Smartphones shipments declined for the first time ever in 2017, but the dip isn’t expected to last long, according to International Data Corporation (IDC) research.
IDC's Worldwide Quarterly Mobile Phone Tracker reported a 0.5 percent decline in 2017, the first year-over-year decline the market has experienced since the introduction of what we now know as smartphones. Smartphone companies shipped a total of 1.46 billion devices in 2017.
However, it looks like the smartphone hasn't peaked yet. IDC expects shipment volumes to return to low single-digit growth in 2018 and the overall market to experience a compound annual growth rate of 2.8 percent over the 2017-2022 forecast period, with volumes forecast to reach 1.68 billion units in 2022.
Design innovation continues to be a focal point of the industry, yet technology advances are becoming less about tangible hardware aesthetics and more about components and software. This shift makes differentiation a challenge, especially as the entire industry is sprinting towards bigger screens and smaller bezels. IDC expects 2018 to be the year when phablets out-ship regular smartphones, essentially ending the race for bigger screens. Big differences in quality and display type still exist, but the average consumer will continue to struggle to understand these differences, IDC said.
Long-term, much of the expected growth is attributed to continued improvements in the 5G momentum that is in full swing as device OEMs, component suppliers, telcos and services companies are all looking to capitalize. IDC expects commercial 5G smartphones to hit the market in 2019, ramping up to account for roughly 18 percent of worldwide shipments by 2022.
“To keep up with the increasing demand for the new AI, AR/VR, contextually aware and 5G functionalities headed to the market, we expect growth to come from improvements in overall core functions in the near term," said Anthony Scarsella, IDC research manager. "Improvements in speed, power, battery life and general performance will be critical in driving growth at a worldwide level as the smartphone evolves into a true all-in-one tool. Although these types of improvements seem to arrive each year, delivering it more affordably will carry even greater significance to consumers as many highly competitive emerging markets remain crucial in driving growth throughout the forecast period."