Work from home helps drive up wearable market by 30% – IDC

The Q1 wearable shipment numbers showed strong growth, with the wireless headset segment up by nearly 70%, partly driven by working from home employees’ need to block out unwanted noise.

In its latest wearable tracker, the research firm IDC saw the overall market go up by 29.7% over the same quarter in 2019. The strongest growth was in the so-called ‘hearables’ segment, which is essentially wireless earphones and headsets. This segment increased by 68.3% and accounted for 54.9% of the 72.6 million wearable market.

“The hearables category was seemingly resilient to the market-suppressing forces caused by COVID-19,” said Jitesh Ubrani, Research Manager for IDC Mobile Device Trackers. “Consumers were clamouring for these sophisticated earpieces not only for the abilty to playback audio but also to help them increase productivity, as many of them were forced to work from home and sought ways to reduce surrounding noise while staying connected to their smartphones and smart assistants.”

The other categories in the total wearable market includes wristbands and watches. IDC estimated the wristband segment grew by 16.2%, helped by the launch of Fitbit’s new Charge 4. However, the watch category has seen a 7% decline. IDC attributed the contraction primarily to supply chain disruption in China caused by COVID-19.

“The downward pressure on watches shifts the onus to the latter half of 2020,” said Ramon Llamas, Research Director for IDC’s Wearables Team. “This gives companies the time to refine their products and messaging, and to align those with customer needs. Given the hyper focus on overall health and fitness in today’s climate, vendors would do well to highlight those capabilities, and provide guidance on how to live healthier lives.”

Incidentally, this estimate of the watch market is rather different to the smartwatch market numbers published by Strategy Analytics earlier this month, when it estimated a 20% increase in the segment. SA also believed Apple Watch volume grew by 23% in Q1 to reach 7.6 million.

“Apple’s global smartwatch market share has grown from 54 percent to 55 percent, its highest level for two years,” Neil Mawston, Executive Director at Strategy Analytics said. “Apple Watch continues to fend off strong competition from hungry rivals like Garmin and Samsung. Apple Watch owns half the worldwide smartwatch market and remains the clear industry leader.”

IDC, on the other hand, put Apple Watch’s sales volume in Q1 at 4.5 million units, down by 2% from a year ago. Such is the difficulty posed to research firms when Apple, the market leader does not disclose device volumes.

It is also worth noting that the two research firms are reporting on slightly different market segments. IDC, in addition to smartwatch, also includes what it calls ‘basic watch’ in its market estimate, by which it refers to those watches that have computing and data processing power as well as wireless connectivity but do not run third-party applications. IDC does not split the volume of two types of watches it reports on in its publicly available data.

Here are the market estimates from the two firms:

Worst case scenario: European smartphone shipments down by 50% for 2020

IDC estimates suggest European smartphone shipments could half year-on-year for 2020 if the pandemic hits as hard as it is threatening to do.

For those who have an optimistic side, IDC is now forecasting smartphone shipments will decline 10% year-on-year for 2020, but the worst-case scenario could see shipments plummet as much as 47%. This is down from 6.4% growth which was forecast in February, prior to the most severe impacts of the COVID-19 outbreak.

“In addition to the increasing number of economic forecasts that the drop in GDP in major European countries could be double that seen in 2008, if lockdowns need to continue towards the summer we have to take into account other factors in the current situation,” said Simon Baker, Programme Director for devices at IDC EMEA.

“Much of phone retail is shut, while for the rapidly growing numbers of newly unemployed their priority this year will be just getting by.”

Earlier this week, Thérèse Coffey, the Secretary of State for Work and Pensions for the UK, said there were 950,000 new claims were put forward for unemployment benefits in the final two weeks of March. If accurate, unemployment in the UK could potentially double from 3.9% in January, the most recent figures from the Official of National Statistics (ONS).

According to the International Monetary Fund (IMF), other nations could be hit harder than the UK.

“Spain will be hard hit for a number of reasons,” said Poul Thomsen, Director of the European Department at the IMF.

“They are hard hit by the pandemic, but looking beyond the immediate impact, Spain’s dependence on tourism is, again, a special vulnerability. Spain has a large number of small and medium sized enterprises, and that’s a further vulnerability because such enterprises often do not have the financial resources and the buffers to withstand significant shocks.

