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According to a new forecast from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, 2015 will be the first full year of single-digit worldwide smartphone growth. IDC predicts worldwide smartphone shipments will grow 9,8% in 2015 to a total of 1,43-billion units.
IDC updated its previous forecast to reflect slowing growth in Asia/Pacific (excluding Japan), Latin America, and Western Europe. The slower growth is expected to intensify slightly over the 2015-2019 forecast period and is largely attributed to lower shipment forecasts for Windows Phone as well as “alternative platforms” (phones running operating systems other than Android, iOS, and Windows Phone).
China has been the focal point of the smartphone market in recent quarters as its economic slowdown has dampened worldwide growth due to the sheer size of the market. However, IDC maintains its view that China has largely become a replacement market. As a result, shipment growth in China is only forecast to be in the low single digits.
The Middle East & Africa (MEA) region will see the highest growth in 2015, with shipments expected to increase nearly 50% year over year, surpassing “hot growth” markets like India and Indonesia.
“With the smartphone market finally slowing to single-digit growth, maintaining momentum will depend on several factors,” says Ryan Reith, programme director with IDC’s Worldwide Quarterly Mobile Phone Tracker. “The main driver has been and will continue to be the success of low-cost smartphones in emerging markets. This, in turn, will depend on capturing value-oriented first-time smartphone buyers as well as replacement buyers.
“We believe that, in a number of high-growth markets, replacement cycles will be less than the typical two-year rate, mainly because the components that comprise a sub-$100 smartphone simply do not have the ability to survive two years. Offering products that appeal to both types of buyers at a suitable price point will be crucial to maintaining growth and vendor success.”
“As shipment volumes continue to slow across many markets, consumers will be enticed by both affordable high-value handsets as well as various financing options on pricier models,” says Anthony Scarsella, research manager with IDC’s mobile phones team. “Vendors will look to push device financing and trade-in options across many of the developed markets as growth in these markets is expected to primarily come from replacement purchases and second devices.
“Apple has taken the lead with its iPhone Upgrade Program, and several other vendors are expected to implement similar plans in the months ahead. These plans could represent the most effective way to get flagship devices into the hands of consumers while speeding up the upgrade cycle through trade-in and incentives.”
Android’s market share is expected to grow slightly from 81% in 2015 to 82% over the forecast period. Despite numerous attempts by “alternative platforms” to enter the market, none have proved successful. IDC believes the proliferation of the core Android platform will continue with huge efforts being put forth by companies like Cyanogen and Xiaomi to differentiate themselves from their competitors. Given its global footprint and application/services ecosystem, IDC fully expects some form of Android to hold a dominant share of the smartphone OS space for the foreseeable future.
IDC has raised its 4Q15 iPhone numbers by 7,6% based on continued consumer demand for the 6(+) and S6(+) lineups, as well as smooth supply chain foresight. As mentioned in previous releases, the market share forecast for iOS is expected to remain around 14-15% annually, with clear spikes around product launches. As the majority of Apple’s core markets have transitioned into replacement markets, Apple’s move to get into the iPhone trade-in space is not surprising. The possible challenge in two to three years’ time could quite possibly be excess inventory in the developing markets that refurbished iPhones are sold into. However, the lead time to solve a problem of this nature does not present any immediate concerns to IDC.
Despite all the effort Microsoft has put into the launch of Windows 10, IDC does not expect Microsoft’s share of the smartphone OS market to grow much over the coming years. In 2015, IDC expects the average selling price (ASP) of Windows Phones to be $148, which is $71 lower than Android’s ASP of $219. This was brought about by the Microsoft/Nokia push into the low-end mass market. While this approach helped drive shipments up to 34,9-million units in 2014, IDC is forecasting a year-over-year decline of -10,2% in 2015, followed by further decline in 2016. The weak results can largely be attributed to the lack of OEM partner support.