2015 is likely to be the last year for double-digit global smartphone growth in large part thanks to the transition of China from a growth market to a mature ecosystem, this according to International Data Corporation‘s (IDC) Worldwide Quarterly Mobile Phone Tracker report released overnight.
In 2015, 1.44 billion smartphones were shipped across the world, representing a 10.4 per cent increase from 2014 but in 2016 the IDC predicts 1.5 billion shipments — a 5.7 per cent growth rate.
Furthermore, the report predicts single-digit growth rate will continue moving forward and the projected number of smartphone shipments in 2020 is projected at 1.92 billion.
The reason for the deceleration is mainly thanks to mature markets dragging down global statistics. In 2015, mature markets like China, Western Europe and the United States saw single-digit growth (emerging markets like Africa, India, Indonesia, the Middle East and Southeast Asia remained healthy).
“The mature market slowdown has some grave consequences for Apple, as well as the high-end Android space, as these were the markets that absorbed the majority of the premium handsets that shipped over the past five years,” said Ryan Reith, Program Director of IDC’s Worldwide Quarterly Mobile Phone Tracker.
One takeaway from the report, and why Reith specifically highlighted Apple and high-end Androids, is the growth market appears to be in cheap phones. The statistic to support this point is the ‘market average selling point’ is expected to drop to US$237 by 2020 from its current price of US$295.
One company bucking the trend for cheaper phones is Apple. In 2015, the company rose its average sales price to US$713 from US$663 the year before. IDC expects Apple to have relatively flat growth in 2016 but see a boost in 2017 when its trade-in strategy extends outside of the United States.
For Android, IDC sees low-cost alternatives as the biggest volume opportunity for the brand (In 2015, only 14 per cent of Android shipments were US$400 or greater).
“This in itself poses the biggest challenge for Android OEMs as the margins on these low-cost devices are thin at best. At the same time, the competition within this segment continues to increase as new local vendors continue to pop up in many high-growth markets,” the report read.
While it was clear Windows had a tough year, the numbers are startling. Sales dropped a whopping 18 per cent in 2015, it only shipped 11.1 million phones (Apple shipped 231.5 million, Android shipped 1.17 billion) and 95 per cent of them were Microsoft/Nokia branded. It adds up to a projected market share in 2016 of a paltry 1.6 per cent.
The final tidbit from the report is that consumers should expect phone screens to continue to increase in size. Phablets — as the report called phones like the iPhone 6+ —already make up 20 per cent of the smartphone market and are expected to make up 32 per cent of the market by 2020.
“Consumers are still migrating upstream with regard to device size as phablets continue to grow in popularity,” said Anthony Scarsella a Research Manager with IDC’s Mobile Phones team in the report.
The IDC is a US-based market intelligence company for the IT, telecom and consumer tech industries.