A higher number of SMEs and a high reliance on tourism are not factors limited to Spain either. Italy, France, Portugal and a number of other European nations could see the pandemic wipe out irrecoverable revenues.

With economic activity continuing to decline and unemployment on the rise, the prospect of global recession is daunting. If the economic downturns in 2008 and 2015 are anything to go by, the telco industry should be bracing for impact.

However, what makes this situation unique is the closure of the high street.

Although more smartphone sales are moving to online channels, that does not mean every consumer will purchase a device without seeing or holding it. A browse through the mobile phone shops on the high street might add more confidence to the consumer, who is being asked to spend eye-watering amounts on smartphones nowadays.

Model Launch Price Average Salary (UK)
iPhone 4 (2010) $749 £25,879
iPhone 5 (2012) $849 £26,500
iPhone 6 Plus (2014) $949 £26,936
iPhone 7 Plus (2016) $969 £28,028
iPhone 8 Plus (2017) $949 £28,600
iPhone X (2017) $1149 £28,600
iPhone XS Max (2018) $1449 £29,588
iPhone 11 Pro Max (2019) $1449 £30,350

As you can see from the rapid rise in price for an iPhone over the last decade, consumer wallets are being pressed harder than ever. It should be noted that a smartphone does so much more in 2019 than it did in 2010, but the wealth of consumers (and therefore spare cash to spend on goods such as smartphones) has not risen comparatively.

At a time where frivolous spending will be limited as much as possible, the prospects do not look the most encouraging for the smartphone industry.

“In Europe the biggest impact will clearly be in countries such as Italy and Spain, the places hardest hit by the crisis, but under our probable scenario we are expecting nearly all European markets to drop by around a fifth,” said Marta Pinto, Programme Manager at IDC EMEA.

What remains to be seen is how quickly European economies can be reignited.

Spain has recently said it will attempt to ease the lockdown in an attempt to revive its economy, while French President Emmanuel Macron announced this week the lockdown would be extended to May 11. UK politicians are discussing extensions and easements behind closed doors, and Germany is planning to slowly lift restrictions over the coming weeks.

Working through the pandemic and removing restrictions on the lives of the consumers is only the first step, the tricky job will be bringing the economy back online and growing consumer confidence once again. With livelihoods threatened and earnings decreasing (hopefully only temporarily) consumers will not want to spend significant chunks of monthly salaries on smartphones immediately.

Wearables market doubles, but only if you include wireless headphones

The latest global wearable device market numbers from IDC reveal it grew by 95% in Q3, but much of this came from a category that didn’t used to be counted.

The launch by Apple of its AirPod earphones provided a general boost to the Bluetooth headphones market. Wired headphones never used to be included in assessments of the wearables market but, for IDC at least, the removal of those wires had been sufficient for them to qualify. As a result, a category that used to be comprised mainly of fitness bands and smart watches is now dominat3ed by earwear.

“Hearables have become the new go-to product for the wearables market,” said Ramon Llamas of IDC. “This began with multiple vendors removing the headphone jack from their smartphones, driving the move toward wireless headphones. It continued with hearables incorporating additional features that either augment or expand the audio experience. Next, hearables have taken on multiple form factors – ranging from truly wireless to over-the-ear headphones – appealing to a broad base of earwear user preferences. Finally, prices have come down significantly, with some reaching below $20.”

Not with Apple they haven’t. AirPods start at £159, going up to £249 for the Pro version. Nonetheless, Apple being Apple, it’s still shifting a ton of them. IDC reckons Apple tripled its total wearables shipments to 29.5 million units in Q3 and since there’s little evidence of an explosion in Apple Watch sales, much of this must be down to the AirPods. If Apple decides to ditch the lightning port, that trend seems bound to continue.

As you can see from the second table below, earware shipments are by far the biggest wearables category now and are almost entirely responsible for its rapid growth. However it’s highly debatable whether a single function accessory should be counted as a wearable device in its own right. Even fitness bands have some degree of smart functionality and the mere removal of a wires seems like a crude reason so suddenly designate something ‘wearable’, since the human interface has barely changed.

