IDC Sees 'Another Challenging Year' for Smartphones Ahead of 5G Acceleration

Global smartphone shipments are facing “another challenging” year in 2019 with volume forecast to retreat 1.9 percent from 2018, the third consecutive year of market contraction, IDC reported Thursday. It cited “highly saturated markets” in developed countries and slower churn in some emerging markets. First-half shipments will be down 5.5 percent from the year-ago period, said IDC, but second-half shipments should rebound with 1.4 percent growth -- despite a 5 percent decline in China -- driven by 5G acceleration, lower-priced premium phones and continued uplift from India and other markets. Developing markets have upsides, but some momentum has been lost as the transition from feature phones to smartphones slows, it said. Pricing in all markets is a “critical decision factor” for consumers, creating opportunities in mid-range price points, but the most uncertain market factor is how the U.S.-China trade war will play out over the year, said IDC. 5G smartphones will start slowly this year, capturing 0.5 percent of total 2019 shipments, but will ramp up quickly in all markets, reaching 26.3 percent of worldwide shipments by 2023, said the research firm. A challenge is rising demand for smartphone functionality at the same time consumers' tolerance for higher priced devices is dropping, said analyst Sangeetika Srivastava, saying affordable products are key to reinvigorate growth. Android's smartphone share is forecast to nudge up to 86.7 percent this year, from 85.1 percent in 2018, on new launches, including a handful of 5G devices. Android average selling prices are estimated to grow 5.8 percent this year to $269. Volume of iPhone shipments is expected to fall 12.1 percent this year to 183.5 million. Apple isn’t expected to have a 5G phone this year, but that isn’t likely to affect its market share “given that many telcos and markets are still trying to figure out their 5G strategy,” IDC said.