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.

India defies global trends as smartphone shipments grow 20%

IDC has released its quarterly estimates of smartphone shipments for India, claiming 33.5 million units were sold across the period, a year-on-year increase of 20%.

While this is great news for Indian telcos and smartphone manufactures, capitalising on the country’s late charge towards the digital economy, global trends are not as positive. Broader estimates from IDC put global smartphone shipments down 1.8% over the course of the second quarter, though in shipping 95 million devices, the three month period was a positive one for Huawei.

“Huawei has had a stellar quarter worldwide moving into the second position, toppling Apple,” said Upasana Joshi of IDC. “In India, with a refreshed focus it has been able to grow its share in the online space in the last two quarters, on the back of several new launches across price segments. IDC believes Huawei should be seen as a serious long-term player in India market with all the ingredients to challenge Xiaomi and Samsung.”

As the wealthier markets worldwide are no-longer looking as glorious for the smartphone manufacturers, with many hitting a glass ceiling in terms of smartphone penetration to population, India is a very attractive proposition. The young, increasingly affluent, population are ready to be sold to. Largely thanks to the Reliance Jio disruption, the digital revolution is fast taking over the country with data consumption rising healthily quarter-on-quarter. Jio consumers use on average 10.6 GB of data per month, including 15.4 hours of video. The appetite for the digital economy and more premium devices usually go hand-in-hand.

While the majority of devices are still low- to medium-end, shipments of high-end devices (those worth more than $500) doubled year-on-year, with the Samsung Galaxy S9 series and OnePlus 6 being crowned winners. OnePlus surpassed Apple to take second place in the premium market share rankings. That said, consumers are taking advantage of financing schemes in the offline channels to snap up deals, average selling price decreased from $167 to $157 for the quarter, while demand for feature phones continues to be strong, growing 29% year-on-year.

In terms of capitalising on the opportunity right now, Xiaomi took top spot for shipments over the three months, increasing its shipments by 107% year-on-year and capturing 29.7% of total market share. Samsung captured 23.9% of shipments, though with Huawei continuing to make solid progress worldwide it might not be too long before it starts making its mark on the India market.

AR and VR headsets nosedive in Q1

Shipments of augmented and virtual reality headsets have plummeted year-on-year across the first quarter, according to statistics from IDC, as telcos unbundle the kit from premium contracts and handsets.

Despite the poor performance in the first quarter, down 30.5% year-on-year, totalling 1.2 million units, IDC does forecast the segment to return to growth for the remainder of 2018 as more vendors target the commercial AR and VR markets and low-cost standalone VR headsets such as the Oculus Go make their way into stores. The team estimate sales will increase to 8.9 million units in 2018, up 6%, with growth continuing upwards to 65.9 million by 2022.

“On the VR front, devices such as the Oculus Go seem promising not because Facebook has solved all the issues surrounding VR, but rather because they are helping to set customer expectations for VR headsets in the future,” said Jitesh Ubrani of IDC. “Looking ahead, consumers can expect easier-to-use devices at lower price points. Combine that with a growing line-up of content from game makers, Hollywood studios, and even vocational training institutions, and we see a brighter future for the adoption of virtual reality.”

Although bundling has become unpopular for the telcos, it is worth noting the importance of such sales models. Smartphone penetration was incredibly rapid in comparison to other technological breakthroughs, partly because consumers have more disposable income, but also bundling made the process of purchasing a device simpler and more cost effective. It normalised the product, before consumers become more savvy shoppers, exploring data only tariffs and separate purchases of devices. Telcos might not like bundling devices into contracts, but it is a very important factor in the progression of the data and digital economy, and aiding the market penetration of new devices.

Augmented reality is going to be the poster child of the segment for the immediate future, it is far more accessible, though it shouldn’t be too long before virtual reality starts making waves. IDC forecasts virtual reality headsets to grow from 8.1 million in 2018 to 39.2 million by the end of 2022, believing the commercial market to be equally important and predicts it will grow from 24% of VR headset shipments in 2018 to 44.6% by 2022.

AR and VR has certainly been making progress over the last 12 months, admittedly quite slowly, hopefully Q1 is simply a blip in the progress.

Canalys reckons Apple Watch shipments exploded in Q4 2017

Estimates from research firm Canalys put the number of Apple Watches shipped in Q4 2017 at 8 million, which is apparently more than the entire Swiss watch industry.

Apple doesn’t break out its Apple Watch shipments publicly, so these are only estimates, but probably good ones as that’s Canalys’ day job. Furthermore there seems to be some consensus with IDC tweeting similar vibes ahead of publishing its hard estimates. Either way it looks like the latest version of the Watch is gaining some momentum.

“The cellular version of the Apple Watch was in strong demand in the US, Japan and Australia, where all major operators stocked it in time for the holiday season,” said Vincent Thielke of Canalys. “But limited operator selection in the UK, Germany and France influenced consumer purchase decisions, and stifled the growth potential of the connected Apple Watch. Moving into new markets, such as Singapore and Hong Kong in Q1 2018, just in time for Chinese New Year, is a good move.”

Business Insider had a look at the claim made in the IDC tweet about the Swiss watch industry and its official source of data, which seems to indicate Q4 2017 exports of Swiss watches in the region of 6-7 million. There are, of course, other sources of conventional watches but Apple does seem to be aiming more towards the luxury end.

What to read into this trend, however, is far from clear. It’s not known to what extent the most recent shipments were influenced by operator bundling, nor how much more seasonal smart watch sales are than conventional ones. Furthermore Swiss brands such as Rolex tend to be very expensive and so should be expected to sell in lower volumes.

The Canalys chart for the full year is below, which implies 100% of the Apple Watches shipped in Q4 were the new series. It’s interesting to note some traction for the modem-enabled ones since it’s unlikely many users will leave the house without their phone anyway, unless they’re going for a run.

Canalys 2017 Apple Watch