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03 Mar 2016

Smartphone Growth Expected to Drop to Single Digits in 2016, Led by China's Transition from Developing to Mature Market, According to IDC

FRAMINGHAM, Mass. March 3, 2016 – According to a recent forecast update from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, 2015 is likely to be the last year of double-digit smartphone growth. The 2015 calendar year finished with 1.44 billion smartphone shipments worldwide, which were up 10.4% over 2014. IDC's most recent projections show 2016 shipments of 1.5 billion, or 5.7% growth over 2015. The trend of single-digit year-over-year growth is expected throughout the forecast with volumes growing to 1.92 billion in 2020. The market will continue to see volumes shifting to the low end with the aggregate market average selling price (ASP) dropping from $295 in 2015 to $237 in 2020.

From a regional standpoint, mature markets like the United States, China, and Western Europe all hit single digit growth in 2015, while high growth markets such as India, Indonesia, the Middle East and Africa, and other pockets in Southeast Asia, all remained healthy. "The mature market slowdown has some grave consequences for Apple, as well as the high-end Android space, as these were the markets that absorbed the majority of the premium handsets that shipped over the past five years," said Ryan Reith, Program Director with IDC's Worldwide Quarterly Mobile Phone Tracker. "I believe Apple's move into the trade-in business with its 'Trade Up with Installments' program is aimed at further increasing churn in some of its most lucrative markets despite the high penetration rates. By entering this space, Apple can more tightly control the trade-in offerings, as well as monitor the demand for where these perfectly functioning 1-year old iPhones end up. The latter is just as important as the trade-in location as it will give Apple a strong pulse on areas of high demand but perhaps less disposable income."

With an abundance of new devices across multiple operating systems and price points expected to arrive in 2016, the one thing that can be assured is that many of these devices will continue to sport larger screens. "Consumers are still migrating upstream with regard to device size as phablets continue to grow in popularity," Anthony Scarsella, Research Manager with IDC's Mobile Phones team. "Phablets now account for 20% of all smartphone volumes in 2015, with expectations that volumes will grow to 32% in 2020 or 610 million shipments." Android phablet percentages are generally in line with the 20% to 32% as noted above, and expectations for Apple is that its phablet devices – currently the iPhone 6 Plus and 6S Plus – will grow from 26% in 2015 to nearly 31% in 2020.

Platform Highlights

Android: IDC's top-line projections did not change much from the previous forecast with expectations that Android shipments will grow from 1.17 billion in 2015 to 1.62 billion in 2020 and its share of the smartphone industry will grow from 81% to 85%. The biggest volume opportunity for Android is clearly within the low-cost space, and in 2015 only 14% of Android shipments were $400 or greater. This in itself poses the biggest challenge for Android OEMs as the margins on these low-cost devices are thin at best. At the same time, the competition within this segment continues to increase as new local vendors continue to pop up in many high-growth markets.

iOS: 2015 was a tremendous year for Apple and the iPhone as shipments hit a new record of 231.5 million for growth of 20.2% over 2014, which was nearly double that of the overall smartphone market. More importantly, Apple was able to grow its ASP from $663 in 2014 to $713 in 2015. The continued upgrades to the newer, pricier iPhones were the primary catalyst for increasing ASPs at a time when the majority of the market is chasing low-cost models. IDC expects 2016 to be relatively flat regarding iPhone volume. However, growth should return in 2017 and beyond as its trade-in programs will expand into markets outside of North America and help drive churn.

Windows Phone: This past year was another challenging year for Windows Phone as shipments were down 18% in 2015 to 29.2 million units with roughly 95% of that volume coming from Microsoft (or Nokia) branded devices. The recent MWC conference in Barcelona showed a few new products from partner OEMs although it remains unclear how serious the Windows Phone offerings will be from OEMs.



Worldwide Smartphone Forecast by OS – Shipments, Market Share, Year-Over-Year Growth, and 5-Year CAGR (shipments in millions)

Region

2016* Shipment Volumes

2016* Market Share

2016* YoY Growth

2020* Shipment Volumes

2020* Market Share

2020* YoY Growth

5 year CAGR

Android

1,254.6

82.6%

7.6%

1,624.4

84.6%

4.6%

6.9%

iOS

231.2

15.2%

-0.1%

269.0

14.0%

3.2%

3.0%

Windows Phone

23.8

1.6%

-18.5%

17.8

0.9%

-5.7%

-9.4%

Others

9.5

0.6%

-15.1%

9.2

0.5%

4.8%

-3.9%

TOTAL

1,519.0

100.0%

5.7%

1,920.4

100.0%

4.3%

6.0%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, March 3, 2016.

* Forecast data

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About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad. The IDC Tracker Chart app is also available for Android Phones and Android Tablets.

For more information about IDC's Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or knagamine@idc.com.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC.

Coverage
Regions Covered

United States

Topics Covered

Android, Smartphone, Windows mobile, iOS

Contact
For more information, contact:

Michael Shirer
press@idc.com
508-935-4200

Ryan Reith
rreith@idc.com
650-350-6242

Anthony Scarsella
ascarsella@idc.com
508-935-4712