 

Top 5 Wearables Companies by Shipment Volume, Market Share, and Year-Over-Year Growth, Q3 2019 (shipments in millions)
Company 3Q19 Shipments 3Q19 Market Share 3Q18 Shipments 3Q18 Market Share Year-Over-Year Growth
1. Apple 29.5 35.0% 10.0 23.0% 195.5%
2. Xiaomi 12.4 14.6% 7.4 17.1% 66.1%
3. Samsung 8.3 9.8% 3.2 7.4% 156.4%
4. Huawei 7.1 8.4% 2.3 5.4% 202.6%
5. Fitbit 3.5 4.1% 3.5 8.0% 0.5%
Others 23.8 28.1% 16.9 39.0% 40.4%
Total 84.5 100.0% 43.4 100.0% 94.6%
Source: IDC Worldwide Quarterly Wearables Tracker, December 5, 2019

 

Worldwide Wearables Market by Product Category Shipment Volume, Market Share, and Year-Over-Year Growth, Q3 2019 (shipments in millions)
Product Category 3Q19 Shipments 3Q19 Market Share 3Q18 Shipments 3Q18 Market Share Year-Over-Year Growth
Earwear 40.7 48.1% 11.9 27.4% 242.4%
Wristband 19.2 22.7% 12.9 29.7% 48.6%
Smartwatch 17.6 20.9% 11.9 27.4% 48.0%
Others 7.1 8.4% 6.7 15.5% 4.7%
Total 84.5 100.0% 43.4 100.0% 94.6%
Source: IDC Worldwide Quarterly Wearables Tracker, December 5, 2019

 

Smartphone market finally expected to grow again in 2020

After years of misery, decline and shrinking profits, IDC is estimating the smartphone market might actually grow in 2020 thanks to 5G.

The 4G era produced a boom in technology adoption few would have predicted, though the years which followed were slightly less profitable. Since 2017, worldwide shipments of smartphones have been in decline, though it does seem the 5G buzz is living up to its reputation in at least one area.

Shipments are forecast to decline slightly over the remainder of 2019, however IDC is estimating year-on-year growth of 1.6% in 2020.

“The anticipation of 5G, beginning with smartphones, has been building for quite some time but the challenges within the smartphone market over the past three years have magnified that anticipation,” said Ryan Reith of IDC.

“To be clear, we don’t think 5G will be the savior in smartphones, but we do see it as a critical evolution in mobile technology. We expect the 5G ramp on smartphones to be more subtle than what we saw with 4G, but that is primarily because we are in a much different market today.”

The growth numbers are not as revolutionary as a decade ago, but they are certainly more palatable than another year of contraction.

2019 is proving to be another tough year for the smartphone manufacturers, IDC expects a year-on-year decline of 2.2% for the 12 months, though there are some glimmers of hope. Not only are 4G networks scaling in some developing markets opening-up a new window of opportunity for 4G handset sales, but the up-coming 5G euphoria creates an entirely new refreshment cycle in the developed markets.

This is something smartphone manufacturers and telcos have been looking forward to for years.

In the developed markets, as soon as smartphone penetration exceeded 100% of a country’s population, there was always going to be a struggle. Incremental improvements in terms of storage capacity, camera performance or software features, carried momentum for a period, but the decline of smartphone shipments was perhaps largely down to a lack of innovation.

Consumers are being asked to pay more for new devices, but without the attraction of innovation it becomes difficult to tolerate these purchases every year. A new camera is fine, but if it is only marginally better than the one you already have, does that justify the expenditure? Clearly it doesn’t as 2019 becomes the third-year straight for shipment declines.

This is what 5G offers manufacturers and telcos; something genuinely different to talk to consumers about and rationalise the process of purchasing a new device. It does something previous generations of devices do not.

Of course, despite the coverage limitations of 5G networks, the advertising campaigns are already in full swing, but who will be the winners and losers?

Samsung was one of the first leading brands out of the gate, and alongside Xiaomi, it could benefit significantly from the woes of Huawei. 12 months ago, we were contemplating if Huawei could overhaul Samsung and take the global market share lead, though a lot has changed during that period.

Huawei looks in a very suspect position currently. Its supply chain currently looks in a precarious position, and while this will not threaten the existence of the brand, it might lead some to question the quality of the end-product. US suppliers can be replaced, but can Huawei seek alternatives which can fulfil the same order quantities reliably, and will the components perform as well as those offered by incumbent suppliers?

