Smartphone sales slow from pandemic peak.

The world’s leading smartphone manufacturers – Apple and Samsung – both took a hit to their Australian sales in 2H 2021 largely due to supply chain shortages and a hangover from the pandemic according to emerging technology analyst firm Telsyte.

The Telsyte Australian Smartphone Wearable Devices Market Study 2022 found premium features such as 5G, high-refresh rate displays, and long software support have increasingly appeared in challenger brands’ mid-range offerings, putting pressure on the market leaders. The impact was a decline in a combined sales share of 4 per cent in 2H21 compared to 2H20.

Despite overall slower sales, Samsung’s investment in the foldable category has started to pay off. Samsung is the foldable market leader and Telsyte estimates almost 10 per cent of its Australian smartphone sales were Galaxy Z series foldables in 2H21.

Apple, Samsung and Oppo remained the top 3 smartphone vendors in 2H21. However, Telsyte research found Nokia, Motorola and Google branded handsets gained ground.

Overall, Telsyte estimates 4.49 million smartphones were sold in 2H 2021, down 1.5 per cent compared to a year ago. Total Android smartphone sales increased by around 3 per cent in the same period.

Unfolding the future

The study found interest in foldable smartphones is growing, particularly among Australians planning to upgrade their smartphones in 2022. Over a quarter (26 per cent) are interested in using a foldable smartphone, up 9 per cent from the previous year

Despite 59 per cent of consumers preferring larger form factors (i.e., smartphone that folds out to a tablet), Telsyte believes lower priced flip models will sell substantially more units.

Consumer price expectations are starting to align. Among those interested in the flip and larger tablet style foldables, there is a willingness to pay an average of 16 per cent and 29 per cent more (respectively) than a typical premium smartphone, which is close to current offerings.

Telsyte expects better software support to be a key driver. This includes foldable-optimised mobile apps as well as improvements in the operating system, as promised by Android 12L – a feature update that optimises the user interface to take advantage of larger screens.

Telsyte anticipates a handful of foldables will be released locally this year. Samsung, Motorola, Oppo, Microsoft and other Android vendors are expected to have foldable smartphones in 2022. Telsyte does not anticipate Apple joining the foldable market in 2022.

Hardware subscriptions and trade-in programs set to combat growing replacement cycles

Telsyte believes there are untapped opportunities to shorten replacement cycles with smartphone subscriptions (sometimes called Hardware-as-a-Service).  Subscription offerings see consumers paying a monthly fee for a handset that is swapped over when a new model is available. The consumer has access to the device and after sales care.

Australians are already heavily gravitating to the subscription concept – and currently have over 42 million entertainment-related subscription services and millions more covering food delivery, groceries, etc.

The current average replacement cycle for smartphones is over 3 years in Australia, gradually edging up from 2.4 years in 2016.

Apple and Samsung are the top two smartphone manufacturers in Australia with a combined 17 million users. Samsung has recently started offering its own “Samsung Subscription” in partnership with Latitude Pay and bundles Samsung Care+.

Telsyte believes Apple could follow, as nearly a third of Australian iPhone users are considered loyal and locked in (i.e., measured by Telsyte as having 5 or more Apple products or services).

The research found 50 per cent of loyal Apple users claim to buy environmentally conscious or ‘green’ products and services when possible. Subscriptions and trade-in programs might resonate if manufacturers can re-use materials and improve sustainability.

“If the price is right, hardware subscriptions can shorten replacement cycles and pave the way for better smartphone recycling” Telsyte Managing Director Foad Fadaghi says.

Health and Fitness driving smart wrist wearables

A total of 1.5m smart wrist wearables were sold in 2H21, up 25 per cent from a year ago driven by the demand for premium health and fitness features such as ECG and blood oxygen measurement.

“The Omicron outbreak contributed to the demand for wearables that have health monitoring features” Telsyte Senior Analyst Alvin Lee says.

Sales of smart wrist wearables continued to be driven by smartwatches (70 per cent), with Apple the leader, followed by Samsung, Garmin, and Fitbit. The latest Apple’s Series 7 Watch and Samsung’s Galaxy Watch4 were the top performers.

Tags: AustraliaTechnology