Gartner, Inc. said global smartphone sales
will continue to slow and will no longer grow in double digits. Worldwide smartphone
sales are expected to grow 7 percent in 2016 to reach 1.5 billion units. This
is down from 14.4 percent growth in 2015. In 2020, smartphone sales are on pace
to total 1.9 billion units.
"The smartphone
market will no longer grow at the levels it has reached over the last seven
years," said Anshul Gupta, research
director at Gartner. "Smartphone sales recorded their highest growth in
2010, reaching 73 percent."
Slowing Replacement of
Phones
Today, the smartphone
market has reached 90 percent
penetration in the mature markets of North America, Western Europe, Japan and
mature Asia/Pacific, slowing future growth. Furthermore, users in these regions are not
replacing or upgrading their smartphone as often as in previous years.
"In the mature
markets, premium phone users are extending life cycles to 2.5 years, which is
not going to change drastically over the next five years," said Gupta.
Communications Service
Providers (CSPs) have moved away from subsidies providing a "free"
smartphone every two years, which has led to more varied upgrade cycles. On the
other hand, CSPs have introduced financing programs and vendors such as Apple
now offer upgrade programs that provides users with new hardware after only 12
months. "These programs are not for everyone, as most users are happy to
hold onto their phone for two years or longer than before.They do so especially
as the technology updates have
become incremental rather than exponential," added Gupta.
In emerging markets, the
average lifetime of premium phones is between 2.2 and 2.5 years, while basic
phones have an average lifetime of three years and more. "2015 was the
year when sales of smartphones overtook those of feature phones for the first
time in Sub-Saharan Africa. This region represents an attractive market for
vendors that can persuade users to migrate to their first smartphone,"
said Gupta.
India Is the Main Focus
for Growth Opportunity
Since mature markets are
saturated, the focus for many vendors is on India and China. "India has
the highest growth potential," said Gupta.
"Sales of feature phones totaled 167 million units in 2015, 61 percent of
total mobile phone sales in India."
Smartphones are expensive
for users in India, but with the average selling prices (ASPs) of low-end
models falling, Gartner estimates that 139 million smartphones will be sold in
India in 2016, growing 29.5 percent year over year. ASPs of mobile phones in
India remain under $70, and smartphones under $120 will continue to contribute
around 50 percent of overall smartphone sales in 2016.
After recording
growth of 16 percent in 2014, sales of smartphones in China were flat in 2015.
"In this saturated yet highly competitive smartphone market, there is
little growth expected in China in the next five years," said Annette Zimmermann, research director at
Gartner. Sales of smartphones in China represented 95 percent of total mobile
phone sales in 2015. Similar to India, falling ASPs for smartphones will make
them more affordable for users."
"The worldwide
smartphone market remains complex and competitive for all mobile phone vendors,
and we are not expecting the vendor landscape to get smaller," said
Zimmermann. "In such a fluid vendor landscape, some will exit the market
while newcomers, including mobile manufacturers or internet service providers
from China and India, could make their debut."
Gartner forecasts that by 2018, at least one nontraditional
phone maker will be among the top five smartphone brands in China.
"Chinese internet companies are increasingly investing in mobile device
hardware development, platforms and distribution as they aim to grow their user
bases and increase user loyalty and engagement," concluded Zimmermann.
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