One of the most interesting developments here concerns Google, its mobile applications and its Android operating system. Last week, both Google and Huawei confirmed the new Mate 30 will be shipped without the Google applications. There might be a workaround, though should the trade conflict between China and the US continue, Huawei will be forced to use its own Harmony OS.

This presents problems on two fronts. Firstly, will Android fan boys trust the unknown of a new operating system. And secondly, how much reputational damage has been done to Chinese brands by the White House; will consumers trust a Chinese brand without the middle man of a US operating system?

These are the unknowns, but the early signs do not look promising for Huawei. Research from Canalys suggests Huawei smartphone shipments in Western Europe during the most recent quarter has declined by 16% after President Trump dragged the brand through the mud, though there is an upshot for both Xiaomi and Samsung, who increased shipments 48% and 20% respectively.

Another brand which might suffer at the beginning of the 5G era is Apple.

“A lack of 5G support in the new iPhone won’t surprise anyone, though it will still disappoint operators looking for 5G devices to help them drive traffic to new 5G networks,” said Peter Jarich, Head of GSMA Intelligence.

“At the same time, new features that are expected – improved camera functionality, improved processor, upgrade to Wi-Fi 6 – may all seem incremental rather than revolutionary, particularly if the product line and form factor line-ups remain relatively constant.”

Apple has a very loyal customer base, while the closed-ecosystem has forced loyalty upon others. However, Apple will be testing the limits of loyalty. 5G will be plastered on every wall, each advert and on the lips of every consumer before too long. Apple will have to be confident it can convince customers to delay the purchase of a 5G device until it is ready to launch its own, otherwise it could risk losing those customers to the Android ecosystem permanently.

Looking at the IDC forecasts, iPhone shipments are expected to decline 14.8% year-on-year, due to market maturity and a lack of 5G-compatible device. When the firm does deliver its 5G device in 2020, it will have to prove it is better than rivals to justify the delay in delivery, otherwise the precious brand could be damaged.

This is not new from Apple. This is a company which doesn’t necessarily want to be the first to market, but it does invest heavily to be the best. It will have to do the same once again.

What is also worth noting, is this is just the beginning of the 5G era. A swing back to growth in 2020 for year-on-year smartphone shipments is encouraging, however the momentum will have to be compounded and the only way to do this is through the development of an ecosystem, applications and broader usecases.

Right now, the telcos and the ecosystem are only really talking about one thing; speed. If you believe the hype, 5G is going to be between ten and a hundred times faster than 4G. This might sound good as an advertising tagline, but a continued focus on speeds will become tiresome. Consumers will realise the excess speed is redundant soon enough, and this is another path which takes the telcos towards commoditisation.

More interesting usecases for 5G will have to emerge, and some of them will be reliant on improvements realised for latency.

Gaming is one area which is becoming increasingly dominated by mobile, and the more comfortable people are using higher volumes of data on the move, the greater this dominance will become. Lower latency will certainly help the case here, as more real-time gaming experiences become palatable.

The connected car is another development where 5G and lower latency could add to the momentum. Right now, the usecases are simplistic, though incremental gains in the connectivity world are improving the prospects for entertainment providers and application developers in the car. And we haven’t even mentioned the dreaded ‘autonomous’ tag this time around.

Of course, when you are talking about an entirely new generation of connectivity, you have to talk about the unknown. Perhaps the most exciting applications are the ones we mere mortals will struggle to imagine today. Uber is a perfect example.

Uber seems like the simplest idea today, but no-one else thought of the idea until Travis Kalanick. This is an application which was only possible because of 4G and the mass adoption of mobile internet, which makes us wonder what is in the pipeline. There will be blue sky thinkers who have an idea, but it can’t be validated or tested until 5G is scaled. This is when 5G devices could genuinely accelerate.

Marginal growth is all well and good for the moment, though the ecosystem will drive the next generation of profits. Having a snazzy new phone is fine for the early adopters and tech enthusiasts, but when the normmies start seeing how much more can be done through a 5G device, interest will scale much faster.

This is an area which is of course very difficult to quantify; what is the awareness of 5G in the consumer segments, and how much do they actually care?

According to research from Ericsson, half of smartphone users in South Korea and Australia, as well as 40% in the US, claim they do not have fast enough mobile broadband connections. Those who live in the big cities around the world will also be familiar with the challenge of network congestion, offering another buy-in for 5G contracts. Respondents to the survey said they would be prepared to pay 20% more on average to realise the benefits of 5G. Those who are more familiar with the concept of 5G, said they would tolerate a 32% increase in prices.

