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Gartner: Weak global demand for smartphones in third quarter of 2019

Consumer concern about value for money and deferrals due to 5G add up to disappointing smartphone sales in the third quarter of 2019

It may have seen success for brands such as Huawei, Samsung and OPPO, but the third quarter of 2019 was bad for the global smartphone industry as a whole, with user sales declining year-on-year as consumers became more concerned about getting value for money, according to research from Gartner.

The analyst’s Market share: PCs, ultramobiles and mobile phones, all countries, 3Q19 update report found that overall sales contracted 0.4% compared with the third quarter of 2018, as the issue of value for money bit into the likes of Apple and Xiaomi, but was also dampened by customers deferring purchase of existing models as they waited for 5G options to emerge.

Gartner added that the shift led brands such as Samsung, Huawei, Xiaomi, OPPO and Vivo to strengthen their entry-level and mid-tier portfolios. This strategy helped Huawei, Samsung and OPPO grow in the quarter.

“For the majority of smartphone users, desire has shifted away from owning the least expensive smartphone,” said Gartner senior research director Anshul Gupta.

“Today’s smartphone user is opting for mid-tier smartphones over premium-tier ones because they offer better value for money. In addition, while waiting for 5G network coverage to increase to more countries, smartphone users are delaying their purchase decisions until 2020.”

Samsung was the global smartphone market leader for third-quarter 2019, shipping 79.056 million devices, which is a rise of 7.7% annually and gaining a 20.4% market share, up 1.5 percentage points on the same period of 2018.

Gupta noted Samsung’s aggressive revamp of its portfolio, with a focus on mid-tier and entry-tier segments, strengthened its competitive position.

Hot on the Korean company’s heels was Huawei, which saw third-quarter smartphone shipments surge 26% annually to 65.822 million units, taking 17% of business.  

Gartner noted that Huawei’s performance in China was the key driver of its global smartphone sales growth, as the local market invested in the company after being buffeted by the now deferred US ban. It sold 40.5 million smartphones in China and increased its share of the country’s market by almost 15 percentage points.

Some way behind the top two was Apple, the market share of which slipped back 1.3 percentage points as shipments tumbled 10.7% on a yearly basis to total 40.833 million.

Looking forward to the fourth quarter, Gartner expressed general optimism seeing Black Friday and Cyber Monday spurring consumer demand in the fourth quarter of 2019.

It noted that suppliers, including Google and Samsung, were likely to offer aggressive price promotions not just for their older smartphones, but for new devices such as the Google Pixel 4 and Samsung Galaxy Note 10.

Interestingly, Gartner predicted that competition between manufacturers will increasingly focus on more intelligent smartphones, which deliver increasingly personalised content and services that draw on users’ contexts and preferences.

The analyst cautioned that to do so, suppliers would need to improve the integration of artificial intelligence (AI) in smartphones and make security capabilities and privacy key aspects of their brands.

It advised that at what it called “a time of limited technology-led innovation”, product managers should focus on offering attractive features at low prices as quickly as possible, and that by offering better value for money, they can increase demand for smartphones.

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