What’s behind smartphone market’s slowing growth?

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What’s behind smartphone market’s slowing growth?

The worldwide smartphone market will grow in the coming years, but new research suggests its meteoric rise over the past several years will start to slow over sluggishness in China.

Smartphone shipments will rise 10.4 percent in 2015 to 1.44 billion units, research firm IDCpredicted on Tuesday. While the forecast reflects ongoing growth, IDC was quick to note that the expected gain is far below the 27.5 percent year-over-year rise registered in 2014. It’s also down from the company’s previous forecast of 11.3 percent for 2015.

One of the main issues for the slowing growth is China, IDC said. The research firm said that while China will remain the world’s largest smartphone market in 2015, demand for new devices is slowing. The issue, according to IDC, is that China is slowly turning into a mature market where the vast majority of consumers own a smartphone. Mature markets, like North America and Western Europe, tend to see slowing growth year over year. China is following suit.

China has long been a critical market for most technology companies, largely because of its massive and growing consumer base. Still, there is rampant speculation that the country’s market may be weaker than anticipated. On Monday, the Chinese stock market suffered its biggest drop in eight years. The Chinese media called the day “Black Monday,” and prompted concerns among analysts and Wall Street watchers that companies and countries doing business in China may be negatively affected.

In an odd move for a company that prides itself on secrecy, Apple CEO Tim Cook tried to ally fears on Monday, emailing CNBC host Jim Cramer and saying that his company has “continued to experience strong growth for our business in China through July and August.” He added that growth in iPhone activations has “actually accelerated over the past few weeks,” and he said he believes the mobile market in China is stable.

“Obviously I can’t predict the future, but our performance so far this quarter is reassuring,” Cook wrote, according to a tweet by Carl Quintanilla, another host at CNBC, the business-focused television network. “Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge.”

LTE is a wireless communications technology that delivers higher-speed and better-quality service to wireless networks. LTE has been slow to arrive in China, but, according to Cook, could ultimately help the market’s smartphone space grow.

Another major factor in smartphone market growth — both in China and elsewhere around the world — is higher demand for big devices, according to IDC. The company reported that shipments of big smartphones — featuring screen sizes of 5.5 inches and up — will rise significantly in 2015 and drive the market’s gains.

“Since Apple finally delivered a larger-screen smartphone with the iPhone 6 Plus, the demand for large-screened devices among consumers has been at a record high,” Anthony Scarsella, research manager at IDC’s mobile phones team, said in a statement. “Smartphones featuring display sizes from 5.5 inches to 6 inches are forecast to grow 84% in 2015 compared to last year, while phablets overall will make up over 71% of shipments by 2019.”

Looking ahead, despite the dip in smartphone shipment growth worldwide, IDC doesn’t anticipate much changing in terms of the market’s overall makeup. The research firm believes the market will grow at an annualized rate of 7.9 percent through 2019, ultimately reaching 1.9 billion shipments in 2019 alone.

IDC also forecast that Google’s Android platform, which will own 81.1 percent of the smartphone space in 2015, will retain the same share through 2019. Apple’s iOS share is expected to end 2015 at 15.6 percent, but ultimately fall to 14.2 percent in 2019 as Microsoft’s Windows platform steals some share and rises from 2.6 percent this year to 3.6 percent in 2019.

Source: http://cnet.co/1KMPsbI

 

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