Global smartphone market to shrink in first half of 2019

According to the International Data Corporation (IDC), global smartphone shipments will face another challenging year in 2019 with volumes forecast to decline 1.9% from 2018. This will mark the third consecutive year of market contraction driven by highly saturated markets in developed countries and slower churn in some developing economies. 

While developing markets still have a lot of upsides, some market momentum has been lost as the transition from feature phone to smartphone has started to slow. In all markets, pricing remains a critical decision factor when purchasing a new handset, and this is creating new opportunities for mid-range price points. However, the most significant and most uncertain market factor is how the U.S.-China trade dispute will play out over the year.

IDC expects shipments in the first half of 2019 (1H19) will be down 5.5% compared to 1H18, but the second half of the year should see shipment growth of 1.4% driven by 5G acceleration, a growing selection of lower-priced premium handsets, and on-going uplift from markets like India.

"Even without the growing trade tensions between the U.S. and China, the smartphone market has some important challenges that need to be resolved before we see growth again," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers.

While design innovation will remain the industry's center of attention, 5G momentum is also in full swing globally and device OEMs, component suppliers, telcos, and services companies are actively investing in establishing an early lead. IDC expects 5G smartphones to experience a slow start in 2019, capturing just 0.5% of total shipments. But the ramp up will be quick across all markets, driving 5G to account for 26.3% of worldwide shipments in 2023.

"Amidst all these design and 5G developments, the challenge remains that consumer demands around smartphone functionality continue to expand while their tolerance for higher-priced products continues to drop," said Sangeetika Srivastava, senior research analyst with IDC's Worldwide Mobile Device Trackers. "With 5G on the horizon as well as some interesting new form factors, it will be critical for vendors to continue to bring affordable products to market to reinvigorate the market's growth."