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Smartphone market ‘veers into decline’ as phablets gain popularity: IDC

Smartphone market ‘veers into decline’ as phablets gain popularity: IDC 

In its latest Worldwide Quarterly Mobile Phone Tracker report, IDC said global smartphone shipments are expected to reach 1.46 billion units within a year-over-year growth rate of 1.6 per cent this year. “Although growth remains positive, it is down significantly from the 10.4 per cent growth in 2015,” IDC said.

On the other hand, consumers appear to be showing a growing interest in Phablets, mobile devices typically 5.5 inches or larger designed to straddle the size format of smartphones and tablets. The popularity of augmented reality and virtual reality technology will drive phablet market share from just one-quarter of the smartphone market to one-third by 2020, IDC predicts.

“As phablets gain in popularity, we expect to see a myriad of vendors further expanding their portfolio of large-screened devices but at more affordable price points compared to market leaders Samsung and Apple,” said Anthony Scarsella, research manager, mobile phones at IDC. “Over the past two years, high-priced flagship phablets from the likes of Apple, Samsung, and LG have set the bar for power, performance, and design within the phablet category.

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He foresees many new ‘flagship type’ phablets being introduced by both aspiring and traditional vendors. These devices will deliver similar features at considerably lower prices in both developed and emerging markets.

“Average selling prices (ASPs) for phablets are expected to reach $304 by 2020, down 27 per cent  from $419 in 2015, while regular smartphones (5.4 inches and smaller) are expected to drop only 12 per cent ($264 from $232) during the same time frame,” said Scarsella.

How are the top platforms doing?

Android: In terms of share, IDC does not expect much to change as Android will maintain greater than 85 per cent of the smartphone market. Google’s introduction of Daydream and Project Tango will help usher in new use cases and will help participating hardware vendors to offer differentiated experiences in the premium segment. The latest release of Nougat and Google’s ongoing ambition to secure Android will help the OS secure a better footing in the commercial segment. Overall Android’s ASP is set to remain flat in 2016 ($217) compared to last year and will decrease to $190 by 2020.

iOS: The rumoured removal of the headphone jack and the expectation of a significant hardware refresh in 2017 – the tenth anniversary of the iPhone – are contributors to the first full-year decline in iPhone shipments in 2016. However, IDC does expect a rebound in 2017 and beyond as iPhones reach nearly a quarter-billion units in 2020.

Windows Phone: IDC anticipates a further decline in Windows Phone’s market share throughout the forecast. Although the platform recently saw a new device launch from one of the largest PC vendors, the device (like the OS) remains highly focused on the commercial market. Future device launches, whether from Microsoft or its partners, are expected to have a similar target market. 

IDC attributes much of the slowdown in smartphone sales to the decline expected in developed regions in 2016 but while emerging markets continue with positive growth.

Developed markets as a whole (United States, Canada, Japan, and Western Europe) are expected to see a compound annual growth rate (CAGR) of -0.2 per cent, while emerging markets (Asia/Pacific excluding Japan, Central and Eastern Europe, Middle East and Africa, and Latin America) will experience a CAGR of 5.4 per cent over the 2015-2020 forecast period.

“Growth in the smartphone market is quickly becoming reliant on replacing existing handsets rather than seeking new users,” said Jitesh Ubrani, senior research analyst with IDC’s Worldwide Quarterly Mobile Device Trackers. “From a technological standpoint, smartphone innovation seems to be in a lull as consumers are becoming increasingly comfortable with ‘good enough’ smartphones.

However, he said, vendors and telcos are fighting back by introducing trade-in or buy-back programs to entice customers to replace their smartphones earlier. This, together with expected innovations in AR/VR technology could help spur device upgrades in the next 12 to 18 months, which in turn could entice buyers to snap up newer models.

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