The shift reflects a tightening budget phone market, squeezed by AI-driven memory shortages that have pushed up component costs for DRAM and NAND flash, making low-end devices less commercially viable. Higher-end models sold through operators on contract plans remain more accessible, as monthly payments spread the handset cost.
Apple overtook Samsung to become the largest brand in the European operator channel during the quarter, while Motorola and vivo were the fastest-growing brands in that segment.
Counterpoint associate director Jan Stryjak said operators are likely to keep gaining share “for the next few quarters at least, as the lower end of the market continues to be impacted by the memory crisis.” However, he noted “a steady increase in promotional activity by independent retailers” that could offset some price rises and stimulate the open market.
Some buyers may turn to second-hand devices instead. Counterpoint predicts a 12 percent rise in trade for the second-hand market this year as new phones become less affordable.
Counterpoint also forecast that by 2027, 80 percent of flagship smartphones will feature agentic AI capabilities, enabling on-device software agents to make decisions and perform actions on behalf of the user.