Back in the fourth quarter of 2015, Gartner reports that sales of smartphones to consumers / end users is at 403 million units, a 9.7 percent increase over the same period a year before, in 2014. The numbers may look good, but it was the slowest growth rate since 2008. Smartphone sales for the whole of 2015 reached 1.4 billion devices, a 14.4 percent increase from 2014.
Anshul Gupta, research director at Gartner, says that the driving factors for growth continued to be strong demands for low-cost smartphones in emerging markets, plus premium smartphones in more mature markets. This is partly contributed by the aggressive pricing from local and Chinese brands in entry-level and mid-range segments in emerging markets, which led to more folks upgrading to new-and-affordable devices at a faster rate. 85 percent of people in emerging Asia-Pacific markets replace their old mid-range devices with newer, mid-range devices.
On the flip side, the currency devaluations against the US dollar in many markets are putting margin pressure on many manufacturers that import devices, therefore slowing growth in sales. This has prompted some to consider setting up manufacturing centers in India and Indonesia to avoid being affected further by future currency devaluations and/or high import taxes.
In the said Q4 of 2015, Huawei and Samsung are the only two top-five smartphone manufacturers that saw an increase in their sales to end users. Apple is still in the number two spot, but suffered its first sales decline for the iPhone — down by 4.4 percent. Lenovo, whose figure is now combined with Motorola’s, also suffered a decline in global smartphone sales in Q4 of 2015. Xiaomi, at number five, also saw a slight decline, but not as much as Lenovo.
The best year-over-year performance goes to Huawei, with a 53 percent increase in smartphone sales (104.1 million units) in Q4 of 2015. The company’s increased brand visibility (noticeable here in Malaysia too), plus its initial decision to (almost) only sell smartphones to consumers, also gave it a higher average selling price in 2015. Samsung remained at number one (sold 320.2 million units), but its market share dropped to 22.5 percent from 24.7 percent in the previous year. Meanwhile, Apple’s market share actually grew a bit to 15.9 percent from 15.4 percent in 2014, after having moved 225.9 million iPhones.
As for smartphone operating system, Android grew 16.6 percent in Q4 2015, to make up a whopping 80.7 percent market share globally. Roberta Cozza, research director at Gartner, said that this is mainly due to the aforementioned demand in affordable phones, and from the slowdown of iPhone shipments in the premium market that quarter. However, despite Apple’s decline in iPhone sales, iPhone’s market share is inching closer towards Samsung’s in 2015, as seen in the table above.
Fast forward to the first quarter of 2016, based on current market performance, Gartner is forecasting that global smartphone sales in 2016 will, for the first time ever, exhibit only a single-digit growth of 7 percent from 2015, with an estimated sales number to reach 1.5 billion units. This is only smartphone numbers we’re talking about; forecast for the mobile phone market says that it will reach 1.9 billion units in 2016. As for combined shipments for computing devices worldwide (that include PCs, tablets, “ultra-mobiles”, and phones), they are expected to reach 2.4 billion units in 2016, a 0.6 percent increase from 2015. The end-user spending in US dollars is estimated to decline year-over-year, by 1.6 percent.
Growth in emerging markets slowing down
Ranjit Atwal, research director at Gartner, said that the double-digit growth era for global smartphone market has ended. China and even North America smartphone markets are on track to be (almost) flat in 2016, showing only a 0.7 percent and 0.4 percent growth, respectively. Previous economic slumps had little to no impact on sales and spending for smartphones, but this is no longer the case.
Annette Zimmermann, another research director at Gartner, added that the price did not decline enough to drive upgrades in the low-end segment, and that manufacturers aren’t able to produce smartphones that are “good enough” which cost end-users less than USD 50 (~MYR 194.63). Because of this, while the sales numbers will continue to grow in emerging markets, it will also continue to slow down. Gartner predicts that from now until 2019, 150 million smartphone users in emerging Asia-Pacific markets will postpone their upgrades, until the functionality-to-price ratio becomes more desirable. However, countries like India will help the growth of new mobile phone users — the country is on track to reach 29 percent in smartphone sales in 2016, and will continue to show two-digit growth for the next two years.
Lifetime of mobile phones in mature markets increasing
Mature markets like North America, Western Europe, Japan, and other mature Asia-Pacific countries, will also see a slowdown in sales. The major factor is driven by carriers/telcos offering plans and contracts that are getting more complicated, discouraging users to sign-up for new phone plans. Couple this with the fact that as smartphone technology matures, the hardware and software becomes more reliable and newer versions will only offer an incremental update over previous-generation models, therefore increasing the phone lifetimes among users.
PC shipments returning to growth in 2017
Gartner predicts that the global PC shipment market as a whole (traditional PCs plus tablets) will hit a total of 284 million units in 2016, a decline of 1.5 percent year-over-year.
Interestingly, while traditional PCs alone will continue to decline 6.7 percent this year, it will bottom out before returning to growth in 2017. It could be due to users’ frustration at the lack of capabilities in Android or iOS tablets, driving them to consider going back to using Windows PCs in a tablet form factor. The latest hardware, Windows 10 with Intel’s Skylake architecture offers the best of both worlds — a tablet form factor with responsive user interface, and the ability to run both mobile and desktop applications.
Because of this, Android and iOS tablets will continue to decline by 3.4 percent in 2016. This is partly also due to the same factors that are extending the lifetimes of smartphones. Tablets are maturing in hardware/software features and users are finding that their existing devices are still completely usable, not to mention new tablets on the market do not offer any exponential feature upgrades.
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