Gartner’s predictions for the global smartphone market are slightly – but only slightly – more positive than IDC’s recent figures (Brands Shorten Lifecycles as Smartphone Slowdown Continue). Gartner expects growth to roughly halve YoY, to 7% growth in 2016, versus IDC’s 3.1%. However, because both forecasts came from different starting points, the actual unit shipment figure is similar: 1.5 billion for Gartner and 1.48 billion for IDC. Gartner expects 1.9 billion shipments in 2020.
The smartphone market is saturated in many mature markets, with penetration in the 90% region in North America, Western Europe, Japan and certain APAC regions. Replacement sales have also fallen off, with life cycles extending to two and a half years. This is not expected to change drastically over the next five years.
Upgrade cycles have become more varied lately, as mobile operators have moved away from subsidised smartphone deals where they would provide a ‘free’ phone every two years. Instead, they have introduced financing programmes. Some vendors, notably Apple, also offer upgrade and trade-in programmes after just 12 months. However, these deals “are not for everyone,” said Gartner’s Roberta Cozza, “…especially as the technology updates have become incremental rather than exponential.”
Premium smartphones have a lifespan of between 2.2 and 2.5 years in emerging markets. Basic (feature) phones last three years or more. These regions are become a key focus for vendors, especially India and China. India is identified as the market with the highest growth potential – again, echoing IDC – where feature phones represented 61% of total mobile phone sales (167 million units) last year.
Falling ASPs are expected to prompt smartphone growth in India, to 139 million units this year (up 29.5% YoY). Overall mobile phone ASPs will remain under $70, and smartphones under $120 will represent about 50% of all smartphone sales in the country.
China is another focus for vendors, despite its smartphone market slowing. Sales rose 16% in 2014, but were flat last year. Little growth is expected over the next five years, although falling ASPs will make smartphones more affordable for more users. Smartphones had a 95% share of China’s mobile phone market in 2015.
Gartner does not expect the smartphone vendor landscape to shrink in the near future. Some will exit – Cozza, in an interview with PC World, named Microsoft and HTC as possibilities – but newcomers, especially from China and India, will enter.