Smartphone Sales Just Fell for the First Time Ever (Premium)

With Gartner and IDC now both weighing in on smartphone marketshare in 2017, we are confronted by a troubling, if long-awaited milestone. Smartphone sales actually fell in the final quarter of 2017. That's a first.

Worse, smartphone sales for calendar year 2017 almost fell year-over-year as well.

Before considering what this means, let's look at the numbers. As I do with PC sales, these numbers are an average of figures provided by both Gartner and IDC.

In 2017, hardware makers sold 1.5 billion smartphones worldwide. This compares to 1.48 billion in 2016, a gain of just 1.4 percent. As a reference point, I consider any sales difference that can round to 1 percent to be "flat."

Smartphone sales leveling off year-over-year is a troubling trend, but a bigger milestone happened in the fourth quarter. For the first time ever, worldwide smartphone sales fell year-over-year in Q4 2017.

That is, hardware makers sold 405.65 million smartphones in the quarter, down from 431.4 million units in the same quarter a year earlier. That drop is fairly significant, at 6 percent. That it came in the holiday quarter is particularly troubling, especially when you consider that that is when Apple launched three new iPhones.

The timing is interesting. Exactly ten years earlier, Apple launched the first iPhone, kicking off the modern smartphone era. Since that time, smartphone sales have risen every year, often dramatically, and in every quarter.

Granted, this milestone has been a long time coming. Thanks to saturation in mature markets and the rapid maturation of what used to be emerging markets, smartphone sales growth has slowed in recent years. In 2015, for example, hardware makers shipped 1.43 billion units worldwide. So the sales gain from 2015 to 2016 was just 3.5 percent. It's reasonable to assume that 2018 will be the first full down year for smartphone sales. Or, that it will be flat at best.

Two things stand out here.

First, the smartphone market rose to dominance, crested, and then matured much more quickly than that for the PC. In just ten years, we've reached peak smartphone. Meanwhile, the PC's biggest year was in 2011, when PC makers sold 365.4 million unit. That occurred exactly 30 years after the release of the first IBM PC. (And if you consider earlier personal computers, the "PC era" took even longer to crest.) The smartphone isn't just bigger than the PC ever was, it also rocketed to that success much more quickly.

Second, the reason for this maturity is quite different than that for the PC. When the PC crested in 2011, the smartphone had already emerged as its replacement: PC makers sell fewer PCs today largely because customers have moved to more personal and mobile devices like smartphones for most tasks. As I wrote a few years back, the iPhone is the asteroid that killed the Windows (PC) dinosaur. The smartphone is the PC's potential extinction moment.

But the smartphone doesn't face such a foe. Potential ...

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