Europe's mobile operators sell fewer phones but gain share as budget market shrivels

Contract purchases hold up better than independent retail sales, with Apple overtaking Samsung in the carrier channel

European mobile operators are gaining a slightly larger share of smartphone sales, not because they are selling more devices, but because other sales channels are shrinking faster.

This is according to market watcher Counterpoint Research, which says that sales of new smartphones through European operators were down by 4 percent during the second quarter of this year, compared with the same period a year ago.

But device sales through the open market fared much worse, declining by 11 percent. This refers to phones that are bought outright from independent retailers or directly from manufacturers, which are typically SIM-free and unlocked so the customer can choose which network they hook up to.

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Operators accounted for 36 percent of European smartphone sales in the second quarter, up from 35 percent a year earlier. The open market still represented the majority.

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As The Register has covered numerous times this year, mobile phones have been hit by the AI-driven memory crisis, which has led to a shortage of the DRAM and NAND flash components needed for consumer kit like smartphones and PCs.

The resulting rise in prices has been felt most keenly at the lower end of the market, effectively making it commercially unviable to produce budget devices, according to some reports.

Phones sold through operators tend to be higher-end models than those bought on the open market. Contracts spread the handset cost over monthly payments, making expensive devices more accessible.

Apple played a key part in this slight shift, Counterpoint says, overtaking Samsung as the brand with the greatest market share in Europe's operator channel. Motorola and vivo are highlighted as the fastest-growing bands in the same segment.

Counterpoint associate director Jan Stryjak said operators were likely to keep gaining market share for the next few quarters at least, as the lower end of the market continues to be impacted by the memory crisis.

"However, we are seeing a steady increase in promotional activity by independent retailers compared to operators, which could mitigate some of the price rises and provide additional stimulus to the open market," he said.

Or perhaps more buyers might turn to the second-hand market instead, which has been predicted to see a rise in trade of 12 percent this year, as rising prices make new phones less affordable.

Counterpoint forecast that 80 percent of top-flight smartphones will feature agentic AI capabilities by 2027, meaning they will have software agents making decisions and carrying out actions on the owner's behalf. ®