Smartphone Sales Declining

Source: zerohedge.com

Shipments of smartphone out of China have collapsed 21% to 91 million units. Since 2013, shipments have exceeded 100 million units every quarter. It is feared that this is signaling that the eight year smartphone bubble is in danger of deflating. The market will probably not sustain a sudden collapse as the smartphone is still widely used for most people.

Many households have surrendered their landlines in favor of a mobile phone service, this supports the probability that the smartphone market will not go into free fall. It will likely behave similar to the current auto market, future sales will not be people rushing to buy the latest and greatest but the new models will be purchased to replace worn out or broken phones.

Eight of the top ten smartphone vendors have incurred a decline in sales. Apple's standing of number 4 in vendor sales was replaced by Xiaomi, Xiaomi was the only company to show growth. Its shipments grew to 12 million units. Huawei remained the top vendor by shipping over 21 million units. Currently, the top four vendors are Huawei, Oppo, Vivo and Xiaomi, all are domestic vendors. Together they accounted for more than 73% of all Chinese shipments.

Source: zerohedge.com

Although sales are maintaining in the east, the future of smartphone sales are a major concern because a downturn could have a serious economic impact on China. They smartphone industry is pervasive in China and has transformed the nature of their manufacturing base. They are somewhat reliant on the industry as a main source of revenue.

A report by Canalys Research cites that one reason for the decline maybe that the smartphone manufacturers focus on the high end models. Xiaomi is the only vendor focusing on the lower end market, which may explain their 37% growth. The trend seems to be moving where the consumer is looking for a reliable communications devices instead of a device that is packed full features. This report points to a future possibility of mergers among the vendors outside of the top 5 leaders to combat the shrinking market.

Considering that the main market for smartphones is the young generation and that age group has been severely impacted by the global economic slowing. The future outlook for an upturn in sales is unlikely.