Markets

The Evolution of Smartphone Markets: Where Growth Is Going

The global smartphone market is in transition, moving from a high growth spurt towards a phase of stabilized long term growth. The adoption of smartphones is nearing its peak in the developed countries, with majority sales now being generated from upgrades to a better device rather than first-time buying. The growth engine is shifting towards the emerging markets which are poised to benefit from widespread first-time adoption of such devices.

Trends

While the year 2015 recorded the highest worldwide smartphone shipments till date, the rate of growth has been declining. Going by projections, the shipments for smartphones in 2016 will be around the same levels as in 2015 but will pick up growing at around 2017 and 2018 backed by economic revival.

A report by BI Intelligence suggests that there will be about 2,100 million smartphone units shipped in 2021, growing at 6% CAGR during 2016-2021. According to Gartner, “The double-digit growth era for the global smartphone market has come to an end.”

Overall, while the smartphone shipments are projected to increase in numbers, the pace will remain subdued in comparison to previous years.

Top Players

Samsung has been ruling the worldwide smartphone market with wide margins. Its market share peaked during 2013 at 31% but with increasing competition from peers, the same dropped to 24% and 23% in 2014 and 2015. Its shipment of smartphones were reported at 324.8 million during 2015, approximately 2% up vis-à-vis 2014.

During the first quarter 2016, it captured 24.5% of the market share on the back of strong sales of Galaxy S7 and S7 edge. Samsung is working on some exciting smartphone projects such as a foldable, a scrollable and even bendable smartphone design as revealed by its patent application. While its foldable smartphone dubbed as “smartlet” is expected to be released this year, there isn’t any update on the other designs.

The success of iPhone 6S and 6S Plus elevated Apple’s market share during 2015 to touch 16.2% from a 14.8% a year ago while its shipment’s rising by 20% year-on-year. During the first quarter 2016, Apple experienced its first-ever year-over-year decline as the volumes dropped by 16.3% vis-à-vis same quarter in 2015. The impact of Apple’s new product iPhone SE should become visible by the second quarter. The company is set to release its much awaited iPhone 7 towards the third quarter of 2016.

Huawei joined Nokia, Apple and Samsung, to become the fourth mobile company to ship over 100 million smartphones in a year; its shipments in 2015 were at 106.6 million, showcasing a massive 44.3% jump from its 2014 volume. Huawei is a Chinese company which has slowly created a niche for itself especially in the emerging markets through its affordable price range. It has moved up from a 3% share in 2011 to capturing 7% of the worldwide market share. Its first quarter 2016 shipments were 58.4% higher than in first quarter 2015.

The acquisition of the Motorola in October 2014 by Lenovo added smartphones like Moto X, Moto G, Moto E and the DROIDTM series to portfolio of products and positioned it among the top smartphone players. Lenovo’s shipment volume was 74 million during 2015, 24.5% higher than in 2014. It managed to capture 5% of the market share during 2015.

Xiaomi has been hugely dependent on the Chinese market for its growth. Xiaomi sold more than 70 million handsets in 2015, 23% higher than in 2014. The company is looking to expand its global footprint and has its products available in Taiwan, Hong Kong, Singapore, Malaysia, Philippines, India, Indonesia and Brazil. Its share in the worldwide market during 2015 was just below 5%.

There are Chinese brands like OPPO and vivo which too have a market share hovering around the 5% mark. In fact, these two beat Lenovo and Xiaomi by capturing a slightly bigger market share during the first quarter 2016 to place themselves at the fourth and fifth spot respectively.

Final Word

The top end Android and iOS devices remain unaffordable by a majority in developing economies while the mature markets like the U.S., China and Western Europe which have been absorbing the premium models are now slowing to single-digit growth. Going forward, the sale of top-end models and brands will be driven more by innovation and upgrades.

Overall, the smartphone market, which has lower penetration levels in countries such as India, Indonesia, Brazil, Philippines, Africa and Middle East, will need to find ways to fuel demand in the times ahead. This is where wallet friendly smartphones have an edge.

Figures and facts based on reports from IDC, Gartner, Canalys and BI Intelligence.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Prableen Bajpai

Prableen Bajpai is the founder and managing partner at FinFix Research and Analytics; an enterprise engaged in financial research, wealth management, training and financial literacy. She started her career in 2007 with a wealth management firm, where she spent over six years as the research head. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and holds a Bachelor (Honours) and Masters in Economics with a major in Econometrics and Macroeconomics.

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