Gartner Says Worldwide Sales of Smartphones Recorded First Ever Decline During the Fourth Quarter of 2017

SINGAPORE, February 22, 2018 — Global sales of smartphones to end users totaled nearly 408
million units in the fourth quarter of 2017, a 5.6 percent decline over the
fourth quarter of 2016,
according to Gartner, Inc. This
is the first year-on-year decline since Gartner started tracking the global
smartphone market in 2004.

“Two main factors led to the fall in the
fourth quarter of 2017,” said Anshul Gupta, research director at Gartner. “First,
upgrades from feature phones to smartphones have slowed down due to a lack of
quality “ultra-low-cost” smartphones and users preferring to buy
quality feature phones. Second, replacement smartphone users are choosing
quality models and keeping them longer, lengthening the replacement cycle of
smartphones. Moreover, while demand for high quality, 4G connectivity and
better camera features remained strong, high expectations and few incremental
benefits during replacement weakened smartphone sales.”

Source: Gartner
(February 2018)

Despite the start of a
slowdown in sales of Samsung’s Galaxy S8 and S8+, the overall success of those
models has helped Samsung improve overall average selling price. Samsung is
poised to announce the successors to its Galaxy series of smartphones at Mobile World Congress (MWC) this year. The launches of its next flagship devices are
likely to boost Samsung’s smartphone sales in the first quarter of 2018.
Although Samsung’s significant sales volumes lean toward midprice and
entry-level models, which now face extreme competition and reducing
contribution, its profit and average selling price may further improve if these
next flagship smartphones are successful.

While Apple’s market
share stabilized in the fourth quarter of 2017 compared to the same quarter in
2016, iPhone sales fell 5 percent. “Apple was in a different position this
quarter than it was 12 months before,” said Mr. Gupta. “It had three new
smartphones — the iPhone 8, iPhone 8 Plus and iPhone X — yet its performance in
the quarter was overshadowed by two factors. First, the later availability of
the iPhone X led to slow upgrades to iPhone 8 and 8 Plus, as users waited to
try the more-expensive model. Second, component shortages and manufacturing
capacity constraints preceded a long delivery cycle for the iPhone X, which
returned to normal by early December 2017. We expect good demand for the iPhone
X to likely bring a delayed sales boost for Apple in the first quarter of
2018,” added Mr. Gupta.

Huawei and Xiaomi were
the only smartphone vendors to achieve year-on-year unit growth (7.6 and 79
percent, respectively) and grew market share in the quarter. With Huawei’s new
smartphone additions in the quarter, including Mate 10 Lite, Honor 6C Pro and
Enjoy 7S, the vendor broadened the appeal of its smartphones.

Xiaomi’s competitive
smartphone portfolio, consisting of its Mi and Redmi models, helped accelerate
its growth in the emerging Asia/Pacific (APAC) market. It also helped Xiaomi
win back lost share in China.

“Future growth
opportunities for Huawei will reside in winning market share in emerging APAC
and the U.S.,” said Mr. Gupta. “Xiaomi’s biggest market outside China
is India, where it will continue to see high growth. Increasing sales in
Indonesia and other markets in emerging APAC will position Xiaomi as a strong
global brand.”

In 2017 as a whole,
smartphone sales to end users totaled over 1.5 billion units, an increase of
2.7 percent from 2016 (see Table 2). Huawei, ranked No. 3, raised its share in
2017, continuing to gain on Apple. At the same time, the combined market share
of the Chinese vendors in the top five increased by 4.2 percentage points,
while the market share of top two, Samsung and Apple, remained unchanged.

Source: Gartner
(February 2018)

In the
smartphone operating system (OS) market, Google’s Android extended its lead by capturing 86
percent of the total market in 2017 (see Table 3). This is up 1.1 percentage
points from a year ago. “The competition in the smartphone market is unabated
at this time of the year,” said Mr. Gupta. “Ahead of MWC, several phone
manufacturers such as Samsung, HMD (Nokia), Asus and LG have announced that
they will launch new Android smartphones.”

Source: Gartner
(February 2018)

Further information is
available in the Gartner report titled “Market
Share: Final PCs, Ultramobiles and Mobile Phones, All Countries, 4Q17.”

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