Worldwide smartphone shipments are expected to increase by only 1.6 per cent in 2016 to hit 1.46 billion units, much slower than 2015’s growth rate of 10.4 per cent, according to IDC.
The slowdown is mainly attributed to the decline expected in developed markets in 2016, and the report notes that growth is becoming reliant on replacing existing handsets rather than seeking new users.
Emerging markets will continue to see positive growth this year, said the report.
Jitesh Ubrani, senior research analyst at IDC, said “smartphone innovation seems to be in a lull as consumers are becoming increasingly comfortable with ‘good enough’ smartphones. However, with the launch of trade-in or buy-back programmes from top vendors and telcos, the industry is aiming to spur early replacements and shorten lifecycles.”
“Upcoming innovations in augmented and virtual reality (AR/VR) should also help stimulate upgrades in the next 12 to 18 months,” he said.
Consumer preference for larger screens is expected to continue thanks to AR/VR as phablets go from roughly one quarter of the smartphone market to one third by 2020.
Vendors are expected to expand their portfolio of large-screened devices at more affordable price points compared to Samsung and Apple.
New flagship phablets will hit the market from both aspiring and traditional vendors at lower prices.
Average phablet selling prices are expected to reach $304 by 2020, down 27 per cent from $419 in 2015, while regular smartphones are expected to drop only 12 per cent ($232 from $264) during the same time.
Android and iOS
IDC does not expect much to change in the battle between the competing operating systems as Android will maintain greater than 85 per cent of the smartphone market.
Google’s introduction of Daydream in the new Android Nougat platform, and Project Tango, will usher in new use cases and help hardware vendors offer differentiated experiences in the premium segment, the report said.
Meanwhile, the rumoured removal of the headphone jack and the expectation of a significant hardware refresh in 2017 – the tenth anniversary of the iPhone – are contributing to the first full-year decline in iPhone shipments in 2016, as users hold off an upgrade until next year.
However, IDC expects a rebound in 2017 and beyond as iPhones are expected to reach nearly a quarter billion units in 2020.