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Smartphone Bust: Global Phone Sales In Downturn Ahead Of 5G Launch

Courtesy of ZeroHedge. View original post here.

As the global synchronized decline builds momentum, smartphone sales across many regions of the world will remain depressed in 2019.

Gartner, Inc., a research and advisory firm, has published a new report that details sales of smartphones to consumers will total 1.5 billion units in 2019, a 2.5% decline YoY.

The report said Japan, Western Europe, and North America are regions where most of the slump is originating from.

Gartner analysts expect smartphone sales to grow in 2020, driven by the launch of 5G models in various parts of the world by communications service providers (CSPs). Analysts expect Apple to reveal its first 5G Apple iPhone for commercial launch next year.

"Lengthening smartphone replacement cycles and a ban on Huawei accessing technology from U.S.-based suppliers weakened demand for smartphones in the first half of 2019," said Annette Zimmermann, research vice president at Gartner. "We expect demand to get even weaker in the second half as replacement of high-, low- and mid-end smartphones continues to slow, due to low value benefits."

Zimmermann expects 5G smartphone sales to start increasing in 2H20 because of coverage and availability will begin to increase with CSPs.

"Although leading mobile manufacturers have started positioning their first 5G smartphones (such as the LG V50 ThinQ, OPPO Reno 5G, Samsung Galaxy S10 5G and Xiaomi Mi MIX 3 5G), and CSPs have started to offer some aggressively priced 5G service packages, 5G smartphone sales are set to remain small in 2019. Sales will start to ramp up in the second half of 2020 as the coverage and availability of 5G hardware services improve," said Zimmermann.

FY'19 projections for 5G smartphones sales across the world are about 15 million units, which represents less than 1% of total smartphone sales for the year.

Analysts found that Japan (-6.5%), Western Europe (-5.3%) and North America (-4.4%) will experience the most significant smartphone declines this year: "In mature markets, the high-end smartphone market is particularly oversupplied and commoditized, with higher average selling prices (ASPs) and no compelling new utility or experiences for users to upgrade to. Despite ASP increases on high-end smartphones slowing down recently, the vendors who primarily rely on replacement smartphone sales continue to face tough times," said Roberta Cozza, senior research director at Gartner.

Gartner sees widespread deterioration for 2H19, continuing the trend from earlier in the year. The weakness in smartphone sales comes as the industry's growth rate in global sales has declined since about 2015.

Another reason for slowing sales is the trade war that created massive amounts of uncertainties that have amplified a structural slowdown around the world. President Trump's economic war against China and Huawei this year have certainly not helped the industry's overall health: "The ban on Huawei (even though currently partially lifted) has created negativity around the Huawei brand and is likely to open a few opportunities for other manufacturers in overseas markets such as Western Europe," said Zimmerman. "Despite the US administration's directive that allows US suppliers to work with Huawei again, the situation remains unclear. The latter part of the second quarter of 2019 was certainly challenging for Huawei in EMEA and Latin America. However, its leading position in its home market remained unchanged."

And in a separate report, we recently detailed how a global smartphone bust has been underway for some time, has led to a surprising new trend that sheds light on one reason why the Trump administration has waged war on China: Huawei has replaced Apple as No.2 smartphone maker in the world.

With Western smartphone makers becoming less relevant in global markets, and the launch of 5G next year, most likely dominated by Huawei and Samsung, could further explain how America's global dominance is dying.

As cycles boom, then eventually bust, out with the old [American domiance], and in with the new [Asian dominance]. The world is rapidly reshaping away from the West.


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