While 2018 could be defined as the finest year for mobiles, the first quarter of 2019 saw the industry build on the momentum from the previous year.
Smartphones, in particular, had a revolutionary 2018 as devices with better cameras entered the market. What’s more, devices that targeted specific audiences, like gamers, were also revealed.
Thanks to these devices, consumers spent more time on their handhelds, downloaded and spent more apps than ever before, thus marking last year a stellar year for the mobile industry all around.
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On that note, here the Investing News Network (INN) takes a look back on the first quarter of the year as to how the mobile industry evolved and things to look forward for the rest of the year.
Mobile market update: New devices emerge
Foldable devices, 5G, and advancements of mobile photography were some of the highlights of the first quarter. Companies either teased or launched a device which offered one or all of these capabilities. Foldable devices feature screens that can be folded either inward or outward depending on the brand. Meanwhile, 5G services are projected to offer higher data speeds and capacity to handle devices that make up the Internet of Things.
In February, Samsung (LSE:SMSN, KRX:005930) set the pace of the industry with the launch of four devices. This included its flagship Galaxy S10+ with a model that supports 5G. The South Korean major also launched the Galaxy Fold device, which offers most of the capabilities of the S10+ but with a foldable display. Popular features of the S10+ like the reverse wireless charging, the three camera setup in the rear and the latest processor from Qualcomm (NASDAQ:QCOM) are all included in the Galaxy Fold.
In a report published in February, Counterpoint Research said that the Galaxy Fold is similar to the first generation capacitive touch devices. While the first generation touch devices like Blackberry (TSX:BB) Storm, and Motorola Droid had issues like poor touch response, the first generation foldables may have their own teething issues. The initial batch of Galaxy Fold seems to suffer from display issues.
“It is the future, but early versions will be clunky and compromised,” the company said in its post. “The device appears to be severely ‘girthy’ and compromised. The US$1,980 price tag secures its place as a niche device.”
In the last week of February, several other companies followed Samsung in launching devices. Sony (OTC Pink:SNEJF, TYO:6758), Nokia, LG (LSE:LGLD, KRX:066570), Xiaomi (OTC Pink:XIACF, HKEX:1810) and TCL (SZSE:000100), through its Alcatel brand, released devices at the Mobile World Congress. Like Samsung, these companies focused on features like better photography and 5G for their devices.
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However, it remains to be seen whether these mobile phones can lift the declining shipments of smartphones across the globe. Despite the growth in the emerging markets like India, smartphone shipments declined four percent annually in 2018 as compared to 2017 levels.
While Samsung was first with a 19 percent market share in terms of shipments in 2018, Huawei was tied with Apple (NASDAQ:AAPL) for second each with a 14 percent share. Xiaomi and Oppo held third and fourth spots with market shares of eight percent each. Vivo completed the top five list with a market share of seven percent.
Notably, the Chinese brands Huawei, Oppo, Vivo and Xiaomi were some of the few that witnessed an upward curve in terms of shipments as the likes of Apple saw its shipments decline by four percent in 2018.
Mobile market update: App stores on a high
Meanwhile, App Annie highlighted in its April report that consumer spending surpassed US$22 billion on apps in the first quarter of 2019, making it a fruitful quarter for the app industry. It also marks a 20 percent jump year-over-year.
Further, the report highlights that consumers have downloaded over 30 billion apps in the first quarter of 2019 which marks a 10 percent year-over year growth.
Specifically, downloads on Google’s (NASDAQ:GOOGL) Play Store had a 10 percent spike on a year-over-year basis, with emerging markets playing a contributing factor to the increase.
India, Indonesia and Brazil were said to be the largest contributors for Google Play’s growth in downloads. In terms of the specific apps category, auto and vehicles segment followed by entertainment apps were downloaded the most by people.
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While Google Play downloads were just above 20 billion, downloads on Apple’s App Store was just shy of the 10 billion mark in the first quarter. Brazil was said to be the largest contributor for iOS’ download growth.
App Annie said that the overall contributors for the spike in app downloads across the Play Store and App Store are the entertainment and games categories. Crucially, it was said that mobile gaming will hit 60 percent market share in terms of consumer spending this year across PC and handheld devices. The firm highlighted that the entry of Apple and Google into the mobile gaming market was to capture the lucrative piece of revenue.
“The bottom line: it’s all about services and content, and the tech giants are making mobile the centerpiece of their growth strategies,” the firm said.
Further, App Annie highlighted that the Match Group’s (NASDAQ:MTCH) Tinder took the crown for the global quarterly spend on a non-gaming app.
Mobile market update: 5G and foldables to take center stage
While we had devices that were capable of handling 5G networks, cellular operators have only begun launching these services in April.
Verizon (NYSE:VZ) kicked off the commercial availability of 5G services as it pushed out the network to citizens of Chicago and Minneapolis. The company plans to make the service available in more than 30 cities across the US in 2019.
Counterpoint said that carriers in the US had to roll out this service ahead of markets for marketing purposes.
“While there can only be one winner, ultimately it is all about public perception,” the firm said in the report. “Even if carriers are concerned about the return on investment on the massive costs of a 5G upgrade, they cannot afford to lose the marketing battle.”
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In Canada, the federal government completed the auction for the prized 600 MHz spectrum, which is capable of delivering 5G services which fetched the government C$3.47 billion. Notable winners include Telus (TSX:T,NYSE:TU) and Rogers Communications (TSX:RCI.A,NYSE:RCI). Rogers, in particular, emerged as a major force from the auction having secured the spectrum across the country.
Meanwhile, the commercial availability of foldable phones, especially the Galaxy Fold, also began in April. The device has reportedly been sold out in the US.
In a report, Gartner said that the mobile phone shipments will fall by 0.5 percent on a year-over-year basis. The firm said that 1.8 billion mobiles would be shipped in 2019 and that the industry would see a shipment increase of 1.2 percent in 2020.
“Users have reached a threshold for new technology and applications, which means that unless new models provide significant new utility, efficiency or experiences, users don’t want or need to upgrade,” Roberta Cozza, research director at Gartner, said in the release.
Further, the firm said that the foldable phones would have a market share of five percent by 2023 as it predicts that 30 million units will be shipped.
“We expect that users will use a foldable phone as they do their regular smartphone, picking it up hundreds of times a day, unfolding it sporadically and typing on its plastic screen, which may scratch quickly depending on the way it folds,” Cozza said. “Through the next five years, we expect foldable phones to remain a niche product due to several manufacturing challenges.”
Mobile market update: Investor takeaway
While the stage for the future technologies like 5G and foldable devices was certainly set in the first quarter of 2019, the mobile industry is heading into an exciting phase of growth. This comes thanks to new form factors, technologies and services which gives the investors and consumers plenty to look forward in the upcoming quarters.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.