Apple, Samsung feel the heat as phone sales dive

Smartphone sales are falling in Australia with both Apple and Samsung feeling the brunt of the declines.

Smartphone sales totalled 2.04 million in Australia in the first quarter, down 18.4pc from a year earlier.

Smartphone sales are falling in Australia with both Apple and Samsung feeling the brunt of the declines, according to new figures released yesterday.

Research major Gartner found that smartphone sales totalled 2.04 million in the first quarter of 2019 in Australia, down a hefty 18.4 per cent from almost 2.5 million in the same quarter a year earlier.

Despite flashy new releases from Apple and Samsung, a slowdown in innovation and rising prices mean customers are holding off from replacing their smartphones for longer. At the same time the higher prices for phones suggest consumers are holding on to their old phones for longer.

The numbers aren’t much better globally, with smartphone shipments down 2.7 per cent in the first quarter of 2019, with 373 million shipped, compared to the same quarter last year.

Chinese giant Huawei achieved the highest year-over-year growth among the world’s top five with sales up 44.5 per cent, but Gartner analyst Anshul Gupta said the smartphone maker would struggle to hold on to its market share in the remainder of 2019 in light of the Trump administration’s ban on Huawei and Google pulling the company’s Android licence.

The US ban means Huawei phones will not be able to run some Android features — including popular apps such as Google maps or Gmail — in the future.

Australian smartphone sales, millions (2018)

“Unavailability of Google apps and services on Huawei smartphones, if implemented, will upset Huawei’s international smartphone business which is almost half of its worldwide phone business,” Mr Gupta said. “Not the least it brings apprehension among buyers, limiting Huawei’s growth in the near term.”

Despite its near absence from the US market, Huawei overtook Apple to become the second biggest smartphone vendor worldwide and continued to reduce the gap with Samsung. However take-up of the phone has been slower in Australia.

Apple and Samsung are both struggling to grow their smartphone sales, with Samsung declining 8.8 per cent globally year-on-year and Apple sales falling a sharper 17.6 per cent, the Gartner figures show.

“The price cut for iPhones across markets helped drive up demand but wasn’t enough to restore growth in the first quarter,” Mr Gupta said. “Apple is facing longer replacement cycles as users struggle to see enough value benefits to justify replacing existing iPhones”.

“Demand for premium smartphones remained lower than for basic smartphones, which affected brands such as Samsung and Apple that have significant stakes in high-end smartphones.”

Brokerage Citi this week warned that Apple could pay a heavy price as the US-China trade war escalates, arguing that the iPhone maker is going to struggle to sell its handsets in China.

With Chinese consumers expected to ditch the iPhone and favour local brands, like Huawei and Oppo, Citi expects Apple’s iPhone sales and its market share in China to halve.

China represents 18 per cent of Apple total sales. It also derives almost 30 per cent of its profits from the Chinese market.

Separately, Australia’s biggest telco Telstra has stopped selling Huawei smartphones online, citing stock issues. Huawei’s flagship smartphones have been unavailable on Telstra’s website for close to a week. A Telstra spokesman put that down to a lack of stock.

Telsyte managing director Foad Fadaghi said Australian carriers were likely to remove Huawei phones from their catalogues if the US ban was implemented.

“Other carriers around the world have suspended sales of Huawei handsets,” Mr Fadaghi said. “The carriers are thinking ahead to the challenges that consumers will have when support is withdrawn in 90 days. Consumers are getting a little bit nervous.”