Opportunities arise in Southeast Asian smartphone market

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Smartphone shipments in Southeast Asia grew 6.5% year-over-year (YoY) during Q2 2016, reaching 28 million devices, according to the IDC.

Southeast Asia is a growth hot spot for the smartphone market. Along with India and South America, this region is providing stakeholders in the industry, such as app developers, mobile operators, and device makers, with substantial opportunities amid the decelerating global smartphone market.

In particular, the report highlights three trends in Southeast Asia:

Slow 4G adoption was triggered by carrier deals. In a rush to upgrade customers from 2G networks to 3G networks, carriers began offering substantial deals to users, including free data and heavily discounted smartphones, the IDC notes. This reduced the number of potential 4G customers in the region. However, the market is changing, as 4G networks are accounting for a larger share, ushering in greater device performance.

Demand for high-end devices is increasing. Lower-tiered devices will continue to account for a majority of device shipments in the region; in Q2 2016, they accounted for 68%. Nevertheless, as users look to replace their devices, it's likely they will look to premium devices for better specifications and performance. This will encourage usage of more data-heavy apps and allow advertisers to serve richer ads.

Local and Chinese vendors are eating up the market. Just as in India, local and China-based vendors are able to undercut larger retailers, flooding the market with highly affordable low-end devices. These vendors will begin shifting this strategy as the Southeast Asian market starts upgrading to premium models, making low-end devices an unsustainable business model.

App downloads in Southeast Asia are on the upswing. This growth will be further ignited by the overall shift to better-performing devices and cell networks. This provides a significant opportunity for businesses and developers looking to increase their global footprint in the region, or APAC generally.

Keep in mind, though, that the global smartphone market is expected to slow considerably over the next few years. Despite a record-setting holiday quarter, 2015 was likely the last year of double-digit growth for smartphone shipments.

Mature markets were at the heart of this year's deceleration. Adoption has reached new highs in key markets in the United States, Europe, and China. The pool of first-time buyers in these countries is shrinking rapidly, and sales are now primarily coming from phone upgrades.

Meanwhile, emerging markets will continue to see robust shipment growth. India and Indonesia, in particular, will help fuel a large share of the shipments growth within the global smartphone market over the next few years.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartphones by country that forecasts the market through 2021 to reflect slower, stabilizing growth in the long term.

Here are some key points from the report:

The global smartphone market is still growing at a steady pace due to more widespread adoption in emerging markets. We estimate the global market will hit about 2.1 billion units shipped in 2021.

Shipments growth over the past few years has been driven by the falling price of smartphones, which has made handsets more accessible in emerging markets. The average selling price of a smartphone in India nearly halved between 2010 and 2015.

With relatively low smartphone penetration, we forecast Indian smartphone shipments to grow rapidly over the next five years. Nevertheless, India has a long way to go before it surpasses China as the world's leading market for smart handsets. India is estimated to account for roughly 10% of the global smartphone market in 2016, considerably less than China's 30% share.

The global platform wars are over, even as smartphone adoption continues to rise across various markets worldwide. Android and iOS are estimated to account for 97.3% of global platform market share in 2015, compared to 96.3% last year.

Apple closed the year with another strong quarter on the back of its iPhone 6s and iPhone 6s Plus launches. Still, the vendor saw a slight decline in YoY growth of its share of the market in the face of stiff competition from Samsung and Chinese vendors such as Huawei.

In full, the report:

Forecasts global smartphone shipments through 2021.

Explores why India is the next high-growth smartphone market.

Breaks down the global smartphone platform wars.

Discusses smartphone vendor performance market share.

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Source: Opportunities arise in Southeast Asian smartphone market