When did you last upgrade your smartphone?
Perhaps not as promptly as you have in the past? After explosive growth, the smartphone industry is showing some signs of slowing. So have we passed the peak?
The industry’s had a tricky few months, with shipments dropping nearly 5% in the fourth quarter of 2018, compared with the same period a year earlier, according to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.
“Outside of a handful of high-growth markets like India, Indonesia, Korea, and Vietnam, we did not see a lot of positive activity in 2018,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers. “We believe several factors are at play here, including lengthening replacement cycles, increasing penetration levels in many large markets, political and economic uncertainty, and growing consumer frustration around continuously rising price points.”
The final period of 2018 was the fifth consecutive quarterly decline, closing the worst year ever for smartphone shipments.
Even Apple, a company synonymous with the smartphone, is warning investors that life is getting tougher. Earlier this year the company issued its first profit warning since it launched the iPhone.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline,” chief executive Tim Cook wrote to investors. “While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be.”
The IDC data showed iPhone volumes dropped nearly 12% in the fourth quarter of 2018 and total volumes were down 3% for the full year. Samsung smartphone volumes declined nearly 6% in the fourth quarter, dragging full year volumes down 8%. But Huawei volumes grew 34% over the year and 44% in the fourth quarter, powered by its Honor line of devices.
“With replacement rates continuing to slow across numerous markets, vendors will need to find a new equilibrium that balances the latest smartphone features, compelling design, and affordability,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker. “The arrival of both 5G and foldable devices later this year could bring new life to the industry depending on how vendors and carriers market the real-life benefits of these technologies.”
Even as smartphone growth slows, their proliferation has created the fastest-growing waste stream in the world, as discarded phones and associated technologies mount up to create so-called e-waste.
According to a report launched at the World Economic Forum’s Annual Meeting in Davos, we produce nearly 45 million tonnes in total each year, enough to weigh more than 125,000 Boeing 747 jumbo jets or to build 4,500 replicas of the Eiffel Tower.
The report called for a new circular approach for electronics, boosting buy-back
or returning systems for old equipment, recycling components more readily, and improving durability and repairs. It advocated the use of financial incentives and said consumers would need to be reassured that their personal data would be properly handled.
Some of those solutions could actually help revive profits in the industry – with Apple’s Tim Cook suggesting that trading in old iPhones might incentivize people to upgrade to newer versions, bolstering sales.
“We are undertaking and accelerating other initiatives to improve our results,” he wrote. “One such initiative is making it simple to trade in a phone in our stores. This is not only great for the environment, it is great for the customer, as their existing phone acts as a subsidy for their new phone, and it is great for developers, as it can help grow our installed base.”