Smartphone market slowdown is happening now

4 Dec 2015

Unstoppable growth in the smartphone market is stalling, IDC warns

After almost a decade of unstoppable growth, the global smartphone market will finally slow to single digit growth in 2015, analysts have warned.

IDC has predicted that worldwide smartphone shipments will grow 9.8pc in 2015 to a total of 1.43bn units.

The venerable tech research body said that growth is slowing in Asia-Pacific, Latin America and western Europe, with the only growth markets remaining being Japan and the Middle East and perhaps India.

It attributes the slowdown to lower forecast shipments for Windows Phone devices as well as other operating systems other than the mainstream Android, iOS and Windows Phone.

But the elephant in the room is China. China has been the focal point of the smartphone market in recent quarters as its economic slowdown has dampened worldwide growth due to the sheer size of the market.

Shipment growth in China is only forecast to be in the low single digits. The Middle East and Africa (MEA) region will see the highest growth in 2015, with shipments expected to increase by nearly 50pc year-over-year, surpassing “hot growth” markets like India and Indonesia.

“With the smartphone market finally slowing to single-digit growth, maintaining momentum will depend on several factors,” said Ryan Reith , programme director with IDC’s Worldwide Quarterly Mobile Phone Tracker.

“The main driver has been and will continue to be the success of low-cost smartphones in emerging markets. This, in turn, will depend on capturing value-oriented first-time smartphone buyers as well as replacement buyers.

“We believe that, in a number of high-growth markets, replacement cycles will be less than the typical two-year rate, mainly because the components that comprise a sub-$100 smartphone simply do not have the ability to survive two years. Offering products that appeal to both types of buyers at a suitable price point will be crucial to maintaining growth and vendor success,” said Reith.

Battle of the mobile operating systems continues


Android’s market share is expected to grow slightly from 81pc in 2015 to 82pc over the forecast period.

IDC believes the proliferation of the core Android platform will continue, with huge efforts being put forth by companies like Cyanogen and Xiaomi to differentiate themselves from their competitors. Given its global footprint and application/services ecosystem, IDC fully expects some form of Android to hold a dominant share of the smartphone OS space for the foreseeable future.

IDC has raised its Q4 2015 iPhone numbers by 7.6pc based on continued consumer demand for the iPhone 6 and iPhone 6s line-ups, as well as smooth supply chain foresight.

It said that the market share forecast for iOS is expected to remain around 14-15pc annually, with clear spikes around product launches.

As the majority of Apple’s core markets have transitioned into replacement markets, Apple’s move to get into the iPhone trade-in space is not surprising.

Despite all the effort Microsoft has put into the launch of Windows 10, IDC said it does not expect Microsoft’s share of the smartphone OS market to grow much over the coming years. In 2015, IDC expects the average selling price (ASP) of Windows Phones to be $148, which is $71 lower than Android’s ASP of $219. This was brought about by the Microsoft/Nokia push into the low-end mass market.

“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,” said Anthony Scarsella, research manager with IDC’s mobile phones team.

“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 has taken the lead with its iPhone Upgrade Programme, 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.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years