Analyst Gartner is expecting a big drop in smartphone sales growth, projecting the market will shrink from 14.4 per cent growth in 2015 to just 7 per cent in 2016 — with only 1.5 billion smartphone units being shipped globally this year.
The high watermark for smartphone sales was back in 2010, when Gartner notes the market grew 73 per cent.
The signs of a slowdown in the global smartphone market have been clear for more than a year, with mature Western markets saturated and China’s growth engine also slowing as demand has topped out. Incentives for consumers to upgrade their devices yearly have also softened, with Gartner noting that new devices offer only incremental upgrades over existing hardware and carriers have been moving away from subsidizing upgrades.
In emerging markets it says the average lifetime of premium phone is between 2.2 and 2.5 years, while basic mobiles have an average lifetime of three years and up.
Gartner sees the biggest remaining opportunity for smartphone growth in India, noting that sales of feature phones — aka dumbphones — accounted for a majority (61 per cent) of total mobile device sales last year, leaving plenty of scope for upgrades as smartphones continue to become more affordable.
It is estimating 139 million smartphones will be sold in India this year, growing 29.5 per cent year-over-year. It notes the average selling price of mobiles in the country remains below $70, and it expects smartphones priced under $120 to continue to contribute around half of overall smartphones sales there this year. So little to cheer Apple there, in terms of growth opportunity for premium priced devices, but potentially good news for alternative smartphone OS maker Jolla which last year inked a deal with Indian OEM Intex to get devices running its Sailfish platform into the market.
The first Sailfish device for India, the Intex Aqua Fish, is priced below $120 and due to arrive this year, although its launch has been delayed — and last month was being slated as arriving “in the coming months”.
Turning to China, the story last year was flat smartphone sales, and Gartner is expecting “little growth” in the region in the next five years — couching it as a “saturated yet highly competitive” market — and noting that sales of smartphones represented 95 per cent of total mobile phones sales last year. So bad news for ambitious homegrown player Xiaomi, which has been gunning for high growth just as the local market is saturating. Last month it signed a deal with Microsoft on patents — paving the way to hunt elusive smartphone growth overseas.
Gartner does say it sees opportunity for “non-traditional” vendors in China, projecting that by 2018 at least one such phone maker will be among the top five smartphone brands in the country. “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,” notes Gartner analyst Annette Zimmerman in a statement.
The Sub-Saharan African region is also couched as an attractive region for smartphone vendors, with smartphone sales only overtaking mobile phones sales there for the first time last year. Nokia brand licensee and newly formed smartphone OEM HMD will want to take note, given it has paid for the right to build featurephones (and smartphones) bearing the previously iconic Nokia brand name.