Smartphone Saturation Takes Toll On Mobile Market Growth

As smartphone market penetration increases in top markets, it has led to a slowing growth in smartphone shipments on a global scale, according to new research from IDC’s Worldwide Quarterly Mobile Phone Tracker report.

While smartphone shipments are estimated to increase by 11.3 percent this year, that’s down from the 27.6 percent growth seen in 2014. The forecast for 2015 is in line with what IDC previously predicted for the market, which was an 11.8 percent growth for the year. The smartphone shipment slowdown isn’t all that unexpected, as market penetration for smartphones had to eventually offset the rising shipments.

IDC’s research also shows that smartphone shipments will continue to taper overall, but worldwide shipment volumes should still hit 1.9 billion in the next four years. The most noticeable market in IDC’s report is China, where — for the first time — smartphone growth will be slower than the rest of the world. China’s smartphone shipment is expected to grow by just 2.5 percent in 2015.

“Smartphone volume still has a lot of opportunity in the years to come, but two fundamental segments driving recent years’ growth are starting to slow,” said Ryan Reith, Program Director with IDC’s Worldwide Quarterly Mobile Phone Tracker.

IDC previously reported this month that China’s smartphone market shrank by 4 percent year over year in 2015’s first quarter, with 98.8 million units shipped. That tally, while significant on an absolute basis, marks the first time in six years that the Chinese smartphone market actually declined, year on year.

Apple was the top smartphone vendor in China in the latest quarter, with 14.7 percent overall market share. IDC said consumers still desire the larger screens that are a hallmark of both the iPhone 6 and iPhone 6 Plus. Data released last month by another research firm, Kantar World panel ComTech, showed urban consumers helped propel Apple to the No. 1 spot. Especially in China where Android smartphone shipments had been a key figure, the saturated smartphone market could hurt Android’s potential to tap into future growth.

“As Chinese OEMs shift their focus from the domestic market to the next high-growth markets, they will face a number of challenges, including competition from ‘local’ brands,” IDC reported. The local brands referenced refer to companies like Xiaomi, which has been growing its smartphone share in China quite rapidly.

While Apple faced a similar dip the past two years between 2012-2014, Apple’s shift toward larger screen models have helped it gain back a larger share of smartphone sales. IDC’s most recent research projects that iOS smartphones will increase by 23 percent in 2015.

“There’s no question that a large chunk of Apple’s installed base is still using older models (pre-iPhone 6/6-Plus), which leaves continued growth opportunity in the second half of 2015 and beyond,” Reith said. “In addition, IDC believes a sizable portion of the Android installed base were those who migrated over to the platform from iOS with the desire for a larger screen smartphone. This is an opportunity Apple is no question focusing on. However, the price difference between Android/iOS devices in many markets will remain a significant hurdle for Apple.”

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