Analysts at IDC have lowered their projections about how much they expect the smartphone market to grow in 2015. Earlier this year, IDC said shipments would grow at 11.3 percent year-over-year, but today’s report says that figure is being revised to just 10.4 percent growth instead. Both numbers represent a dramatic drop from the 27.5 percent growth the market saw in 2014, the firm notes.
One of the big reasons for the slowdown? According to IDC, it’s China. The Chinese smartphone market is maturing, joining North America and Western Europe in seeing slowing growth. While still the largest market for smartphones – the country claimed 32.3 percent of all new smartphone shipments last year – its 2015 shipments are expected to grow just 1.2 percent in 2015, down from 19.7 percent in 2014.
Meanwhile, China’s overall share of the market is expected to drop to 23.1 percent by 2019 as high-growth markets like India expand.
“India has captured a lot of the attention that China previously received and it’s now the market with the most potential upside,” explained IDC Program Director Ryan Reith . “The interesting thing to watch will be the possibility of manufacturing moving from China and Vietnam over to India. We’ve begun to see this move as a means to cut costs and capitalize on financial benefits associated with localized India manufacturing. It is the local vendors like Micromax, Lava, and Intex that will feel the most pressure from international competition within its market.”
The news of China’s slowing growth comes just a day after Apple CEO Tim Cook took the rare step of trying to ease investor concerns about the region by emailing CNBC’s Jim Cramer to discuss Apple’s performance in China. Though the email didn’t mention hard numbers of device sales, Cook said that the company still expected “strong growth” for its business in China through July and August, and it had seen the best performance of the year in the Chinese App Store during the last two weeks.
“Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge,” Cook noted in his email.
That being said, IDC predicts today that it will be Android, not iOS, that continues to hold the top spot when it comes to mobile operating system market share from 2015 to at least 2019.
The firm says that markets with the biggest growth opportunities tend to be price sensitive, which is why Android will retain a 81 percent in 2015 and for several years to come. IDC said it believes this will continue to be the case, even if Apple introduces another lower cost iPhone option – like the rumored iPhone 6C – as many Android OEMs sell phones at price points of $200 or less.
Still, OS market share doesn’t necessarily equate to profit, IDC notes. “This isn’t to suggest that Apple’s success with the iPhone won’t continue,” the report said. “IDC believes [Apple’s] efforts to maintain significantly higher margins compared to its competitors are much more valuable than chasing share.” (In other words, Apple’s going to be okay, IDC believes.)
Meanwhile, Android global shipments are expected to grow from 1.06 billion in 2014 to 1.54 billion in 2019, IDC also stated, while iOS shipments will grow from 192.7 million in 2014 to 269.6 million in 2019. Windows Phone, meanwhile, was dubbed “a marginal challenger at best.” (Burn!)
In addition, large-screened phones, often dubbed “phablets,” will continue to encourage growth, especially in emerging markets. IDC forecast that phones with display sizes from 5.5 inches to 6 inches will grow 84 percent in 2015 compared to last year, while phablets overall will make up over 71 percent of shipments by 2019.Featured Image: JOHANNES EISELE/Getty Images