Counterfeits led to 184m fewer smartphone sales in 2015

Smartphone producers lost €45.3bn in sales due to counterfeiting in 2015, according to a new report.

The latest sector-specific analysis from the EU Intellectual Property Office (EUIPO) Observatory – which covers 90 countries - suggests that 184 million fewer smartphones were sold by legitimate companies as a result of the illicit trade in knock-off phones during that year.

That is equivalent to around 13 per cent of the 1.3 billion smartphone sold worldwide in 2015, based on point-of-sale tracking of consumer purchases. The EUIPO says approximately one out of every six people on the planet purchased a smartphone that year, at an average cost of €275.

Looking at the EU market, the report finds that 14m fewer smartphones were sold in that year because of the counterfeit trade, around 8 per cent of the total market and equivalent to €4.2bn in lost sales.

For other regions, the report suggests 21.3 per cent of sales were lost due to counterfeiting in Africa, 19.6 per cent in Latin America, 17.4 per cent in Arab countries, 15.6 per cent in China, 11.8 per cent in the Asia-Pacific region and 7.6 per cent in North America in 2015. All told, China accounts for one third of the total global revenue loss in the smartphone sector.

Along with direct lost sales, counterfeit phones can lower the quality of service of telecomms services, can create a safety hazard for consumers due to the use of substandard components or materials, and raise cybersecurity and privacy issues. They also pose risks to the environment and consumer health due to the use of hazardous substances in the manufacturing of these devices, says the report.

"Many of these impacts are particularly serious in regions such as Africa where many consumers rely on their smartphones to an even greater extent than consumers in Europe or North America," it notes.

The data were compiled and analysed with the help of the International Telecommunication Union (ITU), a trade organization representing smartphone producers, and it is the first report in the Observatory series which analyses a sector both inside and outside the EU.

EUIPO executive director António Campinos said the estimate that almost 13 per cent of legitimate sales of smartphones were lost globally in 2015 "can act as a powerful message for policymakers, and all who work to combat counterfeiting worldwide."