A new report from Gartner, Inc. says that global smartphone sales will continue to slow and will no longer grow in double digits.
Worldwide smartphone sales are expected to grow 7% in 2016 to reach 1.5 billion units, according to Gartner. This is down from 14.4 percent growth in 2015. In 2020, smartphone sales are on pace to total 1.9 billion units.
"The smartphone market will no longer grow at the levels it has reached over the last seven years," says Roberta Cozza, research director at Gartner. "Smartphone sales recorded their highest growth in 2010, reaching 73%.”
Today, the smartphone market has reached 90% penetration in the mature markets of North America, Western Europe, Japan and Mature Asia/Pacific, slowing future growth, according to Gartner. What’s more, users in these regions are not replacing or upgrading their smartphone as often as in previous years, adds the research group.
"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," says Cozza.
Communications service providers (CSPs) have moved away from subsidies providing a "free" smartphone every two years, which has led to more varied upgrade cycles. On the other hand, CSPs have introduced financing programs and vendors such as Apple now offer upgrade programs that provides users with new hardware after only 12 months. "These programs are not for everyone, as most users are happy to hold onto their phone for two years or longer than before. They do so especially as the technology updates have become incremental rather than exponential," says Cozza.
In emerging markets, the average lifetime of premium phones is between 2.2 and 2.5 years, while basic phones have an average lifetime of three years and more.
"2015 was the year when sales of smartphones overtook those of feature phones for the first time in Sub-Saharan Africa. This region represents an attractive market for vendors that can persuade users to migrate to their first smartphone," says Cozza.