Gartner: Sales of Smartphones Drop for the First Time Ever

It seems like smartphones took a nosedive.

According to Gartner, during the fourth quarter of last year, the sales of smartphones dropped for the first time ever. On Thursday, the research firm said that handset makers sold approximately 408 million smartphones to customers during the quarter, which is down by 5.6 percent from the same period in 2016. The number marks the first annual decline since Gartner began tracking the smartphone market way back in 2004.

On Thursday, Anshul Gupta, a Gartner analyst, said that lesser people are replacing their feature phones with smartphones “due to a lack of quality ‘ultra-low-cost’ smartphones. Instead, people are purchasing nicer feature phones. He also added that people who already own smartphones are opting for higher-end models and holding on to their devices for a longer period.

Gupta noted: “Moreover, while demand for high quality, 4G connectivity and better camera features remained strong, high expectations and few incremental benefits during replacement weakened smartphone sales.”

Lately, the smartphone market has been slowing down. It has become harder for vendors of handsets to make notable changes in their devices and differentiate from their competitors. Prices for the newest and greatest phones have increased at the same time as carriers in the United States have gotten rid of subsidies. All of that means that people are waiting for longer period to upgrade.

Even Apple has had a hard time. In April 2016, the company reported that the sales of its iPhone unit dropped for the first time ever, and they ended up falling for that full year. The sales of Apple have considerably rebounded, though they again declined in the December quarter despite the launching of the iPhone X.

Gartner said that Samsung was able to hold on to the Number 1 position during the fourth quarter, even though the unit sales of the company dropped by 3.6 percent to 74 million units. On Sunday, the company is scheduled to show off the Galaxy S9, its newest phone. The new device is expected to feature some tweaks. However, it will have no major design overhaul.

On the other hand, Apple ranked Number 2 during the period with the sales of iPhone down by 5 percent to 73.2 million, closely followed by vendors from China like Huawei, Oppo and Vivo. Xiaomi and Huawei (which failed to rank in the top five) were the only vendors of smartphones to observe growth in their unit sales during the quarter, said Gartner.

Earlier this month, Apple reported that the company sold 77.3 million iPhones during the December quarter. However, Gartner calculates the figures differently. Gartner tallies devices that are in the hands of actual users, while Apple and other vendors also include phones that have not been purchased yet by end consumers and are still held by Best Buy, Verizon Wireless, and other vendors.

Gartner said that the sales of smartphones increased by 2.7 percent to 1.5 billion units for the full year. The market share of Samsung stayed about flat at 21 percent, while the sales of Apple remained at around 14 percent. Huawei’s sales grew from 8.9 percent to 9.8 percent in 2016.

For the operating systems of smartphones, the lead of Android increased by 1.1 percentage points to 86 percent. On the other hand, the iOS of Apple remained at around 14 percent.