Of course, these projections are largely meaningless unless there is proof of accuracy. That said, in South Korea SK Telecom is claiming to have secured 1 million 5G postpaid subscriptions in the first four months of network operations. This represents 3.5% of the total subscribers at the telco, demonstrating there is an appetite for the new generation of mobile connectivity.

There is clearly an appetite for 5G connectivity, and should the manufacturers be able to produce a product which is tolerable for the consumers, there could be profits sooner rather than later.

“Solid push of 5G smartphones by the mobile operators in China in 2020 will drive economies of scale for the phone makers, and we will see the prices of these devices globally slide down to much more acceptable levels from their current highs,” said VP of Forecasting at CCS Insight, Marina Koytcheva.

“5G will not drive everyone to the shops in a search for a new phone, but for a group of technology enthusiasts- early adopters of all things tech- the new generation of mobile technology will act as a catalyst for replacing their current smartphones.”

This is an awkward challenge which the manufacturers will face; pricing. Smartphones are eye-wateringly expensive nowadays, perhaps a contributor to the shipments decline, and 5G devices are likely to see another premium added onto the tag.

This will at least be the challenge in penetrating the smartphone market in the early days, though Koytcheva is a bit more confident than IDC. CCS Insight are suggesting shipments could increase by 3% year-on-year over the next twelve months. This number will account for 4G devices in increasingly digitised developing markets, though 5G will add impetus in the developed nations.

But the challenge still remains; if 5G smartphones are going to anywhere near replicate the success of 4G predecessors, economy of scale in manufacturing operations will have to be achieved.

We suspect, and many others do also, that 5G devices will not take the world by storm in the same way 4G devices did. The transition from 3G to 4G was much more dramatic in the consumer world than the current transition we are anticipating today. The long-tail of applications and network evolution might be greater, but the up-front glories will not necessarily be the same.

That said, even if it is marginal year-on-year growth for smartphone shipments, that is a lot better than a fourth consecutive year of contraction.

India smartphone sales on the up

Most of the world might be experiencing dip with smartphone shipments, but with India playing catch-up in the digital economy, device sales are continuing to rise.

According to new estimates from IDC, Q2 registered the second-highest ever number of smartphone shipments in India. 36.9 million smartphones were shipped in the quarter, 9.9% year-on-year and 14.8% quarter-on-quarter growth, while a total of 69.3 million mobile phones were shipped to India.

This is a country which is under-going its own digital revolution, admittedly a few years after some of the Westernised markets, though it does present opportunities for bewildered and down-beaten smartphone manufacturers.

“Despite the efforts towards multi-channel retailing by almost all vendors, the online channel continued its growth momentum fuelled by multiple new launches, attractive offers and affordability schemes like EMIs/cashbacks,” said analyst Upasana Joshi.

“This resulted in YoY growth of 12.4% for the online channel with an overall share of 36.8% in 2Q19.”

Globally, smartphone shipments are on the decline. Estimates suggest shipments are at the lowest levels since 2014, which can be attributed to a number of different factors. A lack of innovation might be putting people off purchasing new devices, with new flagships offering little more than incremental upgrades. The price of these new devices might also have the same impact, though it is providing a surge for the second-hand market.

Another factor to consider is the up-coming 5G revolution. Telcos are building the hype around 5G, and if consumers buy into the euphoria, why would they consider purchasing a 4G device when more affordable 5G-compatible devices might just be around the corner. The last thing the consumer wants is buyer’s remorse.

These are not necessarily factors which are that influential in India however.

Although it has been considered a growth market for decades, the reality never really fulfilled the promise in telco and technology. Sluggish telcos were happy to sit back and quietly collect profits as aging networks and a pre-historic approach to business slid India down the global digital rankings. And then Jio entered the fray.

Taking a data-centric approach to telecommunications, Jio forced a digital revolution onto the Indian society and dragged the traditional telcos into the 21st century. The result is better and more inclusive networks, consumers using more data and digital applications, leading to increased sales of smartphones.

As IDC points out, 2G and 3G device shipments are gradually declining, while 4G smartphones are on the up. The average cost of devices is also increasing, the $400-$600 segment is the second-fastest growing segment, though the premium segment ($500+) is also starting to gather momentum. 72% of purchases are below the $200 threshold, though $200-300 is the fastest growing area.

