Canalys Report: Slowdown in Foldable Phone Market in 2024, but Bright Outlook for AI Phones

Canalys Report: Slowdown in Foldable Phone Market in 2024, but Bright Outlook for AI PhonesA recent report from Canalys predicts a slowdown in the global foldable phone market in 2024, with year-over-year growth projected at only 13%, and a potential year-over-year decline in 2025. While the novel form factor has attracted initial market attention, the report highlights the need to address issues such as product value proposition and durability to sustain market demand

Canalys Report: Slowdown in Foldable Phone Market in 2024, but Bright Outlook for AI Phones

A recent report from Canalys predicts a slowdown in the global foldable phone market in 2024, with year-over-year growth projected at only 13%, and a potential year-over-year decline in 2025. While the novel form factor has attracted initial market attention, the report highlights the need to address issues such as product value proposition and durability to sustain market demand. However, a rebound is anticipated in 2026, driven by the entry of new players, advancements in generative AI technology, and clearer product positioning.

The report also provides a comprehensive analysis of other smartphone segments. Demand for high-end smartphones remains robust. In Q3 2023, global shipments of smartphones priced above $600 saw a 15% year-over-year increase, fueled by the launch of AI-powered smartphones.

Apple, with its iPhone 16 series featuring Apple Intelligence across the board, demonstrated its strategic focus on generative AI, achieving a 10% year-over-year growth and holding the top spot in the high-end market with a 63% market share. Samsung, driven by its new Galaxy Z foldable series and sustained demand for its first-generation AI flagship S24 series, experienced a 22% year-over-year growth, securing second place with a 21% market share. Huawei, with the launch of its first tri-folding phone, the Mate XT, solidified its image as a technology leader; the continued popularity of the Pura 70 series contributed to a 32% year-over-year growth, resulting in an 8% market share and third place. Google's new Pixel 9 series flagship phones and expanded SKUs led to a remarkable 157% year-over-year growth, claiming fourth place. Honor's strong performance in overseas markets with its flagship models contributed to a 68% year-over-year growth, placing it fifth.

Canalys forecasts an AI phone penetration rate of 17% in 2024, accelerating to 32% in 2025, with shipments nearing 400 million units. This is attributed to the upcoming launch of second-generation AI flagship phones from Android manufacturers and iterative improvements in model algorithms; on-device small models have shown significant progress. Building an open AI service ecosystem is a key focus of many Android manufacturers' next-stage AI strategies. The entry of leading industry players will attract more developers to create AI applications and services for mobile devices, further enhancing the nascent AI Agent application scenarios.

Canalys expresses cautious optimism about smartphone shipments in the second half of 2023. The report predicts global smartphone shipments of 1.22 billion units in 2024, a 6% year-over-year increase. However, it also suggests that after this year's strong rebound, the smartphone market will plateau from 2025 onwards, with the Compound Annual Growth Rate (CAGR) from 2024 to 2028 further reduced to 1%.

Detailed Vendor Performance in the High-End Market:

• Apple: Maintained its leading position in the high-end market with a 63% market share and 10% year-over-year growth, thanks to the iPhone 16 series' Apple Intelligence feature and strong brand influence. This demonstrates Apple's strategic execution in generative AI and highlights the high-end market's demand for innovative technology and premium user experiences.

• Samsung: Continued strong growth in the high-end market (22% year-over-year growth, 21% market share) driven by the success of the Galaxy Z foldable series and steady demand for the S24 series AI flagship phones. This showcases the effectiveness of combining foldable technology with AI to enhance product competitiveness and attract high-end consumers.

• Huawei: Further solidified its technological innovation leadership with the launch of the Mate XT tri-folding phone and the continued success of the Pura 70 series (32% year-over-year growth, 8% market share). This highlights Huawei's strong R&D capabilities and brand appeal in the high-end market.

• Google: Achieved remarkable growth (157% year-over-year) fueled by the strong performance of its Pixel 9 series and expanded SKUs, securing fourth place. This demonstrates Google's success in product strategy and market positioning, leveraging its influence within the Android ecosystem.

• Honor: Strong growth (68% year-over-year) in the high-end market driven by the excellent performance of its flagship models in overseas markets. This shows Honor's successful international expansion strategy and its global product competitiveness.

In conclusion, Canalys' report reveals a complex landscape for the 2024 smartphone market. The foldable phone market's slowdown necessitates addressing challenges related to value proposition and durability. However, the rapid development of AI technology presents new growth opportunities, with AI phone penetration set to increase, offering manufacturers new avenues for growth. While demand remains strong in the high-end segment, competition is intensifying. Manufacturers need continuous innovation in technology, product positioning, and market strategy to stand out. AI will be a crucial driver of the smartphone industry's future, and manufacturers' strategic vision and execution will determine their market share and prospects. The Canalys report offers vital insights into future smartphone market trends, urging manufacturers to focus on evolving consumer needs and constant innovation to navigate the challenging market environment. The rapid growth in AI phone penetration signifies a transformative impact of AI on the smartphone user experience in the coming years. From basic smart assistants to sophisticated AI Agents, AI will empower phones with enhanced capabilities and personalized services. Manufacturers need to proactively build open AI service ecosystems to attract developers and fully unlock AI's potential, delivering richer application scenarios to consumers a key differentiator in future market competition. Furthermore, the forecast of a smartphone market slowdown after 2025 necessitates proactive preparation and the identification of new growth areas, such as exploring innovative form factors, new application scenarios, or new markets. Continuous innovation will be crucial to adapt to market changes and maintain long-term competitiveness. The future smartphone market will be increasingly complex and challenging, requiring manufacturers to adapt effectively to succeed. Continued R&D investment and a deep understanding of consumer needs are pivotal for success.