Growth to hit only 7% over this year, while sales in China and North America to be flat
Smartphone sales globally in 2016 will for the first time exhibit single-digit growth. Sales are estimated to reach 1.5 billion units in 2016, a 7% growth from 2015, said Gartner. The total mobile phone market is forecast to reach 1.9 billion units in 2016.
Worldwide combined shipments for devices (PCs, tablets, ultramobiles and mobile phones) are expected to reach 2.4 billion units in 2016, a 0.6% increase from 2015. End user spending in constant US dollars is estimated to decline by 1.6% year on year.
“The double-digit growth era for the global smartphone market has come to an end,” said Ranjit Atwal, research director at Gartner. “Historically, worsening economic conditions had negligible impact on smartphone sales and spend, but this is no longer the case. China and North America smartphone sales are on pace to be flat in 2016, exhibiting a 0.7% and 0.4% growth respectively.”
While smartphone sales will continue to grow in emerging markets, that growth will slow down. Gartner predicts that, through 2019, 150 million users will delay upgrades to smartphones in emerging Asia-Pacific, until the functionality and price combination of a low cost smartphone becomes more desirable.
Said Annette Zimmermann, research director at Gartner: “Prices did not decline enough to drive upgrades from low end feature phones to low end smartphones. Vendors were not able to reduce the price of a ‘good enough to use’ smartphone lower than $50.”
Countries such as India will help generate new mobile phone user growth. Sales of smartphones in India are on pace to reach 29% in 2016 and will continue to exhibit double-digit growth in the next two years.
In the mature markets of North America, Western Europe, Japan and mature Asia-Pacific, Gartner analysts expect to see an extension of phone lifetimes among users.
Added Zimmermann: “As carriers’ deals become more complex, users are likely to hold onto phones, especially as the technology updates become incremental rather than exponential. In addition, the volumes of users upgrading from basic phones to premium phones will slow, with more basic phones being replaced with the same type of phone.”
Jonathan Bell, VP marketing, OpenCloud, commented on the slowdown: “Since the advent of the smartphone, mobile operators have relied on the latest mobile handsets to lock customers into their networks and thus secure the subscription and usage revenues for the next one or two years. However the effectiveness of exclusivity or subsidised handset deals to drive revenues is now waning.
“Operators need to differentiate the services they offer customers with their network to compete for and retain customers,” added Bell. “It need not just be about brand, handset and network coverage. They should also seek to deliver communication and content services that meet the varied needs of their business and personal customers.”
Meanwhile, the global PC shipment market is expected to total 284 million units in 2016, a decline of 1.5% year on year. Traditional PCs are on pace to decline 6.7% in 2016. Atwal noted: “In 2016, the PC market will reach its last year of decline before returning to growth in 2017. The biggest challenge, and potential benefit for the PC market, is the integration of Windows 10 with Intel’s Skylake architecture. It has the potential for new form factors with more attractive features.”
In addition, the frustration with the capabilities in tablets will drive some consumers and businesses to review new form factors. “However, to draw their interest the PC manufacturers need to ensure that they meet demand with the right products at the right price,” added Atwal.
Demand for ultramobiles (basic and utility tablets) will continue to weaken, with a decline of 3.4% in 2016. Users are not only extending lifetimes, but also some will fail to replace these devices at all through 2016.
