3G retirement and “Gen AI” devices driving upgrades
SYDNEY, AUSTRALIA – Australia's smartphone market rebounded sharply in the first half of 2024, with sales surging 8 per cent year-over-year to 3.98 million units, driven by Android devices, according to Telsyte's latest research.
The Telsyte Australian Smartphone & Wearable Devices Market Study 2024-2028 found both the premium (>$1,000) and budget (<$300) segments saw double-digit growth during the six months. This market polarisation stems from heightened demand for cutting-edge AI capabilities in flagship models and the impending Telstra and Optus 3G network shutdown, forcing many users to upgrade.
Despite the sales uptick, the average smartphone replacement cycle or time people are hanging onto their phones extended by six months in 2023, reaching nearly four years. This shift reflects persistent cost-of-living pressures, improved device longevity, and extended software support. The trend is most pronounced in the sub-$1,000 market, where replacement cycles now exceed those of premium devices by at least a year. Premium smartphone replacement cycles have remained steady in the past year.
While both major platforms saw increased sales, Android smartphones outpaced iPhones with double-digit growth (12% vs. 4%). This surge is attributed to the proliferation of handsets with integrated Gen AI* and Android's diverse price points, which better catered to consumers seeking affordable 3G replacements.
The top two vendors remained Apple and Samsung. On any given month either Oppo or Motorola were in third place with Motorola edging closer to Oppo annually.
Gen AI phones, including the Apple iPhone 15 Pro series, accounted for about a third of total sales in the measured six-month period. The iPhone 15 Pro series led Apple's sales, buoyed by anticipated compatibility with the upcoming Apple Intelligence release.
On-device AI gaining momentum in the smartphone landscape
According to Telsyte's latest research, more than seven million Australians have already embraced Gen AI applications like OpenAI's ChatGPT, Meta AI, Microsoft Copilot, and Google's Gemini. However, two-thirds of Gen AI app users expressed concerns about personal data handling by third-party apps.
The study found that only 35 per cent of smartphone users trust their device manufacturer and the services they provide, with Apple users showing the most trust (39%).
Computers remain the primary device for Gen AI access, with three-quarters of Gen AI users accessing apps via computers compared to less than half on smartphones. However, Telsyte predicts smartphones could close the gap within two years with the increasing availability of Gen AI smartphone features.
The study found a nascent but growing demand for on-device AI features, with one-sixth of users stating their next phone “must have” advanced AI features. Overall, 1 in 5 smartphone users would consider upgrading for advanced on-device AI features, rising to 31 per cent among those looking to purchase a smartphone by 2025.
Demand for new features remains high, with half of smartphone users interested in AI assisted photo and video editing, live translation, text generation and other AI features on their devices. However, only a third (36%) of interested users are willing to pay (e.g. just under $10 monthly) for such features.
While cost-of-living pressures remain, Telsyte forecasts 8.7 million smartphones will be sold for the full year 2024, an increase of 7 per cent driven by demand for premium handsets with on-device AI features; better data security; and the desire to "future-proof" smartphone purchase, given an intention to use phone for up to 5 years.
Two in five smartphones sold in 2024 are expected to be Gen AI smartphones, with increasing availability from manufacturers such as Samsung, Apple, Google, Motorola, Oppo and Asus.
The nearing release of Apple Intelligence could spark a major iPhone upgrade cycle in the next 12 to 18 months, rivalling the growing Android premium device trends. This hinges on Apple’s ability to showcase private, on-device context-aware AI that can seamlessly integrate into apps and routines.
Foldable smartphones continue to grow in adoption, with innovations like Huawei's recently unveiled trifold design pushing the boundaries of form factor evolution.
Foldable devices accounted for 8 per cent of total Android smartphone sales in 2023. Telsyte projects this figure could reach 10 per cent in 2024, driven by new and existing offerings from Samsung, Google, Motorola, and Oppo.
“On device generative AI upgrades and new form factors are breathing life into an otherwise very mature sector” says Telsyte Managing Director, Foad Fadaghi, says.
“However, manufacturers could do more about educating their customers on both the utility and safety of their Gen AI platforms,” says Fadaghi.
Health and fitness monitoring drive smart wearables’ success
Australians' commitment to health and fitness continues to fuel the smart wearables market, with nearly two-thirds of users expressing a desire to stay fit and healthy.
