Following a lackluster showing in 2019, worldwide smartphone sales are expected to bounce back this year as more 5G handsets hit the market, according to the latest estimates from market researcher Gartner. Don't expect blockbuster gains, though: Gartner estimates that unit volumes will increase 3% to 1.57 billion smartphones this year. Still, that beats the 2% decline that the market registered -- its first-ever drop -- last year in the face of rising phone prices and slowing upgrades.
In contrast, IDC estimated a few months ago that smartphone shipments would increase 1.6% to 1.37 billion in 2020, although IDC measures shipments into distribution channels while Gartner is approximating sales to end users.
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5G phones will represent 12% of volumes
Of the 1.57 billion total phones, roughly 221 million, or 12%, will support 5G, the next-generation cellular technology that is in the midst of rolling out around the world. Volumes of 5G phones are then expected to more than double in 2021 to 489 million units.
"2019 was a challenging year for smartphone vendors, primarily due to oversupply in the high-end sector in mature markets and longer replacement cycles overall," Gartner research vice president Annette Zimmermann said in a statement. "However, in 2020, the market is expected to rebound with the introduction of 5G network coverage in more countries and as users who may have delayed their smartphone purchases until 2020 in expectation of price reductions begin buying again."
Adoption of 5G will continue to gain traction this year, particularly as 5G phone prices come down. There are already some 5G phones that cost $300 or less. For example, China's Xiaomi launched its Mi Mix 3 5G last year, which costs just $289. That will help Xiaomi address the Chinese market, which remains the largest smartphone market in the world, with over 411 million units in 2019.
Apple (AAPL 1.97%) will jump into the 5G market this year with a handful of 5G iPhones launching in the fall. Gartner expects Apple's entry to help drive demand in China and other markets in the Asia-Pacific region. The Mac maker suffered a rough 2019 in China, with revenue in its "Greater China" segment declining 16% to $43.7 billion in fiscal 2019, although the company has been taking drastic steps to improve the business there that are starting to pay off.
Emerging markets in Asia-Pacific will be the second-largest region, with unit volumes of nearly 380 million. That includes India -- among the fastest-growing smartphone markets, and one that Apple has had difficulty cracking for years. The company is expanding iPhone production in India, which will pave the way for Apple retail stores by meeting local sourcing regulations.
While the first 5G phones hit the market in 2019, 2020 will see 5G adoption accelerate as consumer interest builds.
