Mobile Commerce

Without Wow Factor, Smartphone Sales Expected To Be Flat In 2018

Smartphone growth last year was just 2.7 percent — and while market research firm Garner is projecting that sales of smartphones will jump close to 5% this year, that forecast may prove to be too optimistic given the lack of reasons to upgrade.

That's according to Barron's, which cited Wall Street firm Canaccord Genuity, which predicts smartphone sales will be flat in 2018, with sales growth increasing again in 2019. For the smartphone phone chip makers — which include Skyworks Solutions, Qorvo, Qualcomm and Synaptics — sluggish smartphone growth is not good news. After all, with sales slumping, smartphone investors may turn to other suppliers that make things outside of chips such as Universal Display, which makes the OLED screens. Barron's noted shares are down 43 percent this year, presenting a buying opportunity. Meanwhile, Micron Technology, which makes memory, should also benefit — the amount of memory inside smartphones is starting to increase.

The problem for smartphone makers, noted Barron's, is that experts say there is a lack of the wow factor that gets people to upgrade their smartphones each year. Barron's pointed out that the BlackBerry controlled email while the iPhone brought computing to small devices — and along the way took out standalone digital cameras. Since then, however, there are few new areas for the likes of an iPhone or a Samsung Galaxy to take over. It’s evident in the sales results. According to Barron's, the Galaxy S9 from Samsung has reportedly seen disappointing sales in March, while the iPhone sales in December fell short of expectations and led to less talk about a so-called supercycle for Apple.

For 2019, the industry is hoping that facial recognition built into the phone will be a driver of demand as it replaces everything from a person's wallet to his or her passport. As will 5G, which promises faster cellular speeds and could prompt consumers to upgrade their older phones. The biggest hope next year is that consumers will be prompted to upgrade because of the screen thanks to OLEDs, noted the report. But whether or not Apple or any of the handset makers can come out with a cost-effective OLED screen that is curved enough to really drive a replacement cycle remains to be seen. If not, expect another year or so of “incremental” improvements that may lack the wow factor, noted Barron's.



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