Mar. 6 (NBD) - In the fourth quarter of 2017, global smartphone sales experienced the industry's first decline since 2004, according to the world's leading research and advisory firm Gartner.
As the 4G (the 4th wireless system) market saturates and starts to show signs of slowing down, 5G is expected to be a new growth point.
The new generation of technology is going to reshape the smartphone market. Industry insiders told NBD that 5G has higher technical requirements than 4G, thus smartphone vendors should be better armed with technology to win the competition.
Benefits of 4G are waning
Global smartphone sales reached 408 million units in the fourth quarter of 2017, representing a 5.6 percent decline, compared with the fourth quarter of 2016, when over 432 million phones found a new owner, Gartner reported. Almost every smartphone manufacturer saw sales decline in 2017, including Samsung (a decline of 3.6 percent) and Apple (a 5 percent drop).
According to reports published by IDC, another renowned data company, smartphone vendors shipped a total of 1.46 billion units in 2017, 0.5 percent fewer than that of 2016. A considerable factor for reducing global shipment was China's 5 percent sales decline in 2017, IDC explained.
Kang Zhao, an analyst specializing in the communication industry, told NBD that the market has seen smartphone oversupply. Moreover, rising price of terminals dissuade consumers to change a new phone.
Despite sales growth slowdown, smartphone vendors have never stopped to woo customers with better screens, cameras, and the application of artificial intelligence.
Hu Baishan, Chief Operating Officer of Vivo Technologies, told NBD in an interview that innovation of smartphones in the late 4G generation has boosted demands for new phones to some extent, but the next round of exploding demands will not come until the adoption of 5G.
In the Mobile World Congress 2018 held last week, various chip and smartphone vendors have outlined the time for 5G commercialization. The year 2019 will be a critical year for 5G as the first batch of 5G-enabled smartphones will hit market. 5G communication entails the support of new smartphones, which triggers new demands naturally, Kang Zhao added.
5G has higher technical requirements
High speed, reduced latency, and greater capacity are most talked features of 5G, which can be used in many new application scenarios. 4G is dedicated to building connections among people, while 5G will help build connections among both people and things.
NBD noted that the upstream of 5G industry includes base stations, antenna, wires, chips, and RF converter providers, while telecommunication carriers are in the middle stream. And terminals such as smartphones are in the downstream. A mature 5G industry chain needs joint efforts of different parties. Lacking any of those would affect the popularity of the new technology.
Hu Baishan noted that 5G communication requires higher radio frequency, which means electronic components for 5G devices should be substantially better than 4G ones, making the R&D of 5G smartphones more difficult.
The advance of every generation of communication technology has reshaped the telephone industry, which is a matter of live or death for telephone vendors. Nokia, for instance, lost direction when 3G came, giving its throne to Apple.
Lin Zhihong, vice general manager of the wireless communication department of MediaTek.Inc, told NBD in an interview that technically speaking, fewer companies are eligible to conduct 5G-related business. After the maturation of 5G technology, those companies with higher efficiency must reshape the existing landscape.
Uncertainties remain large in the niche sector, including the upgrades of hardware and software. It is hard to decide how much money and how many human resources should be put in. A single mistake would hamper their opportunities to win the market, an industry insider said to NBD.
No matter how 5G standard will be set and how carriers build their base stations, telephone vendors have to be well-prepared for technology, Hu added.