Gartner: the sale of smartphones weakened in the third quarter but is expected to pick up in 2020

Midtier devices drive more sales globally and Huawei sales increased 26%, with the strongest growth in the top five suppliers.

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Karen Roby from TechRepublic and Jessica Dolcourt from CNET discuss the current and future state of the smartphone industry and the long-awaited benefits of 5G.

Sales of smartphones continued to fall globally in the third quarter of this year, according to Gartner by 0.4% compared to the same period last year.

This was the third consecutive quarter of decline for smartphone sales, but the smallest decline of the year, with a 1.7% decrease in the second quarter of 2019 and a decrease of 2.7% in the first quarter of 2019, according to Gartner .

One of the problems that caused the sales decline is a lack of value on smartphones. Consumers no longer buy the cheapest smartphone, nor the most expensive smartphone. Instead, they opt for medium-sized smartphones that offer more value, according to Anshul Gupta, senior research director at Gartner.

SEE: 5G mobile networks: a guide for insiders (free PDF) (TechRepublic)

A medium-sized smartphone is defined by Gartner as a phone that sells on average around $ 350.

Another factor that causes consumers to wait before they buy a new phone is that they are waiting
5G coverage
in more countries, Gupta said.

Expected revenue in 2020

Turnover, which was delayed in 2019, will pick up next year. “We expect that 2020 will be a year of growth,” Gupta said.

However, consumers will still buy medium-sized phones until 2020. “Mid-tier smartphones will continue to be the key to drive growth in market segments worldwide, so in emerging markets because of the aspirations to own the best possible smartphone,” Gupta said.

Tuong Nguyen, senior chief research analyst, agreed that the trend towards mid-range telephones would continue until 2020.
“While high-tier phones continue to have the latest and greatest hardware and features, the smartphone market has reached a point where the improvements achieved with the latest high-end device are marginal and often excessive for the average user,” Nguyen said.

“I think of it as having ‘too much’ and then adding more to it. Sometimes I think of it as fast food analogies. You need a hamburger pie to make a hamburger. Maybe a double pie would make it better. But otherwise it’s excessive for “most” people, “he added.

To encourage consumers to buy premium phones again, Nguyen said: “These devices should offer something that will change the experience considerably. We don’t know yet what that is, but we saw a similar shift when people went from non-smartphones to smartphones. It went from a device for mainly voice calls and some text to a mini computer in your pocket. “

Gupta said that “a faster pace of innovation and the next generation UX will be crucial” to interest consumers in buying premium smartphones again.

What the shift in purchasing decisions means for manufacturers

Brands such as Samsung, Huawei, Xiaomi, OPPO and Vivo have been able to improve their entry and middle portfolios as a result of this shift in purchasing decisions, and Huawei, Samsung and OPPO grew as a result in the third quarter of 2019. For comparison: Apple has seen a double decrease in sales, compared to a year earlier.

Image: Gartner

Huawei recorded double-digit sales growth despite the slowing smartphone market and was the only one of the five largest smartphone suppliers worldwide with double-digit growth in smartphone sales in the third quarter of 2019.

Huawei sold 65.8 million smartphones, an increase of 26% compared to the same period in 2018. Performance in China is the main driver of its growth, with 40.5 million of its smartphone sales there. The ban on Huawei to gain access to important US technology has yet to be fully implemented, but the proposed ban brought negativity to the brand on the international market, according to the Gartner release.

“The current situation with the US has also fostered patriotism among Huawei’s partners who now want to promote their smartphones in China – a development that makes it difficult for local competitors to compete aggressively against Huawei. Huawei’s long investment in sub-brands ( Honor and Nova), in multi-channel operations (online and retail), and in 5G and other technological innovation forms the basis of its success in China, “according to the Gartner release.

Sell ​​Black Friday and Cyber ​​Monday

Black Friday and Cyber ​​Monday can boost the sales of smartphones and boost consumer demand in the fourth quarter of 2019. Google and Samsung are likely to offer aggressive price offers for both older and newer devices, including the Google Pixel 4 and the Samsung Galaxy Note 10.

“Competition between mobile phone manufacturers will increasingly focus on smarter smartphones,” said Roberta Cozza, senior research director at Gartner, in the release.

“These devices will increasingly deliver personalized content and services based on the context and preferences of users,” said Cozza. To provide relevant personalized experiences, manufacturers must improve the integration of artificial intelligence (AI) into smartphones and create security features and privacy-critical aspects of their brands. ”

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