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Smartphone sales slow to a crawl thanks to China and Windows

Shipments of worldwide smartphone are expected to hit single digit growth for the first time ever

Financial trends and news by Steven Loeb
December 4, 2015 | Comments
Short URL: http://vator.tv/n/41d9

Earlier this year, there was some surprising and, for those in the industry, disturbing news: China, a country that is over-saturated with phones, saw its first year to year decline in the smartphone market in six years. Now that market hit is dragging down the whole industry, which is set to see its slowest growth rate ever in 2015.

Shipments of worldwide smartphone are expected to grow 9.8 percent this year, to a total of 1.43 billion units. This is the first time on record that they have fallen below double digits, according to a report out from IDC.

Going forward, the number are only going to get worse from here, at least over the new few years: by the time we hit 2019, growth is projected to have slowed to 4.7 percent.

The firm attributes the slowdown to two factors. First, as I mentioned, is the slowdown in China, where IDC says it has now become a "replacement market," or one where people are upgrading their old devices, rather than a market that is creating new customers. 

The Middle East & Africa (MEA) region will see the highest growth in 2015 with shipments expected to increase nearly 50% year over year, but that is not enough to offset the loses from China. 

The other factor that is dampening numbers is lower shipment forecasts for Windows Phone, which saw negative 10.2 percent growth year-to-year in 2015, for 31.3 million units shipped and a 2.2 percent marketshare. IDC says it expects the average selling price of Windows Phones to be $148 this year, which is $71 lower than Android's ASP of $219.

By 2019, it will be shipping 43.6 million units, but its marketshare will only have grown by 0.1 percent. 

This year, Android is expected to see growth of 9.5 percent, for 1.2 billion units shipped, and a massive 81.2 percent martketshare. That is expected to grow to 82.6 percent by 2019.

Meanwhile iOS saw larger growth in 2015, 17.3 percent, to 226 million units shipped and a 15.8 marketshare. That is expected to fall to 14.1 percent share by 2019.

With major markets becoming saturdated, and growth slowing, it's going to be up to the manufactuerers to find a way to entice customers into continuing to buy new phones.

"As shipment volumes continue to slow across many markets, consumers will be enticed by both affordable high-value handsets as well as various financing options on pricier models," Anthony Scarsella, Research Manager with IDC's Mobile Phones team, said in a statement. 

"Vendors will look to push device financing and trade-in options across many of the developed markets as growth in these markets is expected to primarily come from replacement purchases and second devices."

Apple, for example, has done this with its iPhone Upgrade Program, and several other vendors are expected to implement similar plans in the months ahead.

"These plans could represent the most effective way to get flagship devices into the hands of consumers while speeding up the upgrade cycle through trade-in and incentives."

(Image source: 1000awesomethings.com)


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