Smartphone Demand Down Though Revenue Growth Remained Strong

Global smartphone demand fell 2% to 347 million units in the first quarter of 2018, according to GfK. Demand was especially sluggish in China (down 6% year-on-year) and North America (down 5%). However, global smartphone average sales price growth accelerated further to 21%. As a result, revenue grew 18% $129.8 billion despite the fall in demand.

“We start the year with a very different picture to the final quarter of 2017, when smartphone demand records were broken. In the first quarter of 2018 by comparison, there was a year-on-year decline in global smartphone demand. It’s perhaps no surprise as we hit saturation point in more markets. On the other hand, consumers are tending to choose higher-priced models as they embrace the latest innovations offered by smartphone brands. As a result, the average sales price grew by an astonishing 21% year-on-year to $374. This led to 18% revenue growth globally, which is exceptional for a maturing industry,“ said Arndt Polifke, GfK’s telecom expert.

Revenue in Western Europe increased by 23% to $14.5 billion, driven by a 26% rise in ASP which was boosted by growing demand in the ultra-high-end segment. This came despite smartphone demand in Western Europe falling 2% year-on-year to 28.3 million units. The markets experiencing the biggest fall in demand the first quarter were Great Britain (11%), Spain 7%) and France (4%). However, while ASP is likely to continue to rise, GfK forecasts smartphone demand in the region to be flat in 2018.

In Central and Eastern Europe, revenue grew by 35% to $5.9 billion. This was driven by a 29% rise in ASP, while demand increased five percent to 19.7 million units. Ukraine was key to the demand growth, with demand here rising 23% in the first quarter. Russia and Poland, the two largest markets in the region, both experienced 2% demand growth. Looking to the full year, GfK forecasts that continued growth in Russia and the Ukraine will drive up smartphone demand in the region by 7%.

In North America smartphone demand declined by an estimated 5% to 35.8 million units. In Latin America, demand continued to grow, with sales of 32.8 million units, up 3%. In the Middle East and Africa region, smartphone revenue grew 7% to $11.4 billion. In contrast to previous years, Lunar New Year promotions failed to drive year-on-year smartphone demand growth in China, with demand falling 6% to 109.6 million. However, revenue grew by 14% to $41.1 billion.

In Developed Asia, smartphone revenue increased 13% to $12.4 billion. This was driven by ASP, which rose 16% to $707. Demand fell 3% to 17.6 million units. In Emerging Asia, demand was flat at 58.7 million units. However, revenues grew 14% to USD 11.0 billion percent due to rising ASP.