iPhone sales slow as cost of smartphones start to bite

Smartwatch and smart speaker sales boom as consumers look beyond handsets

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Tuesday, February 5th 2019

SYDNEY, AUSTRALIA – The high cost of new smartphones is holding back market growth in Australia with Apple losing share to Android rivals, according to new research from Australian emerging technology analyst firm, Telsyte.

The Telsyte Australian Smartphone & Wearable Devices Market Study 2019 found the timing and availability of 5G handset releases will be critical to lifting overall smartphone sales in 2019.

Some 4.6 million smartphones were sold in the second half of 2018, down 3 per cent from the same period in 2017, as consumers held onto their handsets longer and look to 5G models amidst surging prices of new models.

Telsyte research found the average selling price (ASP) of smartphones went up by 13 per cent between 2017 and 2018, impacting consumer demand.

As many as 1 in 4 (24%) consumers are also holding off buying a new smartphone until 5G becomes available.

A further 1 in 3 (33%) Australians indicated 5G capability is important when choosing a smartphone.

 Telsyte forecasts some 9 million smartphones will be sold in 2019 (up just 1 per cent compared to 2018), as only a handful of Android vendors are expected release 5G smartphones in 2019.

However, If Apple releases a 5G iPhone at its usual timeframe in 2019, Telsyte forecasts this could lift total sales to 9.4 million, putting growth closer to 6 per cent.

“There is a clear imperative for carriers to bring 5G handsets to market as soon as possible given the lengthening of the replacement cycle” Telsyte Managing Director, Foad Fadaghi, says.

Despite 5G mobile services not yet available currently in Australia, Telsyte believes consumers are considering ‘futureproofing’ their next purchase, given they anticipate using the same handset for the next three years or longer.

In the Android smartphone market, the top three vendors were Samsung, Oppo and Huawei.

Apple maintains the highest repeat purchase intention rate (greater than 85%), with the next highest being Samsung at around 70 per cent.

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Sales decline, but smartphones usage growing

 Despite the cost increases and flat sales, more Australians are now using a smartphone with around 9.1 million active primary iPhone users compared to 11 million Android users at the end of 2018, up from 8.6 and 10.3 million at the end of 2017, respectively.

 Smartphone dependency is at all-time high. More than half (54%) of premium smartphone users, defined as handsets costing greater than $600, claim that their smartphone is their main digital device.

 A fast-growing area of smartphone usage has been mobile payments, with nearly half of all mobile payment users claiming to use it ‘regularly’ (more than 75% of the time) to pay for goods and services whenever possible, according to Telsyte’s research.

 Following this trend, Telsyte research shows, 1 in 8 (13%) Australians aged 16 to 34 (‘millennials’) have changed or joined a new banking provider due to the lack of mobile payments support, and 14 per cent of Apple Watch users have also done so.

 Telsyte research also shows nearly half (46%) of e-commerce market revenue in 2018 was transacted through mobile devices (including smartphones and tablets). The ‘m-commerce’ market in Australia was worth $15.2b in 2018, up from $12.0b in 2017.

 
Smartwatches and smart speaker sales accelerate as consumers look to other gadgets

 Telsyte estimates 3.5 million smartwatches were in use at the end of 2018 as consumer behaviour increasingly shifts to new devices that work alongside smartphones and apps.

 A total of 1.1 million smart wrist wearable devices (combined smartwatch and smart bands) were sold in the second half of 2018 (up 30 per cent from 2H17) and sales of smartwatches continued to lead the category (65 per cent smartwatch vs. 35 per cent smart wristbands).

 Apple remained the leading vendor in smart wrist wearables sales in 2H18, followed by Fitbit and Garmin.

 In addition to the growth in wearables, Telsyte estimates 1.6 million, or 16 per cent, of Australian households were using smart speakers (such as Google Home, Amazon echo and Apple HomePod) at the end of December 2018, up from 538,000 (or 6% of households) in 2017).

 In Australia, Google is leading the smart speaker market with 72 per cent share of main smart speaker in use in Australian households. Promotions over the holiday period underpinned the strong uptake which Telsyte predicts will continue into 2019.

 For further information on the study or media enquiries contact:

Foad Fadaghi
Managing Director
Tel: +61 2 9235 5851
Email: ffadaghi@telsyte.com.au

Alvin Lee
Senior Analyst
Tel: +61 2 9235 5890
Email: alee@telsyte.com.au

The Telsyte Australian Smartphone & Wearable Devices Market Study 2019 is a comprehensive study which provides subscribers with:

  •  Smartphone market sizing estimates, platform and vendor market shares and forecasts

  • Smart wrist-based wearables market sizing estimates, platform and vendor market shares and forecasts

  • End user trends across devices, application usage, platforms and operators

  • Purchase intentions and acquisition channels

  • Strategic analysis of market trends and issues

  • Device profiles and Telsyte analyst ratings of tested devices

Telsyte measures smart wearable devices in the Telsyte Australian Smartphone & Wearable Devices Market Study 2019 as computing accessories worn on a user’s wrist typically paired and controlled via a smartphone. Examples includes products from Adidas, Apple, Asus, Fitbit, Garmin, Huawei, Jawbone, LG, Microsoft, Motorola, Nike, Pebble, Samsung, Sony, TomTom and others.

In preparing this study, Telsyte used:

  •  Telsyte’s consumer survey conducted in December 2018 with a representative sample of 1,025 respondents, 16 years and older

  • Interviews conducted with executives from service providers, network operators, manufacturers, retailers, financial analysts and channel partners.

  • Financial reports released by service providers and manufacturers.

  • On-going monitoring of local and global market and vendor trends.

  • Analyst reviews of leading smartphone and wearable devices.

 Editor’s note:

Telsyte measures sales of devices (“sell out”), not shipments or sales to retailers or carriers (sometimes called “sell-in”). Telsyte believes this is a more accurate measure of performance of products in a marketplace. Telsyte does not rely on disclosure from vendors or general assumptions made for large multinational companies that do not release local market data. Telsyte uses a comprehensive methodology that includes surveys of consumers, discussions with vendors, carriers and their partners, retailers, and financial analysts. In addition, public financial results from manufacturers and carriers are used.  Telsyte tests a wide range of products in real life usage scenarios and conducts satisfaction and repeat purchase surveys with large and representative samples of Australian smart device users. Telsyte is a pioneer in measuring and reporting smartphone sales in Australia and has been providing insights on mobile technologies since 2006.

 About Telsyte

Telsyte is Australia’s leading emerging technology analyst firm. Telsyte analysts deliver market research, insights and advisory into enterprise and consumer technologies. Telsyte is an independent business unit of DXC.technology. For more information visit www.telsyte.com.au

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