Australian consumers turning to smartwatches as smartphone sales slows

Lack of 5G in 2019 iPhones will impact market in 2019

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SYDNEY, AUSTRALIA – High-speed 5G capability is now important for more than 1 in 3 Australians when choosing a smartphone, and the percentage surges to around 60 per cent amongst those planning to purchase a smartphone before the end of 2020, making it critical for upgraders, according to new research from Australian emerging technology analyst firm, Telsyte.

The Telsyte Australian Smartphone & Wearable Devices Market Study 2019-2023 found just over 4 million smartphones were sold in the first half of 2019, down 6 per cent compared to the same period a year ago. The slowdown was mainly due to a prolonging iPhone replacement cycle and anticipation of greater availability of 5G smartphones in the second half of 2019 and through to 2020.

The study found amongst those that purchased their smartphones outright, the average replacement cycle is now almost 3 years, with iPhones having a 25 per cent longer replacement cycle compared to Android.

The ability to maintain newer operating systems on older handsets has seen iPhones average replacement cycle increase by 30 per cent to around 3.2 years. Android replacement cycles also increased by 11 per cent during this period, to around 2.6 years.

Sales of iPhones declined by 13 per cent during the measured 6 months to 1.7M while Android sales remained stable at 2.3M.

Apple remained the top vendor overall and the top three Android vendors during the measured period remained Samsung, OPPO and Huawei. Sales of Android was driven by increasing demand of mid-range smartphones and bundles (e.g. with a smart speaker or with a smartwatch).

Telsyte research also shows that 1 in 5 (20%) Australian households at the beginning of July 2019 had at least one smart speaker, up from 16 per cent in December 2018.

Despite declining iPhone sales in 1H19, Apple maintained the highest repeat purchase rate (greater than 90%). Samsung and OPPO’s brand loyalty (measured by repeat purchase rates) have both increased and are leading amongst Android smartphone vendors.

It is worth noting OPPO improved the most, jumping from 6th to 3rd overall in terms of repeat purchase intention rates, as the vendor continued to hold its position in the tightly contested Android market.

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Consumers wait for 5G

5G mobile technology is being rolled out across Australia, promising speeds up to 1Gbps and beyond. Many consumers are aware of this and are making purchasing decision based on the availability of this technology, both to “future-proof” and maintain resale value. The lack of 5G support is likely to impact the demand for iPhones in next 12 months.

However, Telsyte believes the arrival of a 5G iPhone model in 2020 could re-ignite the market.

Telsyte anticipates at least one iPhone model to be released in 2020 that will support 5G.

With a large selection of 5G smartphones expected in 2020, annual sales of smartphones could potentially reach the peak levels last seen in 2017 where over 9 million smartphones were sold in Australia.

“All the evidence is suggesting that we are set for a super cycle in 2020 as consumers replace aging 4G handsets”, says Telsyte Managing Director, Foad Fadaghi.

In the interim, Telsyte believes delayed smartphone purchasing has created a window of opportunity for smart wrist wearables.

Wearables driving a better digital experience

Australians have a growing appetite for wearable technology with a total of 1.2M smart wrist wearables sold in 1H19, up 22 per cent from 1 million a year ago, mainly driven by increasing demand for smartwatches.

Some 69 per cent of smart wrist wearables sold during the measured 6 months were smartwatches (830,000).

Apple remained the clear leader in the smartwatch market with close to half (48%) of total smartwatch sales during the six-month period. Other main smartwatch vendors included Samsung, Fitbit, Huawei and Garmin, with all enjoying healthy growth.

As is the case with iPhones, Telsyte’s latest survey recorded a high satisfaction amongst Apple Watch users. Apple Watch had a higher than 90 per cent repeat purchase intention rate.

Telsyte’s research shows the increasing demand for smartwatches has been driven by improved battery life, voice commands, health monitoring and better designed smartwatch apps.

Less than half of existing smart fitness band users plan to buy another one, compared to 85 per cent repeat intention purchase for smartwatch owners, showing a clear shift in market preferences.

“The battle for the wrist wearables market has been won by smartwatches,” Telsyte Senior Analyst, Alvin Lee.

According to Telsyte’s ongoing research, the average cost of smartwatches has decreased by 22 per cent between 2017 and 2019 compared to an increase of more than 15 per cent for smartphones, tipping the scales in favour of greater smartwatch sales during longer smartphone replacement cycles.

Telsyte’s latest research also shows there is growing interest in smartwatches with built-in mobile connectivity such as those enabled by eSIMs – especially amongst smartwatch users (53% of current smartwatch users versus 22% of total Australians aged 16 and over).

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 2019-2023 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

Telsyte measures smart wearable devices in the Telsyte Australian Smartphone & Wearable Devices Market Study 2019-2023 as computing accessories worn on a user’s wrist typically paired and controlled via a smartphone. Examples includes products from Adidas, Apple, Asus, Fitbit, Fossil, Garmin, Huawei, iFit, Misfit, Nike, Samsung, Skagen, SPACETALK, TomTom, Withings and others.

In preparing this study, Telsyte used:

  • Telsyte’s mid-year consumer survey conducted in July 2019 with a representative sample of 1,026 respondents, 16 years and older.

  • Telsyte’s annual Digital Consumer survey conducted in November and December 2018 with a representative sample of 1,162 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, manufacturers and retailers.

  • 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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