Smartphone sales set to slump to single-digit growth for first time

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Gartner blames worsening economic conditions in forecast, with sales predicted to be flat in China and North America

Global smartphone sales will increase seven per cent to 1.5 billion units this year – the first time year-on-year growth has entered single digits.

This is according to analyst house Gartner, which forms part of its latest report ‘Forecast: PCs, Ultramobiles and Mobile Phones, Worldwide, 2013-2030, Q116 Update’.

Smartphone sales growth in China and North America are set to be broadly flat in 2016 at just 0.7 per cent and 0.4 per cent respectively.

The total mobile phone market is predicted to reach sales of 1.943 billion this year – up marginally from the 1.917 billion units sold last year. This is forecasted to rise to just over two billion in 2018.

Declining economy

Gartner research director Ranit Atwal said: “The double-digit growth era for the global smartphone market has come to an end.

“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 per cent and 0.4 per cent growth respectively.”

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

However, countries such as India are expected to generate new mobile phone user growth, with sales on pace to reach 29 per cent this year and will continue to show double-digit growth in the next two years.

“Prices did not decline enough to drive upgrades from low-end feature phones to low-end smartphones,” said Gartner research director Annette Zimmermann. “Vendors were not able to reduce the price of a ‘good enough to use’ smartphone lower than $50.”

Upgrades slowing

In the mature markets of North America, Western Europe, Japan and Asia/Pacific, Gartner expects users to use their mobiles for longer, while number of people upgrading from a feature phone to smartphone will also decline.

“As carriers’ deals become more complex, users are likely to hold onto phones, especially as the technology updates become incremental rather than exponential,” added 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.”

The forecast comes two months after Apple reported just a marginal like-for-like increase in iPhone sales for the final quarter last year, with the company later admitting sales could drop for the first time in the device’s near nine-year lifecycle for the first three months of this year.

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