Commentary

Market Saturation, Climbing Prices Weaken Global Smartphone Picture

Despite Apple’s strong earnings performance,  new data released this week suggests that the global smartphone market continues to sag.

Worldwide, smartphone makers shipped a total of 342 million units in the second quarter -- representing a 1.8% annual decline, the International Data Corporation reports.

The dip marks the third consecutive quarter of year-over-year declines, and only the fourth quarter of decline in history, according to the IDC.

What’s dragging down the market?

“The combination of market saturation, increased smartphone penetration rates, and climbing (average selling prices) continue to dampen the growth of the overall market,” Anthony Scarsella, a research manager with IDC, notes in a new report.

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“Consumers remain willing to pay more for premium offerings in numerous markets and they now expect their device to outlast and outperform previous generations of that device which cost considerably less a few years ago,” Scarsella explains.

Consumers’ willingness to pay top dollar for iPhones helped Apple post stronger-than-expected earnings this week.

To survive in this challenging market, Apple’s rivals need to focus on new innovative features and form factors combined with incentives and promotions to drive growth, Scarsella.

It’s no wonder, then, that Samsung -- which posted subpar earnings this week -- is planning to debut “foldable” phone screens by early next year.

Despite a 10.4% decline in sales over the past year, Samsung is still top dog. During the second quarter, the South Korean corporation maintained a comfortable lead over Apple, Huawei, and other top sellers.

Purely in terms of sales, Apple dropped to the third spot for the first time behind Samsung and Huawei.

The U.S. tech and media giant shipped 41.3 million iPhones, representing modest growth of 0.7% year-over-year.

The iPhone continued to perform well at the high end as the iPhone X remains a top seller in many markets.

Looking ahead, Apple aims to regain control of the market this fall with the expected launch of three next generations of iPhone models.

As IDC notes, the new models are rumored to bring different screens sizes, price points, increased performance, and new features to the table when they arrive next quarter.
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