Worldwide Smartphone Sales to Grow at Slower Pace in 2016

Mobile Market Trends

Worldwide Smartphone Sales to Grow at Slower Pace in 2016

Global smartphone sales will continue to grow, but not in the double digits anymore, according to market research firm Gartner. Smartphone sales are expected to grow 7 percent worldwide in 2016 and reach 1.5 billion units. That is significantly down from 14.4 percent growth in 2015, but it's still substantial growth, equating to a new smartphone for one out of every five human beings on the Earth.

In 2010, smartphone sales hit their highest growth, at 73 percent, Gartner said. 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 Roberta Cozza, research director at Gartner, in a prepared statement.

At the moment, the smartphone market has reached 90 percent penetration in the mature markets of North America, Western Europe, Japan and developed Asia/Pacific, slowing future growth. Furthermore, users in these regions are not replacing or upgrading their smartphones 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," Cozza said.

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 provide users with new hardware after only 12 months.

In emerging markets, the average lifetime of premium phones is between 2.2 and 2.5 years, Gartner said, 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," Cozza said. "This region represents an attractive market for vendors that can persuade users to migrate to their first smartphone.

Since mature markets are saturated, the focus for many vendors is on India and China. "India has the highest growth potential," said Annette Zimmermann, research director at Gartner, in a prepared statement. "Sales of feature phones totaled 167 million units in 2015, 61 percent of total mobile phone sales in India."

Smartphones are relatively expensive for users in India, but with the average selling price of low-end models decreasing, Gartner estimates that 139 million smartphones will be sold in India in 2016, growing 29.5 percent year over year. Average selling prices 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," Zimmerman said.

Sales of smartphones in China represented 95 percent of total mobile phone sales in 2015. Like India, falling average sales prices for smartphones will make them more affordable for users, she said.

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," Zimmerman said.

More details can be obtained in the reports "Forecast: Mobile Phones, Worldwide, 2013-2020, 1Q16 Update" and "Market Share Alert: Preliminary, Mobile Phones, Worldwide, 1Q16."

About the Author

Richard Chang is associate editor of THE Journal. He can be reached at rchang@1105media.com.

Source: Worldwide Smartphone Sales to Grow at Slower Pace in 2016