The record quarterly sales performance in Q3 2015 can be attributed to three markets: China, which returned to growth, the MEA and emerging APAC. In total, 324m smartphone units were sold. The US$294 average selling price (ASP) of smartphones was down 2 percent year-on-year.
Smartphone sales Q3 2014 vs Q3 2015
Units Sold (in mil.) Sales Value (in bil. USD) Q3 14 Q3 15 Y/Y % change Q3 14 Q3 15 Y/Y % change Latin America 26.0 24.7 -5.0% 7.7 6.0 -22.1% Central & Eastern Europe 18.2 18.9 3.8% 4.3 3.7 -14.0% North America 43.9 46.3 5.5% 17.0 18.8 10.6% Emerging APAC 37.5 46.5 24.0% 6.8 7.4 8.8% Middle East & Africa 35.5 41.1 15.8% 10.0 10.4 4.0% Western Europe 32.0 33.0 3.1% 13.6 12.4 -8.8% China 92.6 98.0 5.8% 21.6 28.2 30.6% Developed APAC 15.7 15.2 -3.2% 9.0 8.4 -6.7% Global 301.4 323.7 7.4% 90.0 95.3 5.9%
Source: GfK point of sales (POS) tracking data in 90+ markets, Nov 2015
Kevin Walsh, director of trends and forecasting at GfK says, “A mix-shift towards low-end smartphones, especially in the struggling economies of Latin America and Central and Eastern Europe, has combined with a depreciating US dollar to offset an ASP increase inChina – resulting in ASP remaining flat year-on-year in the third quarter.”
MEA and emerging APAC: Powerhouses of smartphone unit growth
An increase in unit sales of +24 percent year-on-year in emerging APAC was driven primarily by growth of +40 percent year-on-year in India. Strength in the country can be attributed to strong demand within the sub-US$100 price band segment (up +66 percent year-on-year), which now accounts for almost one half (48 percent) of the market.
Local Indian and Chinese brands dominate this price band, and their combined unit share of India’s smartphone market increased to 55 percent in Q3 2015, up 12 percentage points year-on-year. Smartphones accounted for 37 percent of India’s handset demand in Q3 2015 up from 28 percent in Q3 2014, leaving considerable room for further growth.
In MEA, unit sales were up +16 percent year-on-year. Most countries in this region experienced an increase in units sold compared to the same quarter last year, with Egypt posting stand-out figures of +39 percent year-on-year.
China revenues grew +30 percent year-on-year reaching US$28bn
In complete contrast to India, it was sales of high-end and mid-range smartphones that returned unit sales in China to growth for the first time in over a year. In Q3 2015, 98m units were sold, a year-on-year increase of +6 percent. Sales units of high-end (US$500+) and mid-range (US$250-500) devices were up +65 percent and +25 percent year-on-year, respectively. These increases were partially offset by a decline in the large low-end (sub-US$250) segment of -9 percent year-on-year. This shift in demand caused ASP in the country to increase +23 percent year-on-year to US$288.
The shift towards LTE-enabled, larger screen devices continued. 5″+ devices accounted for two thirds (67 percent) of smartphones sold, up from 48 percent in Q3 2014. However, at 90 percent, LTE-enabled devices approached saturation, and GfK forecasts LTE-enabled smartphone unit growth to slow to +13 percent in 2016, following growth of +236 percent in 2015.
In 2015, GfK forecasts smartphone demand in China to decline -4 percent before returning to moderate growth of +3 percent in 2016.
Local brands continued to gain share in the market, accounting for 78 percent of smartphone demand, up from 73 percent in Q3 2014, helped by competitively priced devices.
Latin America and Developed APAC* see demand and value drop
Following significant slowdowns in previous quarters, Latin America unit demand turned negative in Q3 2015 at -5 percent year-on-year. Two of the leading smartphone markets in the region, Argentina and Brazil, posted year-on-year unit declines of -16 percent and -15 percent, respectively, hindered by the poor economic situation in both countries.
Overall ASP in the region declined -17 percent year-on-year as cash-strapped consumers opted for low-end devices, and combined with the unit decline this caused revenue to drop -21 percent year-on-year to US$6bn.
Developed APAC continues to be dragged down by South Korea
Unit demand in South Korea declined -3 percent compared to Q3 2014, the seventh consecutive quarter of decline. However, GfK forecasts a return to growth in Q4 thanks to easier comparisons with the same quarter last year, when sales were affected by the avian flu outbreak.
Europe stagnates at best
Western Europe saw smartphone unit growth of just +3 percent year-on-year in the quarter. This was caused by unit growth in Franceslowing to +5 percent year-on-year, down from +16 percent in the previous quarter. The UK saw a slight decline of -1 percent year-on-year.
Smartphone unit growth in Central Europe remained limited at +4 percent year-on-year, a slight improvement from the previous quarter’s +3 percent year-on-year, but down from double digit growth in prior quarters. Growth continues to be dragged down byRussia and Ukraine, where year-on-year demand declined -6 percent and -19 percent respectively, owing to continued political tension. On a more positive note, GfK forecasts smartphone demand in Central Europe to grow +4 percent in 2015, before improving to +9 percent next year.
Smartphones: 2014 sales vs 2015 forecast
Units sold (in mil.) Sales value (in bil. USD) 2014 2015 Y/Y % change 2014 2015 Y/Y % change Latin America 108.5 109.7 1.1% 30.6 27.2 -11.1% Central & Eastern Europe 69.3 72.0 3.9% 17.1 14.4 -15.8% North America 177.2 192.9 8.9% 72.0 81.3 12.9% Emerging APAC 148.6 186.4 25.4% 28.2 30.3 7.4% Middle East & Africa 135.8 164.6 21.2% 39.4 43.4 10.2% Western Europe 127.9 136.3 6.6% 55.8 52.7 -5.6% China 392.8 378.8 -3.6% 99.0 113.6 14.7% Developed APAC 65.1 65.1 0.0% 38.1 37.1 -2.6% Global 1,225.2 1,305.8 6.6% 380.2 400.0 5.2%
Source: GfK point of sales (POS) tracking data in 90+ markets for calendar year 2014 and GfK forecasts for calendar year 2015, as atNov 2015.
Kevin Walsh explains, “GfK forecasts global smartphone demand to grow by +13 percent quarter-on-quarter in Q4 this year, bringing total 2015 demand to 1.3bn units. At +7 percent year-on-year growth, this represents a slowdown from the growth of +23 percent seen in 2014. Next year we forecast growth to improve marginally to +8 percent year-on-year, buoyed by China and Central Europe, but emerging APAC and MEA will remain the main powerhouses of smartphone unit demand. These markets will continue to benefit from the double-whammy of low smartphone penetration rates and more lower-priced devices entering the market.”