IDC says 2018 was worst ever year for smartphone shipments
Q4 2018 shows 5% drop in smartphone markets, 2019 could also see decline
IDC says that 2018 was the worst ever year for smartphone shipments, and predicts that the likelihood of a declining marketing in 2019 is becoming more of a reality.
Preliminary figures for Q4 2018 showed shipments down to 375.4 million units, a decline of 4.9%, marking the fifth consecutive quarter of decline. Shipments were down 4.1% on the year, with 1.4 billion units shipped in 2018.
"Globally the smartphone market is a mess right now," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers. "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. 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."
Despite all the challenges the smartphone market is facing, the largest focal point remains the China market as recovery continues to get pushed further forward. China, which accounts for roughly 30% of the world's smartphone consumption, had an even worse 2018 than the previous year with volumes down just over 10%. High inventory continues to be a challenge across the market as is consumer spending on devices, which has been down overall. At the same time the top 4 brands, all of which are Chinese - Huawei, OPPO, vivo, and Xiaomi - grew their share of the China market to roughly 78%, up from 66% in 2017.
IDC said that on a worldwide basis, the top five smartphone companies continue to get stronger and now account for 69% of smartphone volume, up from 63% a year ago. If vivo is included, which is currently number six and has been in and out of the top five in recent quarters, the share of the top companies is 75% and growing. While the market faces some very serious challenges in general, none are greater than the challenges facing the brands that continue to lose market share and channel positioning.
"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. However, we expect these new devices to elevate average selling prices as new displays, chipsets, and radios will bring an increased price to the BOM (bill of materials), which will translate to higher price points for consumers. To combat this, carriers and retailers will need to fully maximize trade-in offers for older devices as a type of subsidy to push upgrades throughout 2019."