Smartphones are bound to see their smallest growth record this year – the first time that growth is projected to slow into a single digit. Case in point: first-time buyers in China are mostly gone, meaning growth potential has shifted to the upgrade scene.
According to market research firm International Data Corporation (IDC), global smartphone shipments will grow only 9.8 percent this year, translating to a total of 1.43 billion units. Of this figure, 81.2 percent will run Android, 15.8 percent iOS and 2.2 percent Windows, while all other mobile operating systems are forecasted to dip by 16.8 percent.
Price As A Factor
Ryan Reith, Worldwide Quarterly Mobile Phone Tracker program director at IDC, said that stabilizing the shipment growth of smartphones will mostly rely on low-cost ones hailing from emerging markets.
“This, in turn, will depend on capturing value-oriented first-time smartphone buyers as well as replacement buyers,” he said, adding that replacement cycles in some high-growth areas will be less than the usual two-year rate because the components of a smartphone priced less than $100 simply cannot survive the expected time period.
China is mostly a replacement market now, explaining the IDC projection of low single-digit growth in the country. On the other hand, the Middle Eastern and African region is seen to have shipments increasing almost 50 percent, the highest of any region in 2015.
Other forecasts include iOS’s growth by 17.3 percent and Android by 9.5 percent, as well as Windows’ decline in market share by 10.2 percent.
The IDC report noted that despite all its efforts in launching Windows 10, Microsoft will not see a surge in smartphone OS market share in the coming years. The challenge mostly lies in the company's lack of support in terms of original equipment manufacturer (OEM) partnerships.
What The Projected Numbers Mean
Anthony Scarsella, mobile phones team research manager at IDC, explained in an interview that low-cost smartphones should keep hitting less mature markets, while smartphone manufacturers in more developed segments may be motivated in pushing financing and trade-ins for consumers.
This, he added, is similar to Apple's iPhone Upgrade Program in the United States.
As trends point to the fact that smartphone seekers worldwide already own one, more growth is probably to occur in the upgrade sector than among first-time smartphone users, who used to abound in China. Apple, for instance, reaped 99 percent revenue growth in the country versus the same period in 2014, according to its most recently reported quarter.
Apple also managed to keep its premium-brand reputation, which means it does not stand to lose significant amounts of money anytime soon even with slowing smartphone shipments.
More potential is seen in converting smartphone users into Apple users, as the country is still transitioning to 4G technology.
Photo: Denis Dervisevic | Flickr
