Aussie smartphone sales stay flat despite soaring usage

Australian smartphone sales for the second half of 2016 remained flat despite soaring usage rates, according to a new study by analyst firm, Telsyte.

New findings from the Telsyte Australian Smartphone & Wearable Devices Market Study 2017 shows 4.1 million smartphones were sold during the second half of 2016, down two per cent when compared to the same time the prior year.

Year-on-year, it found that the market grew less than one per cent.

However, at the end of 2016, Telsyte estimated that 75 per cent of Australians were using a smartphone, with near full penetration in the 18 to 55-year-old age group.

Telsyte said smartphone sales were impacted by a combination of factors, including the recall of the Samsung Note 7, rising prices of premium handsets, and a difficult retail environment.

It added that the recall of Galaxy Note 7 has negatively impacted Samsung’s brand for around a third of Samsung’s smartphone users. Samsung smartphone users indicated around 60 percent repeat purchase intention, similar to before the recall.

Apple’s iPhone was the most popular brand of smartphone sold in Australia, with an estimated 1.7 million units sold in the second half of 2016. However, Telsyte said Apple was not able to replicate its second half of 2014 performance, which covered the period following the launch of the iPhone 6, triggering a “major upgrade event” due to its larger screen size.

It added that price rises have also impacted iPhone sales.

Nonetheless, Telsyte said iPhone repeat purchase intentions “remain industry leading” at greater than 80 per cent, creating a big opportunity for Apple if it can deliver a “compelling new product” at the end of 2017.

“A third of the iPhone installed base is on the iPhone 5S or earlier models, making them ripe for an upgrade,” Telsyte senior analyst, Alvin Lee, said. He added that an iOS upgrade in 2017 will result in models such as the iPhone 5 and iPhone 5c being left unsupported.

In addition, the study found that Android remains the most popular operating system on smartphones in Australia (52 per cent of the installed base), with Samsung continuing its Android sales leadership followed by Huawei.

However, a similar study by IDC, in its Quarterly Mobile Phone Tracker, found that following six straight quarters of YoY decline, the Australian mobile phone market returned to growth as it shipped 2.93 million mobile phones in the last quarter of 2016 as compared to 2.84 million the same time the previous year, representing a 3.2 per cent increase YoY.

IDC found that iOS was again the most popular operating system (OS) in Australia, overtaking Android as it took over more than half (54.9 per cent) of the total smartphone shipments in the last quarter of 2016.

IDC said Apple surpassed all expectations as the newly launched iPhone 7 gained momentum in the market and stretched its lead further to hold 54.9 per cent of the Australian smartphone market.

“With over 1.5 million shipments in the fourth quarter of 2016, it was one of the most successful quarters for Apple in Australia since its launch” IDC Australia market analyst, Bilal Javed, said.

“Despite new players such as Google with the Pixel device entering the market, Android could only take 44.6 per cent market share. This goes to show the unanticipated success of iPhone 7 range as Apple smashed through shipment records for the quarter.”

He added that Apple was able to benefit as refresh cycles on two year post-paid contracts approached and consumers warranted a natural upgrade. He also said Apple was also able to pounce on the void left by Samsung Note 7 for consumers seeking large screen devices with a matching spec heavy iPhone 7 Plus device.

IDC mirrored the findings of Telsyte, saying that even as it experienced a 28.8 per cent YoY decline, Samsung was still able to hold onto its second spot as it held 15.6 per cent of the market.

“The impact of the recall and the negative publicity surrounding Note 7 is evident here and makes the 2017 flagship even more critical for Samsung as it looks to gain share amidst other Android vendors in Australia.” Bilal said.

IDC found that while the negative publicity because of Note 7 fiasco hit, the Galaxy S series has carried Samsung in Australia with close to 80 per cent of shipments coming from the flagship range.

The analyst firm also found that Windows Phone uptake declines further and hold less than one per cent market share as lack of new devices and apps on the platform continue to hinder any opportunity in both the consumer as well as commercial segment.