This is market which still has a lot of growth potential, not only because of smartphone penetration, but also the ability to upgrade customers to more premium handsets. Let’s not forget, this is a country with a population of 1.339 billion; there will be plenty of opportunities to make money as long as Jio continues to drag the industry forward.

But who are making the most of this digital boom:

IDC India smartphone shipments

These are the smartphone manufacturers who are embracing the mid-tier smartphone segment. Numerous other, more established players, are scaling back in this market, choosing to more dutifully embrace the high-tier. This is an interesting decision.

Firstly, it not necessarily a bad strategy. A significant refreshment cycle for premium smartphones is on the horizon as 5G gets a better grip around the world. There are billions of users who will want to upgrade over the next couple of years; this is big business for those who make a name for themselves in the premium 5G market.

However, there might also be the negative consequence of brand loyalty. India is upgrading to 4G now, prioritising the purchase of mid-tier devices. This is where numerous Western markets were 4-5 years ago. Some might not want to engage mid-tier purchases, bigger profits are elsewhere, but they will miss out on forming a loyalty relationship with this monstrously large market.

India is surging forward into the digital economy, and there are many brands who are embracing the market through this transition. The likes of Xiaomi, OnePlus, Oppo and Realme are using this momentum to challenge the status quo. There might well be a horde of new device manufacturers to consider in a few years.

Google is now leading the European smart home segment

The smart home is increasingly becoming normalised in the eyes of the consumer, and Google is leading the way in Europe.

According to IDC’s Quarterly Smart Home Device Tracker, the smart home segment is growing healthily though there doesn’t seem to be any one manufacturer dominating the space. Google is holding down the largest market share, thanks to its smart speaker products, though there are gains for a quite a variety of products.

“Google had a stellar quarter and was the clear winner in the first quarter, reaching an important milestone in Europe,” said Antonio Arantes of IDC. “Google continues to expand to new countries and support new native languages at a faster pace than Amazon. This is also contributing to strengthening its position in voice assistant platforms.

“Google Assistant was present in 49.2% of all smart speakers sold in Europe in the first quarter of 2019. Meanwhile, Amazon faced supply issues, with the Amazon Echo Dot being out of stock in some countries for several weeks, leaving space for Google Home products to grow.”

The indirect win for Google is perhaps the most important aspect of this momentum. One-off sales to consumers are all well and good, but another interface with consumers offers recurring revenues through third-party relationships and advertising opportunities. This is more in-line with the traditional business model for Google.

This is far from the end of the story however; smart speakers should still be considered a niche segment though growth is impressive. The smart home market is forecast to reach 107.8 million units in 2019, up 21% year-on-year, before hitting 183.9 million a year in 2023.

Looking at the winners across the smart home segment as a whole, it’s the traditional consumer electronics heavyweights who are winning (aside from the smart speaker segment):

Brand Shipments (in 000’s) Market share
Google 3575 16.8%
Samsung 2853 13.4%
Amazon 2810 13.2%
LG Electronics 2129 10%
Sony 1231 5.8%
Others 8670 40.8%

Looking at the segment growth, home entertainment products are the largest area collecting 55.4%, while smart speakers sit in second place with 21.4%. Lighting, home security and thermostats collectively accounted for 20.8% of the smart home market, with IDC predicting 27.11% CAGR between 2019 and 2023. By 2023, these products could account for an additional 9.5% market share.

IOT spending to top $1.1 trillion in 2023 – IDC

IDC has released its Worldwide Semi-annual Internet of Things Spending Guide, which suggests global IOT spend could reach $1.1 trillion in 2023.

The three segments likely to be the biggest contributors to growth are discrete manufacturing, process manufacturing, and transportation, collectively accounting for a third of the total spend worldwide. Operational efficiency seems to be the focus of the manufacturing segments, while freight monitoring is the key for transportation.

“Spending on IoT deployments continues with good momentum and is expected to be $726 billion worldwide this year,” said Carrie MacGillivray of IDC. “While organizations are investing in hardware, software, and services to support their IoT initiatives, their next challenge is finding solutions that help them to manage, process, and analyse the data being generated from all these connected things.”