Over a million smart wrist wearables were sold during the first half of 2024, up 2 per cent year-on-year, with smartwatches accounting for three-quarters of sales. Apple, Samsung and Fitbit lead the wrist wearable vendor rankings.
The study also revealed Australians’ openness to new wearable form factors, including “smart rings”. A quarter of Australians are already aware of this discreet wearable technology, available from manufacturers like Oura, Samsung, Ultrahuman and RingConn.
Among those aware, 29 per cent expressed interest in wearing one for fitness, health monitoring, and mobile payments, with a willingness to invest close to $500.
“Smart rings could offer a more comfortable option for nighttime health monitoring compared to wrist-worn devices,” says Telsyte Senior Analyst, Alvin Lee.
Smart hearables sales reached over 1.3 million units during the same period, up 6 per cent from a year ago. This category remains attractive to Australians seeking lower cost tech upgrades that enhance cross-device user experiences.
For further information on the study or media enquiries contact:
Foad Fadaghi
Managing Director
Tel: 1800 313 142
Email: ffadaghi@telsyte.com.au
Alvin Lee
Senior Analyst
Tel: 1800 313 142
Email: alee@telsyte.com.au
The Telsyte Australian Smartphone & Wearable Devices Market Study 2024-2028 is a comprehensive study that provides subscribers with:
Smartphone market sizing estimates, platform and vendor market shares and forecasts
Smart wrist-based wearables market sizing estimates, platform and vendor market shares and forecasts
Smart hearables market sizing estimates, platform and vendor market shares and forecasts
End user trends across devices, application usage, platforms and operators
Purchase intentions and acquisition channels
Strategic analysis of recent market trends and developments
In preparing this study, Telsyte used:
An online survey conducted in August 2024 with a representative sample of 1,085 respondents, 16 years and older.
An online survey conducted in May 2024 with a representative sample of 1,050 respondents, 16 years and older.
Interviews conducted with executives from service providers, network operators, manufacturers, retailers, financial analysts and channel partners.
Financial reports released by service providers, manufacturers and retailers.
On-going monitoring of local and global market and vendor trends.
Analyst reviews of leading smartphone and wearable devices.
Telsyte measures smart wearables as:
Smart wrist wearables worn on a user’s wrist typically paired and controlled via a smartphone. Examples includes products from Apple, Fitbit, Fossil, Garmin, Oppo, Samsung, Polar, Ryze, SPACETALK, Withings and others.
Smart hearables: smart earbuds and headphones that support digital assistant and typically paired with a smartphone. Examples include Apple Airpods, Samsung Galaxy Buds, Google Pixel Buds, Amazon Echo Buds, JBL Reflect Flow Pro+, Jabra Elite, Bose QuietComfort® 45, and Sony LinkBuds.
Telsyte covers smartphones from Apple, ASUS, Black Shark, CAT®, Google, HMD, Motorola, Nokia, Nothing, Opel, OPPO, Samsung, TCL, Xiaomi, ZTE and others.
Editor’s note:
*Telsyte defines GenAI smartphones as smartphones with advanced hardware such as a system-on-a-chip (SoC) and neural processing unit (NPU), designed and optimised to efficiently run on-device generative AI models that facilitate a better understanding of personal context. These smartphones enable local execution of AI-driven features, allowing for real-time generation of content and designs without fully relying on cloud processing. Examples include Apple Intelligence, Samsung’s Galaxy AI and Google’s Gemini Nano.
Telsyte measures sales of devices (“sell out”), not shipments or sales to retailers or carriers (sometimes called “sell-in”). Telsyte believes this is a more accurate measure of performance of products in a marketplace. Telsyte does not rely on disclosure from vendors or general assumptions made for large multinational companies that do not release local market data. Telsyte uses a comprehensive methodology that includes surveys of consumers, discussions with vendors, carriers and their partners, retailers, and financial analysts. In addition, public financial results from manufacturers and carriers are used. Telsyte tests a wide range of products in real life usage scenarios and conducts satisfaction and repeat purchase surveys with large and representative samples of Australian smart device users. Telsyte is a pioneer in measuring and reporting smartphone sales in Australia and has been providing insights on mobile technologies since 2006.
About Telsyte
Telsyte is Australia’s leading emerging technology analyst firm. Telsyte analysts deliver market research, insights and advisory into enterprise and consumer technologies. Telsyte is an independent business unit of DXC Technology. For more information visit www.telsyte.com.au
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