The smartphone market in North America dropped 18% year over year in the first three months of 2019, according to a report from research firm Canalys.
Smartphone shipments hit 36.4 million units during the first quarter of 2019, representing a five-year low. The slump comes after smartphone shipments hit a record high in the first quarter of 2018 at 44.4 million units shipped.
Canalys’ report points to Apple’s poor performance and an “absence” of ZTE as causes for the downturn. Apple shipments dropped 19% year over year in the first quarter of 2019 in North America, but the company remained the market leader. Canalys estimates Apple shipped a total of 14.6 million iPhones during the quarter, representing 40% of the total smartphone shipments in North America. Apple shipped 4.5 million of its newest iPhone XR phones during the quarter, accounting for 13% of total smartphone shipments.
“Apple’s fall in Q1 followed particularly high shipments of flagship iPhones in the previous quarter,” said Canalys research analyst Vincent Thielke in a statement. “But, there was a disconnect between channel orders and consumer demand, which then caused early shipments in Q1 to be challenging for Apple.”
Thielke pointed to trade-in promotions as a key driver for smartphone shipments for Apple. “Apple has shown how vital trade-ins have become by moving the mechanism to the front and center of its ordering process,” Thielke said, adding that the company “frequently uses the net price in its flagship iPhone marketing.”
“The momentum of trade-in promotions in Q2 and Q3 will determine the extent to which Apple can counter negative market forces, such as longer device cycles,” Thielke said.
Samsung, Apple’s main competitor in the region, shipped an estimated 10.6 million smartphones during the quarter, accounting for 29% of the total smartphone shipments in the region. Samsung shipped 4 million of its latest Galaxy phones in total, including 2 million S10e phones and 2 million S10+ phones. Those two models together accounted for 12% of total smartphone shipments during the quarter, Canalys said.
“Samsung brought real differentiation to its Galaxy S10 devices,” Thielke said, pointing to features such as the triple camera, ultra-wide-angle lens, hole punch display and reverse wireless charging. “Samsung is among the first to bring [these features] to the U.S in a mass-market smartphone, and the appeal of such new features will be important for other launches this year.”
Thielke also said differentiation between phones had become a weak spot for Apple. A key challenge for Apple is that “its latest iPhones are just not different enough,” Thielke said. “For its performance to improve in 2020, Apple will need to emphasize radical new features that are most likely to impress customers.”