Global smartphone sales growth slashed in half this year

Sales expected to grow by 7% in 2016, down from 14% in 2015

Financial trends and news by Steven Loeb
June 7, 2016
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The buzz around smartphone growth has been all negative lately, with shipments declining for the first time ever, and predictions for sales down in the dumps. Everyone seems to agree: the party is just about over.

The latest figures show something similar, with a report out from Gartner on Tuesday stating that global smartphone sales are expected to grow 7 percent in 2016, to reach 1.5 billion units this year. That is less than half of the 14.4 percent increase in sales in 2015. 

Single digit smartphone growth for smartphones should be expected by now. IDC had been predicting that shipment growth is going to drop to a mere 5.7 percent this year, down from 10.4 percent last year. On top of that, the global smartphone market saw its first ever year-to-year decline in Q1, when shipments dropped 3 percent from the first quarter of 2015 to the first quarter of 2016, dipping from 345 million to 334.6 million.

Shipments and sales aren't the same thing, and sales are likely a more accurate barometer of where the market is going, since shipments doesn't mean the units were ever actually bought by anyone. Either way you slice it, though, both metrics are expected to be cut in half this year.

There is one piece of good news: by 2020, sales are also expected to pick up, reaching 1.9 billion units. It's not much, but take your silver linings were you can get them.

The reason for slowing sales are the usual suspects: oversaturated markets like North America, Western Europe, Japan and China, were penetration has hit 90 percent, according to Gartner. There just aren't many new customers, and the old customers are holding onto their phones longer.  

Emerging markets hold the key to future growth, though, as Gartner says the average lifetime of premium phone is between 2.2 and 2.5 years, while basic phones have an average lifetime of at least three years. Give people a smartphone and they will hold onto it for less time 

"2015 was the year when sales of smartphones overtook those of feature phones for the first time in Sub-Saharan Africa. This region represents an attractive market for vendors that can persuade users to migrate to their first smartphone," Roberta Cozza, research director at Gartner, wrote in the report. 

The most important market going forward might be India, where an estimated 139 million smartphones are going to be sold this year, or roughly 9 percent of all phones sold globally, growing by 29.5 percent year-over-year. 

Interestingly, Garter also sees some potential in China, even though the country just saw its first year to year decline in the smartphone market in six years.

Actually, it's because of the country's market saturation that there's an opportunity there, with the company predicting that there will be "at least one nontraditional phone maker" among the top five smartphone brands in China by 2018. 

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,” Annette Zimmerman, research director a Gartner, said in a statement.

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