Of course, while manufacturing and transportation might not be the sexiest part of the IOT world, the consumer segments will see healthy growth also. The smart home and connected vehicle use cases will drive revenues here, with the consumer market expected to become the largest segment post-2023.

For the telcos, an interesting trend to keep an eye on is the increasing spend on IOT services. So far, hardware has dominated the budgets of enterprise customers, which was to be expected, though as the foundations are laid and the business cases are proved, vertical industry IoT platforms and cloud deployments for IoT software are expected to make headway.

“The new Deployment Type segmentation in the IoT Spending Guide draws sharp lines that identify opportunities for software growth via public cloud services,” said Marcus Torchia of IDC. “Segmented at the deepest level, clients can now prioritize strategy planning at the region/country, industry, and use case levels.”

Wearables are on the up – IDC

Global shipments of wearable devices are increasingly healthily increasing, according to IDC estimates, up 55% to 49.6 million over the first three months of 2019.

Wearables are a tricky segment for the technology and telco world. So much is promised, a new revolution in digital society, but for years it has failed to deliver on the potential. That said, the last couple of quarters have looked a lot more promising.

“The elimination of headphone jacks and the increased usage of smart assistants both inside and outside the home have been driving factors in the growth of ear-worn wearables,” said Jitesh Ubrani Research Manager for IDC Mobile Device Trackers.

“Looking ahead, this will become an increasingly important category as major platform and device makers use ear-worn devices as an on-ramp to entice consumers into an ecosystem of wearable devices that complement the smartphone but also offer the ability to leave the phone behind when necessary.”

This was perhaps the watershed moment for wearables; standalone connectivity. Smart watches, the flagbearer for the segment on the whole, struggled to gain traction due to a lack of standalone connectivity. These certainly weren’t fashion accessories in the early days and tethering the devices to a smartphone largely undermined the selling points.

With standalone connectivity there is now attention on the devices, and the increasing adoption of voice user interface, the devices more appealing for a wider range of applications. That said, the fitness niche is still proving to be a profitable one.

“Shipments of wristwear – including watches and wristbands – grew 31.6% year over year, and continue to dominate the wearables landscape,” said Ramon Llamas, Research Director for Wearables at IDC.

“While the functionalities and capabilities have grown and changed, the one common thread is the relentless focus on health and fitness. This has resonated strongly with users and health insurance companies alike, and new health and fitness insights attract a larger audience.”

Brand Shipments (million) Market share Year-on-year growth
Apple 12.8 25.8% 49.5%
Xiaomi 6.6 13.3% 68.2%
Huawei 5 10% 282.2%
Samsung 4.3 8.7% 151.6%
Fitbit 2.9 5.9% 35.7%
Others 18 36.3% 26%

Interestingly enough, over the last few quarters the top five manufacturers have been consolidating their position in the market, with the ‘others’ category claiming less and less. Like the smartphone space, this is increasingly looking like a market which will be tough for new-comers to crack, with market preferences shifting towards those who have an established brand in the space.

China plummeting and India soaring but Apple just can’t get a break

IDC had a stab at smartphone shipments in two of the worlds most lucrative markets, and it does not make pleasant reading for Apple.

As the Apple management team has now decided against dishing out the specifics on iPhone shipments in the quarterly statements, analysts are the closest we’re going to get for sales figures. Here, IDC is suggesting a sluggish market overall in China, with iPhone sales dropping considerably, while the Indian market is booming, but Apple can’t claim a slice of the action.

Starting with the Indian market, IDC estimates 142.3 million units were shipped across 2018, demonstrating a 14.5% year-on-year increase, though the final quarter saw a 15.1% sequential decline. This might not look as bad as it originally sounds however, as Q4 actually increased year-on-year 19.5%, suggesting the third quarter was just exceptionally positive.

“Amongst the big highlights of 2018 were the online-focused brands that drove the share of the online channel to an all-time high of 38.4% in 2018 and a whopping 42.2% in 2018Q4,” said Upasana Joshi of IDC. “This was primarily driven by several rounds of discounts by e-tailers driving affordability through various financing options, cashback offers and buyback schemes.”

The Jio effect is clearly sustainable across the country as Indian consumers appetite for the digital economy continues to grow. With the disruptive telco promising further expansion, greater digital inclusivity and additional services over the coming months, more consumers might be encouraged to upgrade to more premium devices. As Joshi notes, the premium end of the market was the fastest growing price segment, demonstrating 43.9% year-on-year growth.

