Smartphone Sales to Rise Only 3.1% in 2016

Research firm IDC cuts its growth forecast from 5.7% and predicts a steeper decline in iPhone sales than originally expected.
Matthew HellerJune 1, 2016

“Phone fatigue” may be increasing, as market research firm IDC on Tuesday reduced its forecast for 2016 global smartphone shipments growth and predicted iPhone sales will decline more sharply than originally expected.

In its latest quarterly survey of the smartphone market, IDC said that after rising by 10.4% to 1.44 billion units last year, smartphone shipments will grow only 3.1% to 1.48 billion in 2016. In March, it had predicted 5.7% growth.

Smartphone vendors shipped a total of 334.9 million smartphones worldwide in the first quarter of 2016, up just 0.2% from a year earlier and the smallest year-over-year growth on record.

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The forecast for 2016 iPhone shipments also weakened, with IDC projecting a decline of 2% to 227 million units compared with the March view for relatively flat volume. It would be the first down year for Apple’s flagship product.

According to IDC, the market slowdown reflects in part a shift in buying behavior, with more people opting to go through electronic retailers. Smartphones sold into e-tailer channels grew 65% in 2015 and are expected to account for roughly 12% of smartphone shipments in 2016, up from just 4% in 2013.

“Consumers everywhere are getting savvy about how and where they buy their smartphones, and this is opening up new doors for OEMs and causing some traditional channels to lose some control of the hardware flow,” Ryan Reith, program director with IDC’s Worldwide Quarterly Mobile Phone Tracker, said in a news release.

Devices powered by Alphabet’s Android are expected to grow by 6.2% to 1.24 billion shipments, while Microsoft’s Windows phones are expected to decline by 62%. Windows accounts for a fraction of the total market.

Looking ahead, IDC believes Apple can bring iPhone back to growth in 2017 and beyond supported by its early trade-in program as well as the lower cost iPhone SE. Phablets (devices with 5.5-inch screens and larger) are expected to have double-digit growth until 2019, then slowing to 9.2% growth in 2020.