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

European mobile operators are gaining a slightly larger share of smartphone sales, not due to increased sales volume, but because other sales channels are shrinking at a faster rate. According to market analyst Counterpoint Research, sales of new smartphones through European operators declined by 4 percent in the second quarter of this year compared to the same period last year. However, device sales through the open market declined significantly more, with a 11 percent drop.

This discrepancy arises from the impact of an AI-driven memory crisis, leading to a shortage of essential components for consumer devices like smartphones and PCs. The rising prices have been most felt in the budget market, making it commercially unviable to produce budget devices, according to some reports.

Contrary to the open market, operator sales have seen an increase in market share. Mobile phones sold through operators tend to be higher-end models, and spreading the handset cost over monthly payments through contracts makes expensive devices more accessible. Counterpoint Research notes that Apple overtook Samsung as the leading brand in European operators' channel.

Motorola and vivo are identified as the fastest-growing brands in the same segment. Counterpoint associate director Jan Stryjak anticipates operators will continue to gain market share for the next few quarters, as the lower end of the market remains affected by the memory crisis. However, independent retailers are showing a steady increase in promotional activities, which could help offset some price hikes and stimulate the open market.

Alternatively, buyers might turn to the second-hand market, which is expected to see a 12 percent rise in trade this year as new phone affordability decreases. Counterpoint predicts that by 2027, 80 percent of top-tier smartphones will incorporate agentic AI capabilities, allowing software agents to make decisions and perform actions on behalf of users.