What will be worrying for the iLeader is the inability to get a foothold in the market and capture the attention of Indian consumers. India is traditionally a market driven by low-end devices, however the encouraging growth of handsets priced north of $500 should offer some traction for Apple.

Xiaomi led the market, having recently overtaken Samsung, with 28.9% of total shipments, a healthy 58.6% increase from 2017. Samsung collected 24.7% of Indian devices sales, while Vivo had 10%, Oppo 7.2% and Transsion with 4.5% completes the top five vendors. The remaining 27% of shipments were shared through multiple vendors, Apple included, though the bundled peloton chasing the leading five saw total sales drop by 10.7% year-on-year.

With sales across the world seemingly declining for Apple, the booming Indian market is one it can ill-afford to miss out on. Last year, it announced it was moving manufacturing into the country, with partner Foxconn aiming to be up and running in early 2019, while there are also plans to expand the retail footprint. The team reportedly plan to open three massive stores in both Delhi and Mumbai, owing to the success of retail operations elsewhere around the world.

While India might be a headache due to the iLife indifference of the locals, China is turning into a full-blow migraine for completely separate reasons.

IDC estimate Apple’s smartphone shipments have declined by 19.9% in China, while the home favourite Huawei saw its own shipments grow by 23%. Apple’s loss is Huawei’s gain, though it does appear the iChief is losing its prestige badge in the market.

These figures are of course estimates, as Apple has decided against telling anyone about specific shipment numbers, though the revenues over the last quarter give a decent idea. During the last quarterly results, revenues for the Greater China region declined by roughly 26% from $17.9 billion to $13.1 billion. In years gone, Apple used to be able to simply release a new colour variant of flagships and China consumers would be queuing out the door, but the bonanza is over for the moment.

The big question is why? Of course, there will be a preference from some for local brands, and there will of course be the cash-conscious. But ultimately you have to wonder whether Apple is living up to the brand promise which it spend so many years cultivating; where is the innovation?

Over the last decade, Apple has crafted a brand which is built on the principles of innovation and technological supremacy. Steve Jobs was the figurehead of this image, and many Apple enthusiasts were prepared to pay the premium on devices because of this identity. However, in recent years, Apple has done little to differentiate its devices and justify the pricing premium which is placed on products. Of course, this is not just Apple, innovation has stuttered across the segment, but gone is the assumption Apple immune to market trends.

With revenues declining across the international markets, and Apple set to sit out the initial 5G devices euphoria over the next couple of months, 2019 is starting to look like a very uncomfortable year for Apple.

Most European CSPs expect more enterprise revenue opportunities from 5G

A new survey conducted by IDC, commissioned by Amdocs, has found that almost 80% of European CSPs anticipate increased enterprise revenue opportunities from 5G.

This was the headline datapoint from a survey in which IDC spoke to a bunch of senior management at CSPs from around the world. Another notable finding was that a third of all operators plan to offer enterprise 5G services in 2019 and that will increase to 84% of them in 2020.

“Operators of 5G networks can support mission-critical enterprise communications, with performance backed by service-level agreements,” said John Delaney, Associate VP of Mobility Research at IDC. “Our research shows that mobile operators are optimistic about the potential for 5G to support an expansion of their role in the enterprise market.”

“The survey clearly demonstrates that operators see 5G as a means to restore value around core connectivity services for business customers.” said Matthieu Loreille, VP Head of Consumer, Enterprise and Technology Marketing at Amdocs. “5G technologies such as network slicing will allow them to tailor the performance, security level and characteristics appropriate to each business, opening up differentiating monetization opportunities.

“Furthermore, by leveraging additional technologies such as artificial intelligence, edge computing and hybrid cloud, operators will be strongly positioned to support enterprises in their digital transformation journey. Effectively, this enables them to shift connectivity to the heart of their solutions with meaningful value-added services on top such as cybersecurity, cloud migration, hybrid cloud operations and many more.”

Other datapoints include 72% of European operators reckon they’ll be first to market with 5G enterprise services and 65% of them said their enterprise customers have already expressed an interest. Obviously Amdocs thinks these findings should compel operators to invest loads more in software and services, which it happens to provide.