Kantar: double digit smartphone market growth is over

There may be a good reason why iPhone sales have slowed a bit. According to new data from Kantar Worldpanel ComTech (kantarworldpanel.com, double digit smartphone market growth is over.

The research group says mobile penetration in the US and Europe‘s Big Five Countries (EU5) has reached 91%, and in urban China, that number has risen to 97%. Nearly everyone now has a mobile phone, and if those numbers aren’t staggering enough – 65% of Americans, 74% of Europeans, and 72% of urban Chinese consumers own a smartphone. (Of course, this means Apple still has 35% of Americans, 26% of Europeans, and 28% of urbanChinese consumers who need an iPhone.)

“With this kind of market penetration already in place, some in the industry are wondering where future sales will come from,” says Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, one of the authors of the paper. “As is often the case, the answer depends on how you look at it.”

During 2016, Milanesi estimates, smartphone sales will be largely based on convincing die-hard feature phone users that they need a smartphone and persuading smartphone owners that they want and need the “next big thing.” Kantor says that changes in smartphone operating system market share, along with sales for the two top smartphone brands (Apple and Samsung), will come mainly from convincing users to switch from the competition.

In the US, the high-end segment of the smartphone market (devices with an unsubsidized price of more than $500) represented 48% of sales in 2015, growing a mere 9% over 2014. In the EU5, where the high-end segment represented just 27% of sales, growth was commensurately lower than in the US, coming in at 6%.

What should the industry expect for 2016? According to Milanesi, 48% of smartphone owners in the EU5 are currently planning to upgrade their smartphone over the next 12 months. This number decreases to 46% in the US, and 28% in urban China. Consumer brand preference for their next device varies a little by region, but two brand names that remain prominent are Apple and Samsung.

“In the US, 40% of consumers planning to change their device prefer Apple, and another 35% prefer Samsung. Then, there is a large gap before we get to Motorola (6% preference) and LG (5%). In the EU5, the leadership position among preferred brands is reversed, with Samsung at 37% and Apple at 29%,” Milanesi says.

For the foreseeable future, she believes, the smartphone will remain the device around which millions of people organize their lives. With market saturation, there are no longer hundreds of millions shopping for a first smartphone, but there are hundreds of millions who will carry smartphones everywhere they go.

“The smartphone market will never again see the growth of the past ten years. But, the opportunities to monetize from what has already been built are there, for those with the vision to find and seize them,” Milanesi says.