TMT Predictions, Deloitte
As usual, at the beginning of the year, Deloitte published its TMT predictions for 2019. These predictions include tons of market metrics about a wide variety of topics. According to Deloitte, worldwide technology expenses have been decreasing since 2013, when they peaked at US$ 1,045 billion (EUR 912 billion), to reach US$ 930 billion (EUR 812 billion) in 2018 and, then, are anticipated at US$ 870 billion (EUR 759 billion) in 2019. Smartphones account for 59% of these total technology expenses.
According to Deloitte, innovation is not as fast now as it was in the first decade of this century. This lack of innovation combined with the permanently increasing price of smartphones lead consumers to extend the useful life of their existing smartphones. In other words, consumers spend less on acquiring new devices. If we want to remain positive, spending less on hardware means having more disposable income to spend on software, services and content. This translates into more data, more Netflix-like services, less new iPhones, says Duncan Stewart, Director of Research at Deloitte Canada.
Deloitte considers this appetite for software, services and content will support 5G deployment although the first significant usages of 5G will be 5G modems/hotspots and 5G FWA (Fixed Wireless Access) devices used to bring high internet access to homes through mm Wave transmitters. However, the first 5G handsets are bound to be extremely expensive as chipsets are, for the time being significantly costlier than 4G chipsets and require more power leading the handsets to have a poor battery life. Deloitte anticipates that by 2025, 5G handsets will represent only 14% of the market while 4G will have just passed the 50% bar.
Smartphone market data, Strategy Analytics
In a totally consistent way, analyst firm Strategy Analytics just published data showing that full year smartphone shipments declined 5% in 2018 to 1.43 billion units. Even worse, as the last quarter of the year is generally the strongest, they say that Q4 handset shipments shrank 6% year-on-year to 376 million units. According to Strategy Analytics, this contraction is due to “longer replacement rates, a lack of wow models and economic headwinds.”
According to their research, Samsung remains #1 in terms of volume but its Q4 volume decreased 7% year-on-year to 69.3 million units. They also evaluate Apple iPhone shipments in Q4/2018 at 65.9 million, a 15% Y-o-Y fall.
So, to go with Duncan Stewart, we are bound to see less handsets but more software, services and content. The losers are hardware vendors, the winners will be the fastest ones to adapt to this new context.