The global smartphone market is slowing down, but nowhere are things declining faster than the premium end of the market. According to new figures from Counterpoint Research, that end of the market fell 8% in the first quarter of 2019.
Apple suffered particularly badly, with shipments of the iPhone declining 20%. Counterpoint blames it on users holding onto their handsets for longer.
“The trend of users holding onto their iPhones for longer has affected Apple’s shipments,” Varun Mishra, research analyst at Counterpoint Research, said in a statement. “The replacement cycle for iPhones has grown to over three years, on an average, from two years.”
Given that the price of iPhones has greatly increased, that’s no great surprise. But it’s bad news for a company which has long built its business on getting users to upgrade at regular intervals. Particularly as new markets, such as India, have not taken off as quickly as hoped, regular upgrades are something Apple would especially welcome.
Sluggishness of the Chinese market
The research firm also blames the “sluggishness of the Chinese market.” This backs up what Tim Cook has previously said. When Cook announced Apple’s iPhone underperformance last year, China was one of the pain points he mentioned. To try and get more iPhones into people’s hands in China, the company has been actively cutting prices. However, we’ll have to wait until the next quarter to see how that strategy plays out.
Fortunately, Counterpoint thinks there may be good news on the horizon. “We expect that as 5G begins to commercialize in the future, the premium segment will grow,” Mishra said. “In 2019 and 2020, all the 5G devices are expected to launch in the premium segment.”
Multiple reports have suggested that Apple plans to launch its first 5G iPhone models in 2020. It is also focusing on grower other non-iPhone parts of its business to offset some of the declining revenue.