CNET

Uh-oh. Smartphones finally took a nosedive.

In the fourth quarter of 2017, smartphone sales fell for the first time ever, according to Gartner. Handset makers sold nearly 408 million smartphones to customers in the quarter, down 5.6 percent from the same period a year ago, the research firm said Thursday. That marks the first annual decline since Gartner started tracking the smartphone market in 2004.

Fewer people are switching their feature phones to smartphones "due to a lack of quality 'ultra-low-cost' smartphones" and instead are buying nicer feature phones, Gartner analyst Anshul Gupta said Thursday. And people who already own smartphones are upgrading to higher-end models and holding on to them longer, he added.

"Moreover, while demand for high quality, 4G connectivity and better camera features remained strong, high expectations and few incremental benefits during replacement weakened smartphone sales," Gupta noted.

The smartphone market has been slowing down of late. It's become harder for handset vendors to make huge changes in their devices and differentiate from one another. Prices for the latest and greatest phones have actually increased at the same time US carriers have gotten rid of subsidies. All of that's meant people are waiting longer to upgrade.

Even Apple has struggled. It reported in April 2016 that its iPhone unit sales fell for the first time ever, and they ended up declining for that full year. Apple's sales have largely rebounded, though they again slid in the December quarter despite the launch of the iPhone X.

Samsung managed to hold on to the No. 1 position in the fourth quarter, even though its unit sales slid 3.6 percent to 74 million units, Gartner said. The company on Sunday will show off its newest phone, the Galaxy S9. The device is expected to feature tweaks but no major design overhaul.

Apple ranked No. 2 in the period with iPhone sales down 5 percent to 73.2 million, followed by Chinese vendors Huawei, Oppo and Vivo. Huawei and Xiaomi (which doesn't rank in the top five) were the only smartphone vendors to see their unit sales grow in the quarter, Gartner said.

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(Note, Apple earlier this month reported it sold 77.3 million iPhones in the December quarter, but Gartner calculates its figure differently. It tallies devices in the hands of actual users, while Apple and others also include phones that have not yet been purchased by end consumers and are still held by Verizon Wireless, Best Buy and other vendors.)

For the full year, smartphone sales increased 2.7 percent to 1.5 billion units, Gartner said. Samsung's market share stayed about flat at 21 percent, while Apple's remained at about 14 percent. Huawei's grew to 9.8 percent from 8.9 percent in 2016.

For smartphone operating systems, Android's lead grew by 1.1 percentage points to 86 percent. Apple's iOS remained at about 14 percent.

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