Phone shipments mark 'the biggest annual fall' on record, expensive flagships to blame

Phone shipments mark 'the biggest annual fall' on record in Q4, expensive flagships to blame
Buried in the latest industry reports that witnessed quite a few movers and shakers, is the fact that Q4 actually saw the largest quarterly drop on record in smartphone shipments. That's right, research firm Strategy Analytics showed that shipments were 9% down in Q4 2017, compared to 2016, or "the biggest annual fall in smartphone history."

The culprits? Longer upgrade cycles, particularly in China, due to midrangers becoming "good enough," while average selling prices for flagships are getting ever higher with no "wow" factors attached to their ballooning costs. Ever since smartphone subsidies were removed by carriers, we've seen a much more pronounced rise in high-end phone prices, until we reached "the year of the $1000 phone" with the iPhone XNote 8, or the Pixel 2 XL

Not only has the concept of the $400 flagship dead and buried, as Chinese makers have also increased their starting tags, but there's never been a launch price increase for high-end handsets as drastic as last year. Apple, for instance, clocked a record nearly $800 ASP for its phones in Q4.  "If Apple wants to expand shipment volumes in the future, it will need to launch a new wave of cheaper iPhones and start to push down, not up, the pricing curve," says Strategy Analytics. Apple's rumored "affordable" iPhone 9 with 6.1" LCD display that is allegedly coming down the pipe, may change the shipment gloom, though, as analysts are predicting it would account for no less than 50% of Apple's 2018 models' total sales.

The researchers may be on to something, as the record drop in smartphone shipments last quarter coincides with the record increase in phones' average selling price (ASP). It turns out that the ASP increased a full 10% year-on-year, to $363, while the number of phones sold globally increased just 1.3%. It is still a shipment increase for the whole of 2017, but if Q4 is any indicator, 2018 may see an annual drop for the first time, as people are keeping their phones longer, apparently finding it hard to justify shelling a grand for a phone.
source: SA

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