Smartphone sales fall for first time hitting Japanese supply chain

Smartphone shipments have fallen for the first time ever, from 345m units in Q1 2015 to 334.6 m in Q1 of this year, representing a 3% decline, reportedly due to market saturation, weak international currency, economic fears and less frequent upgrading. Apple sales have fallen from 61m sold in Q1 2015 to 51m in Q1 2016, while interestingly however, China's Huawei has increased its shipments from 173m in Q1 2015 to 283m in Q1 2016 and Oppo, also Chinese, has doubled shipments over the same period from 8.3m units to 15.5m units. On another note, the slowdown of Apple's iPhone has also impacted on Japanese firms, whose products are used in smartphones; Sony has warned that growth in one of its mainstay businesses, image sensors used in smartphone cameras, has come to a sudden stop for Q1 2016. Fanuc and Murata Manufacturing, who also supply Apple, have both also warned of a decline in profits for the current financial year. Furthermore, Carl Icahn, once one of Apple's largest stakeholders, has sold his shares due to concerns regarding Apple's relationship with the Chinese government; Apple is facing a potential crackdown by the Beijing.

Global smartphone market grew 21 percent this time last year but has now shrunk for the first time. Strategy Analytics

Yes, the world may have just witnessed 'peak iPhone', but that news came as the global smartphone market shrank for the first time in history.

According to new figures from Strategy Analytics, global smartphone shipments this year have fallen three percent compared with the first quarter of 2015, down from 345 million units to 334.6 million.

"It is the first time ever since the modern smartphone market began in 1996 that global shipments have shrunk on an annualized basis," said Linda Sui, director at the analyst firm.

Smartphone saturation in the US, Europe and China has been blamed for a slowdown in recent quarters in mature markets, and Sui adds that this quarter's results have also been driven by consumers in China fretting about the health of the world economy.

That phenomenon is noticeable in a sharp decline in Apple's revenue growth in China over the past year, which at one point was more than 100 percent.

As ZDNet recently highlighted, Apple's revenue growth in China plunged from 84.3 percent at the end of fiscal 2015 to 14 percent in Q1 2016. That decline comes despite Apple opening seven new stores there in Q1, bringing its total in China to 35.

Samsung remains the biggest smartphone vendor in the world, with a 23.6 percent share of global shipments, according to Strategy Analytics.

Samsung's global shipments fell four percent year on year, from 82.7 million units in Q1 2015 to 79 million in Q1 2016.

That decline isn't as drastic as Apple's 16 percent year on year fall from 61.2 million units a year ago to 51.2 million units in Q1 2016.

Apple's global market share has slid to 15 percent from 18 percent a year ago, according to Strategy Analytics.

One company that defied the downward trend is China's Huawei, which saw shipments rise 64 percent from 17.3 million in Q1 2015 to 28.3 million in Q1 2016. Chinese vendor Oppo nearly doubled shipments over the period, from 8.3 million units to 15.5 million units.

Meanwhile, shipments from last year's smartphone star, Xiaomi, are flat year on year, ending at 14.6 million for Q1 2016.

Apple doesn't report sales for the Apple Watch but, according to Strategy Analytics' estimates, it shipped 2.2 million units in Q1 2016, down from 5.1 million units Q4 2015. Apple still dominates smartwatch sales but its share of global shipments has fallen to 52 percent from 63 percent in the previous quarter.

However, the analyst firm notes that year-on-year growth in smartwatch sales is still a healthy 223 percent, from 1.3 million in Q1 2015 to 4.2 million Q1 2016.

Samsung shipped 600 million smartwatches in Q1 2016, up from 400 million a year ago.