Emerging markets are continuing to exhibit positive growth, but as a whole it is declining in developed regions.
According to the Worldwide Quarterly Mobile Phone Tracker from the International Data Corporation (IDC), smartphone sales are declining as expected. Many forecasts pointed to an overall slowdown of mobile phone sales in 2016. This is linked to a reduction in sales in developed regions.
Despite the positive growth that continues in emerging markets, it isn’t enough to keep the entire marketplace’s pace.
The report showed that much of the smartphone sales currently occurring in developed regions is in replacements. The rate of new users has decreased substantially as penetration within these populations is now very high. The report predicted a 1.6 year over year growth of smartphone shipments in 2016. This, upon the shipment of 1.46 billion units by the end of the year. That may appear to be a healthy number, but it is a fraction of what it was last year. In 2015, the year over year growth rate for smartphone shipments was 10.4 percent.
As a whole, developed markets are expected to see a negative growth rate in smartphone sales.
The report took the United States, Canada, Western Europe and Japan into its definition of developed markets. Within that region, the IDC predicts a -0.2 percent compound annual growth rate (CAGR). Emerging markets were made up of Central and Eastern Europe, the Asia Pacific Region (except for Japan), Africa, the Middle East and Latin America. They are expected to see a 5.4 percent CAGR throughout the forecast period of 2015 to 2020.
Senior IDC research analyst at the Worldwide Quarterly Mobile Device Trackers, Jitesh Ubrani, said “Growth in the smartphone market is quickly becoming reliant on replacing existing handsets rather than seeking new users.” Ubrani also stated that from the point of view of the tech side, innovation is “in a lull.” Consumers have greatly reduced their inclination to purchase the latest device with all the newest bells and whistles. Instead, they are satisfied with mobile devices that are “good enough.”
Telcos have been working hard to breathe life back into their smartphone sales. Programs such as trade-ins and buy-backs are geared toward shortening lifecycles and increasing the inclination to purchase early replacements.
This skyrocketing sales rate has arrived nearly three years after the company made the choice to drop its branding as a budget option and to step up to face some of the massive players in the industry, such as Apple and Samsung, with high-end offerings. This has aligned very effectively in the Chinese marketplace, where consumers who had previously been extremely conscious of the price of the devices are now more willing to spend additional money if they feel that they will be receiving value and quality in return.