iPhone sales drop in Q1 reflect a market that remains flat

iPhone sales drop in Q1 reflect a market that remains flat

Analysts wonder what new features could reinvigorate smartphone sales

Apple iPhone sales declined 16 per cent in the first quarter, but it's important to remember that the overall smartphone market has also flatlined, largely due to market saturation.

IDC said that smartphone shipments in the quarter increased just 0.2% compared to the first quarter of 2015, marking the smallest year-over-year growth on record. IDC recorded 334.9 million smartphones shipped worldwide during the quarter.

Even Samsung, the world's biggest smartphone maker with a 25 per cent market share, saw a slight decline of 0.6 per cent in smartphone shipments, dropping to 81.9 million. No. 2 Apple declined by 16.3 per cent to 51.2 million, giving it a 15 per cent market share, IDC said.

In developed economies like the US, nearly everybody already has a smartphone -- and next-generation models don't seem significantly better to bother with a replacement, analysts have noted for the past year or more.

Even in China, where smartphone sales were once supposed to help Apple and others, "the appetite for smartphones has slowed dramatically as the explosion of uptake has passed its peak," IDC said. Year-over-year growth in China was 62 per cent in 2013; that number dropped to 2.5 per cent by 2015.

"We've seen the writing on the wall for some time with smartphone replacement rates down and saturation high in developed markets," said IDC analyst Ramon Llamas. "The smartphone market in emerging markets has also been steadily shrinking. What's the next emerging market going to be? It's not a China or an India. It's going to be scattered across less dense populations and less dense markets. Seeing things flatten is the way the market is going now."

Like other analysts, Llamas said it isn't clear what new smartphone features will throw a life-line to the overall industry. "What will make the market move up again, that's the $64,000 question," he said.

"Things are slowing down quite a bit for smartphones and will adding 5G wireless do it?" he said. "Not really, since that's coming post-2020. The usual things every vendor is putting on are either a big screen or a small screen. They continue to play with materials. So, let's look at where new applications take us. "

As both Samsung and Apple were hit by the same market pressures in the first quarter, Huawei came in third place, with 8% market share and growth of 58 per cent year-over-year. Huawei shipped 27.5 million smartphones in the quarter.

Smartphone makers in the next two spots are almost completely unknown in the U.S. In fourth place, Oppo had 5.5 per cent of the market share with 18.5 million smartphones shipped --an increase of 153 per cent. And in fifth place, Vivo took 4.3 per cent of the market, with 14.3 million smartphones shipped. That represented an increase of 123 per cent.

Vivo, based in China, sells its smartphones mainly in China and India. Oppo, also based in China, sells phones in 20 countries and just launched the F1 Plus smartphone for customers in Southeast Asia, the Middle East and North Africa, with online sales for European customers.

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