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Smartphone market fails to sustain growth

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The worldwide smartphone market failed to sustain its growth momentum in the fourth quarter, causing shipments for the full year of 2019 to decline by 2.2% compared to 2018.

This is according to preliminary results from IHS Markit technology research, now part of Informa Tech.

The report says shipments totalled 1.38 billion units in 2019, down from 1.41 billion in 2018. This decrease was slightly less than the 2.4% decline from 2017 to 2018.

In the fourth quarter, IHS Markit says shipments slipped to 359.2 million units, down 1.5% from 364.8 million units in the fourth quarter of 2018.

It points out that just as in 2018, Samsung ended 2019 as the leader in smartphone shipments. The South Korean company shipped 294.8 million units in 2019, up 1.7% from 289.9 million in 2018.

“Samsung’s focus on the mid-range paid dividends in 2019, helping the company to fend off global competition from Huawei, Xiaomi, OPPO and Vivo,” says Gerrit Schneemann, senior analyst, smartphones, at IHS Markit Technology.

According to the research firm, Huawei finished 2019 second to Samsung. For the year, Huawei recorded growth of 16.7% compared to 2018 – reaching 240.6 million units in 2019, up from 206.1 million in 2018.

“Despite achieving double-digit growth for the year, Huawei in the fourth quarter started to feel the impact of continued headwinds from US government trade actions,” says Jusy Hong, smartphone research and analysis director at IHS Markit Technology.

“After three quarters of significant growth in 2019, Huawei’s shipments declined by 7.4% year-over-year in the fourth quarter.”

Until the fourth quarter, Huawei had weathered the uncertainties of a US technology ban well, shipping almost 60 million units in the first quarter, followed by 59 million in the second quarter and 66.8 million in the third, says IHS Markit.

It notes that while the US government has granted licences to some US businesses to continue selling products to Huawei, Google is not one of them so far.

“Huawei is now launching its latest flagship smartphones internationally,” says Anna Ahrens, senior analyst at IHS Markit Technology.

“However, in markets like Western Europe, the lack of Google services will make Huawei phones a hard sell for consumers, especially considering the company’s Mate series is positioned squarely in the premium price segment.”

Aside from Samsung and Huawei, the research firm says most of the other major smartphone OEMs ended the year with shipments down compared to 2018.

It says number four-ranked Xiaomi grew 4% year-over-year, with shipments rising to 124 million units in 2019, up from 118.7 million in 2018.

India remains a critical market for Xiaomi, but the company is facing increasing competitive pressure in the country, says IHS.

Meanwhile, Gartner says worldwide sales of smartphones to end-users are on track to reach 1.57 billion units in 2020, an increase of 3% year-over-year.

It says in 2019, worldwide smartphone sales declined 2%, the first time since 2008 that the global smartphone market experienced a decline.

“2019 was a challenging year for smartphone vendors, primarily due to oversupply in the high-end sector in mature markets and longer replacement cycles overall,” says Annette Zimmermann, research vice-president at Gartner.

“However, in 2020, the market is expected to rebound with the introduction of 5G network coverage in more countries and as users, who may have delayed their smartphone purchases until 2020 in expectation of price reductions, begin buying again.”

Gartner forecasts sales of 5G mobile phones will total 221 million units in 2020 – which will account for 12% of overall mobile phone sales – and more than double in 2021, to 489 million units.

“The commercialisation of 5G phones will accelerate in 2020. 5G phones costing under $300 have been announced, so sales growth of 5G phones is expected to exceed that of 4G phones over 12 months,” says Zimmermann.

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