Global smartphone sales to only grow 7 percent in 2016: Report

NEW DELHI: Global smartphone sales will for the first time exhibit single-digit growth in 2016. Global smartphone sales are estimated to reach 1.5 billion units in 2016, a 7 percent growth from 2015," according to Gartner report.

The total mobile phone market is forecast to reach 1.9 billion units in 2016.

Worldwide combined shipments for devices (PCs, tablets, ultramobiles and mobile phones) are expected to reach 2.4 billion units in 2016, a 0.6 percent increase from 2015 (see Table 1). End-user spending in constant U.S. dollars is estimated to decline by 1.6 percent year over year.
"The double-digit growth era for the global smartphone market has come to an end," said Ranjit Atwal, research director at Gartner.

"Historically, worsening economic conditions had negligible impact on smartphone sales and spend, but this is no longer the case. China and North America smartphone sales are on pace to be flat in 2016, exhibiting a 0.7 percent and 0.4 percent growth respectively." he added.

Emerging Markets Continue to Grow, but at a Slower Rate

While smartphone sales will continue to grow in emerging markets, the growth will slow down. Gartner predicts that, through 2019, 150 million users will delay upgrades to smartphones in emerging Asia/Pacific, until the functionality and price combination of a low-cost smartphone becomes more desirable.

"Prices did not decline enough to drive upgrades from low-end feature phones to low-end smartphones," said Annette Zimmermann, research director at Gartner.

"Vendors were not able to reduce the price of a 'good enough to use' smartphone lower than $50." said Zimmermann.

Countries such as India will help generate new mobile phone user growth. Sales of smartphones in India are on pace to reach 29 percent in 2016 and will continue to exhibit double-digit growth in the next two years.

Mature Markets to Increase Mobile Phone Lifetimes

In the mature markets of North America, Western Europe, Japan and mature Asia/Pacific, Gartner analysts expect to see an extension of phone lifetimes among users.

"As carriers' deals become more complex, users are likely to hold onto phones, especially as the technology updates become incremental rather than exponential," said Zimmermann.

"In addition, the volumes of users upgrading from basic phones to premium phones will slow, with more basic phones being replaced with the same type of phone." she added.

PC Shipments to Bottom Out in 2016

The global PC shipment market is expected to total 284 million units in 2016, a decline of 1.5 percent year over year. Traditional PCs are on pace to decline 6.7 percent in 2016. "In 2016, the PC market will reach its last year of decline before returning to growth in 2017," said Mr. Atwal. "The biggest challenge, and potential benefit for the PC market, is the integration of Windows 10 with Intel's Skylake architecture. It has the potential for new form factors with more attractive features."

In addition, the frustration with the capabilities in tablets will drive some consumers and businesses to review new form factors. "However, to draw their interest the PC manufacturers need to ensure that they meet demand with the right products at the right price," added Mr. Atwal.

Demand for ultramobiles (basic and utility tablets) will continue to weaken, with a decline of 3.4 percent in 2016. Users are not only extending lifetimes, but also some will fail to replace these devices at all through 2016.