Smartphone market in historic drop

It’s almost unthinkable but the smartphone market has dipped for the first time in its history.

According to Canalys, worldwide smartphone shipment fell from 324 million units in Q1 2015 to 321 million units in Q1 2016. The top two vendors both posted shipment declines, with Apple the worse hit.

Excluding Apple and Samsung, smartphone shipment grew five percent despite some of the big named international vendors outside the top five also faring badly. LG, Lenovo and TCL-Alcatel posted significant declines, while Sony plummeted by around 57 percent.

Canalys attributed the decline to a number of factors:

  • Apple’s inability to repeat the success of the iPhone 6, which kick-started a massive upgrade cycle thanks to its larger display. The company had the largest fall in growth of all the major vendors, shipping 11 million fewer units in Q1 2016 than in Q1 2015 (a 16 percent drop).
  • Slowing product innovation in the premium smart phone space has led to increasingly modest upgrades to flagship handsets, meaning consumers keep devices for longer. In some markets, such as the US and Western Europe, subsidies are being reduced, which has compounded the effect.
  • The significant improvements in the specification and quality of mid-range devices means replacement cycles in high-growth markets are also lengthening.
  • Flagship models, such as Samsung’s Galaxy S7 and Apple’s iPhone 6s, are still beyond the reach of many in emerging high-growth markets.
“Conditions are challenging for many vendors, and we expect to see a consolidation of the smart phone market in coming quarters. There are bright spots, however, such as Huawei, Oppo and Vivo, which all increased shipments dramatically. These vendors are expanding beyond China, nurturing their channels, spending on marketing and making their differentiators around technology and positioning abundantly clear to consumers,” said Rachel Lashford, VP of Analysis at Canalys.
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