Smartphone market to decline by 1.3% in 2018: Counterpoint

After years of growth, the smartphone market will drop to a negative 1.3 percent in 2018 and this is a first in the history of smartphones that the market has contracted year over year, as per Counterpoint's latest smartphone report.

It was a tough year already as the market has been experiencing negative growth since the fourth quarter of 2017 and this negative trend is expected to continue in the September quarter and upcoming December quarter as well.

"Many markets have already hit a saturation point for new smartphone demand and are dependent on replacement demand. However, since last year consumers have decided to trade up whenever they had the chance and are thus going for a better device, despite the price difference," Counterpoint Research Director, Tom Kang said.

"This is evident in the introduction of Apple's iPhone X last year. But buying a more expensive device results in extending the length of replacement cycles, especially when your earnings are limited," Kang added.

The research firm also pointed out reasons for a weak demand like the global economy is slowing down and exchange rates in emerging markets fluctuating rapidly as in the case of Latin America.

The US-China tariff wars aren't helping the situation either. Some markets are cooling down after years of overshooting caused by extreme competition. But at the core of the weak demand could be the change in consumer behavior.

However, the firm said that next year is unlikely to be much different as the trend continues with the new Apple iPhone XS Max introduced at a higher price point and with Samsung's foldable smartphone coming soon and 5G devices on the horizon.

"Overall, smartphone revenue may grow 9 percent compared to last year. This is even higher than the 7 percent revenue growth of 2017," Kang added.