Slowdown in Smartphone Sales Seen for 2016

Smartphone shipments will grow 5.7% in 2016, with iPhone shipments declining 0.1%, says IDC.
Matthew HellerMarch 4, 2016
Slowdown in Smartphone Sales Seen for 2016

The smartphone industry will decelerate to single-digit growth this year, with Apple’s iPhone being hit harder than Android devices, according to IDC.

The market research firm said Thursday that after rising by 10.4% to 1.44 billion units last year, smartphone shipments will grow only 5.7% in 2016, to 1.5 billion units.

Mature markets, such as the United States, China, and Western Europe, all hit single-digit growth for smartphone shipments last year, while high-growth markets, such as India, Indonesia, the Middle East and Africa, remained healthy.

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“The mature market slowdown has some grave consequences for Apple, as well as the high-end Android space, as these were the markets that absorbed the majority of the premium handsets that shipped over the past five years,” Ryan Reith, program director with IDC’s Worldwide Quarterly Mobile Phone Tracker, said in a news release.

IDC predicts iPhone shipments will decline 0.1% in 2016, while Android phone shipments increase 7.6%. The market as a whole is expected to experience single-digit year-on-year growth through 2020.

According to CNET, the industry “has been hit by a malady known as ‘phone fatigue.’ Consumers in mature markets have been turned off by a lack of exciting features in new phones, causing more of them to stick with their current smartphones.”

“At the same time, mobile carriers are doing away with subsidized plans, causing more customers to buy their phones at the full retail price, putting a damper on sales of expensive models,” it added.

IDC suggested that Apple’s new “Trade Up With Installments” program may help convince more customers to upgrade. The program allows customers to trade in an old iPhone or other smartphone, apply the value of that device to a new iPhone and then pay off that new phone in installments over 24 months.

“By entering this space, Apple can more tightly control the trade-in offerings, as well as monitor the demand for where these perfectly functioning 1-year old iPhones end up,” Reith said.