Smartphones may have been the Holy Grail of consumer technology over the better part of the last decade, but those heady days of double digit growth may well be a thing of the past. With smartphone penetration in mature markets like the U.S., Europe and China hitting saturation points, the global smartphone industry barely registered a 3.9% growth during the first quarter of this year. Stamford, Connecticut-based research and advisory firm, Gartner, has now come out with a report that claims overall growth in the industry will fall under 10% this year. While the market grew by a steady 14.4% last year, Gartner expects only a 7% growth for the industry in 2016. What's remarkable, is that German market research firm, GfK, had also predicted the exact same thing back in March this year, which is interesting, to say the least as Analysts rarely agree on anything.
The only silver lining for manufacturers and stakeholders is that the sector is expected to continue on its growth trajectory in the foreseeable future, with a whopping 1.9 Billion handsets expected to be shipped globally in 2020. While Gartner’s research director, Ms. Roberta Cozza, named a number of reasons for the global slowdown in smartphone sales, the one reason that seems to stand out is the ever-increasing upgrade cycle, thanks largely to the near-end of the subsidy regime in the U.S. According to Ms. Cozza, “In the mature markets, premium phone users are extending life cycles to 2.5 years, which is not going to change drastically over the next five years”. She also said that the industry expects the bulk of its growth to come from emerging markets and developing economies, like those in sub-Saharan Africa, where smartphone sales surpassed feature phone sales for the first time last year.
However, even though manufacturers are looking at Africa more seriously, there’s still no getting past the two giant markets in Asia – China and India. While the Chinese market is expected to remain largely static over the next few years, another of Gartner’s research directors, Ms. Annette Zimmermann, explained why she expects India to fuel most of the growth in the industry going forward. According to her, as many as 167 million feature phones were sold in India last year. As those feature phone users cross over to entry-level smartphones, there will be enough room for growth, unlike in most mature markets, where smartphone penetration is already over 90%. India, meanwhile, is expected to account for 139 million smartphone shipments this year alone, which represents a growth rate of 29.5%, at a time when global growth in the sector is slowing down to a virtual crawl.