until recently, the North American market had remained somewhat sheltered from the smartphone downturn, primarily as a result of carriers pushing consumers toward upgrade programmes. However, now this upgrade cycle is almost complete, CCS Insight expects the US market to go in a similar direction to Western Europe, with the market facing a steady decline in the coming years.
However, Koytcheva notes that it's not all doom and gloom: "Although mature markets are suffering, there's still growth potential in Africa, the emerging markets of Asia-Pacific, and India.
Looking further into the future, CCS Insight believes the balance between developed and emerging markets will remain relatively stable, resulting in the global market for mobile phones edging up very slightly over the next five years, eventually delivering sales of more than 2 billion units in 2022.
In this context, CCS Insight believes that manufacturers are increasingly looking to 5G technology to reignite growth in mature markets. Koytcheva comments, "The arrival of 5G handsets offers a glimmer of hope for embattled smartphone makers. They're betting that this new, faster technology will give consumers a reason to upgrade their phones".
That said, Koytcheva cautions that phone-makers will have to be patient as they wait for this next wave of upgrade activity. "Although we expect the first 5G smartphones will hit the market in 2019, really significant demand won't start until 2021, eventually having a positive impact in 2022, when we expect over 600 million 5G phones will be sold, accounting for 31 percent of the global market."
CCS Insight also notes that while advanced markets are focused on the transition to 5G, consumers in emerging markets are taking up smartphones more slowly than previously expected. Koytcheva comments, "The rising cost of components for entry-level smartphones and the arrival of affordable feature phones that support 4G networks mean that many people who otherwise might have bought their first smartphone are sticking with a feature phone for now".
CCS Insight's research indicates that the trend is most prominent in India, but is also evident in other emerging markets. As a result, the research company believes smartphones will account for less than half of all mobile phones sold in India, emerging markets in Asia-Pacific and Africa in 2018.
Koytcheva concludes with a note of optimism: "Although the next couple of years are going to be tough, we're certain that the shift to smartphones in emerging markets hasn't evaporated — it's merely been delayed. This year worldwide sales of smartphones will top 1.5 billion units for the first time, and by 2022 sales will nudge 1.8 billion units".
MTCHT
ICT
TECHNOLOGICAL INNOVATIONS
POST
ABOUT US
NEWS
INTERESTING
INTERVIEW
ANALYSIS
ONLAIN LESSONS
