Mobile device sales stall as consumers await 5G, studies say

Brief:

Shipments of mobile devices will rise 1.2% to 1.82 billion units next year before declining again as consumers hold off on upgrading to the latest smartphone models, consulting firm Gartner predicts in its latest report. Mobile shipments will drop 1.4% in 2021 to about 1.8 billion.
"Users have reached a threshold for new technology and applications, which means that unless new models provide significant new utility, efficiency or experiences, users don't want or need to upgrade," Roberta Cozza, research director at Gartner, said in the report. The firm estimates that the average high-end phone lifetime will rise from 2.6 years to 2.8 years by 2023, further encouraging people to keep their phones for longer before replacing them.
The introduction of higher-speed 5G mobile phones will drive adoption of the next-generation technology starting next year, per a separate forecast by analytics firm GlobalData. "Despite a handful of 5G networks having gone live in late 2018 and early 2019, 5G phone sales will be slow this year due to a lack of national coverage and the typically high initial cost of new-generation phones," Jerry Caron, head of technology at GlobalData, said in the forecast.

Insight:

The global smartphone market has slumped as consumers hold onto higher-priced devices and don't see a compelling reason to upgrade for minimal feature improvements. 5G adoption has been slow, and isn't likely to see more rapid growth until device makers like Apple introduce 5G smartphones next year. That may help to boost shipments briefly before sales slump again in 2021, as Gartner forecasts. Cellular carriers like Verizon, AT&T, Sprint and T-Mobile are gradually expanding 5G service across the U.S. over the next few years and debuting high-speed mobile devices to match.

Expensive mobile phones with foldable screens are set to be niche products for the next four years, Gartner predicts. The researcher forecasts that shipments will reach 30 million, or 5% of high-end smartphones, by 2023. As mobile phone shipments stall at about 1.8 billion a year, device makers will be under greater pressure to differentiate their products from competitors.

For Apple, that means the expansion of its services business to make its iPhone more valuable to mobile consumers. IPhone sales dropped 15% to $51.98 billion during the most recent holiday quarter, making the flagship device the only product to see a revenue dip among its Mac computers, iPad tablets and wearable devices like the Apple Watch. The company last month unveiled several new services for entertainment, news, video games and payments aimed at supporting iPhone sales. Apple's high-margin services business, which includes the App Store, Apple Pay, Apple Music, iTunes and iCloud storage, showed healthy growth of 19% to $10.88 billion during the quarter, putting the company on track to reach its of annual goal of $50 billion by 2020.

As consumers replace their older phones with newer 5G models over the next few years, marketers will need to upgrade their mobile technology to keep apace. Gartner last week predicted that the rollout of 5G service will drive growth of augmented reality shopping to 100 million consumers by next year as retailers adopt the technology in stores and e-commerce channels.