Growth in smartphone market is expected to fall by 7.4 per cent as compared to last year, according to latest forecast update from International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.
This market segment is expected to grow at a rate of 3.1 per cent in 2016, thus marking a substantial fall from the 10.5 per cent growth in 2015 and 27.8 per cent in 2014. Shipments are expected to hit 1.48 billion in 2016 and grow to 1.84 billion in 2020.
The new forecast is 2.6 percentage points lower than IDC's previous forecast for 2016 on the basis of the continued slowdown in mature markets and China. IDC expects large markets like the United States, Western Europe, and China to see low-single digit growth rates in 2016 while Japan and Canada are expected to contract by 6.4 per cent and 6.9 per cent, respectively.
In all these markets, smartphone buying behavior is changing in many ways. In operator-driven markets the transition away from two year subsidized contracts toward monthly installment plans are slowly taking place. Meanwhile, many retail heavy markets are seeing a surge in the eTailer channel, better known as online marketplaces.
"Consumers everywhere are getting savvy about how and where they buy their smartphones, and this is opening up new doors for OEMs and causing some traditional channels to lose some control of the hardware flow," said Ryan Reith, program vice president with IDC's Worldwide Quarterly Mobile Phone Tracker.
"Smartphones sold into eRetail channels grew 65 per cent in 2015 and are expected to account for roughly 12 per cent of smartphone shipments in 2016, up from just 4 per cent in 2013. Consumers are having more say over which brands they want and at the same time able to bargain shop."
Outside of the few remaining markets with low smartphone penetration, the focus has shifted toward trying to ensure that smartphone life cycles aren't extended further. IDC believes early trade-in programs, much like the one Apple is facilitating, as well as the broader range of cheap unlocked devices, will play a significant role in keeping mature market life cycles close to two years.