Australia’s Smartphone Sales Rebound Amid 3G Retirement and “Gen Ai” Devices

Australia’s smartphone market saw a significant recovery in the first half of 2024, with sales rising 8 per cent year-on-year to 3.98 million units, according to the latest research by Telsyte. The surge was driven primarily by Android devices and influenced by the impending shutdown of Telstra and Optus 3G networks, prompting many users to upgrade their phones.

The Telsyte Australian Smartphone & Wearable Devices Market Study 2024-2028 reported strong growth in both the premium (over $1,000) and budget (under $300) segments, highlighting a market polarisation. Demand for advanced Ai capabilities in flagship models and the need for 3G replacements were key factors behind this growth.

Despite the rise in sales, the study noted that the average smartphone replacement cycle extended by six months in 2023, now reaching nearly four years. The trend was more pronounced in the sub-$1,000 market, where replacement cycles have stretched beyond those of premium devices by at least a year.

Android Devices Lead Growth

While both major platforms saw an increase in sales, Android smartphones experienced a more robust growth rate, with a 12 per cent rise compared to 4 per cent for iPhones. This growth was attributed to the availability of Gen Ai features in Android devices and the diverse price points that better suited consumers upgrading from 3G devices.

Apple and Samsung remained the top two smartphone vendors, but Oppo and Motorola continued to compete for third place, with Motorola steadily closing the gap on Oppo.

Gen Ai phones, such as the Apple iPhone 15 Pro series, accounted for about a third of total sales during the six-month period. The iPhone 15 Pro series, in particular, saw strong sales due to its expected compatibility with Apple’s upcoming Intelligence release.

On-Device Ai Features Gain Popularity

Telsyte’s research highlighted a growing interest in on-device Ai features, with more than seven million Australians already using Gen Ai applications like OpenAi’s ChatGPT, Microsoft’s Copilot, Meta Ai, and Google’s Gemini. However, the study also revealed concerns around personal data security, with two-thirds of users expressing distrust in third-party Ai apps.

While 35 per cent of smartphone users trust their device manufacturer’s Ai features, Apple users showed the highest level of trust, with 39 per cent expressing confidence.

Computers remain the dominant device for accessing Gen Ai applications, with three-quarters of users relying on them compared to less than half using smartphones. However, Telsyte predicts that smartphones could close this gap within two years as more Ai features become integrated into mobile devices.

Growing Demand for Ai Features

The report found that one in six users indicated that advanced Ai features were a must-have for their next phone. Twenty per cent of smartphone users overall expressed interest in upgrading for Ai capabilities, a number that rises to 31 per cent among those planning to purchase a new device by 2025.

There is considerable interest in Ai-assisted features such as photo and video editing, live translation, and text generation. However, only 36 per cent of those interested in these features are willing to pay for them, with a suggested price point of under $10 per month.

Telsyte expects that by the end of 2024, 8.7 million smartphones will be sold in Australia, a 7 per cent increase from 2023. This growth will be driven by the demand for premium handsets with on-device Ai features, enhanced data security, and future-proofed technology for those looking to keep their devices for up to five years.

By the end of the year, two in five smartphones sold are expected to be Gen Ai models, with manufacturers like Samsung, Apple, Google, Motorola, and Asus contributing to the growing availability of these devices.

The launch of Apple’s Intelligence platform is anticipated to spark a significant iPhone upgrade cycle in the next 12 to 18 months, potentially rivalling the increasing popularity of Android premium devices. This will depend on Apple’s ability to demonstrate how its private, on-device Ai features can integrate seamlessly into users’ everyday routines.

Foldable Phones Continue to Grow

Foldable smartphones are seeing steady growth in adoption, with devices like Huawei’s trifold design pushing the boundaries of smartphone design. Foldable devices accounted for 8 per cent of total Android sales in 2023, and Telsyte projects this figure will reach 10 per cent in 2024. Samsung, Google, Motorola, and Oppo are all contributing to this growth with new and existing foldable offerings.

Telsyte Managing Director Foad Fadaghi commented on the evolving smartphone market, saying, “On-device generative Ai upgrades and new form factors are breathing life into a very mature sector. However, manufacturers could do more to educate their customers on both the utility and safety of their Gen Ai platforms.”

Health and Fitness Drive Smart Wearables Growth

The demand for smart wearables remains strong, with health and fitness continuing to be key drivers. Over a million smart wrist wearables were sold in the first half of 2024, up 2 per cent year-on-year. Smartwatches accounted for three-quarters of these sales, with Apple, Samsung, and Fitbit leading the market.

Telsyte’s study also revealed growing awareness of new wearable form factors, such as smart rings. A quarter of Australians are already familiar with this technology, offered by manufacturers like Oura, Samsung, and RingConn. Among those aware, 29 per cent expressed interest in using smart rings for health monitoring, fitness tracking, and mobile payments, with a willingness to spend up to $500 on these devices.

Alvin Lee, Telsyte Senior Analyst, said, “Smart rings could provide a more comfortable option for nighttime health monitoring compared to wrist-worn devices.”

Meanwhile, sales of smart hearables, including wireless earbuds and headphones, reached 1.3 million units in the first half of 2024, a 6 per cent increase from the previous year. These devices remain a popular choice for Australians seeking affordable tech upgrades that enhance cross-device experiences.

Last Updated on October 8, 2024 by Nick Ross