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Smartphone Sales Growth Will Drop To Single Digits In 2016, Says Gartner (techcrunch.com) 78

Posted by BeauHD from the what-goes-up-must-come-down dept.
An anonymous reader writes from a report via TechCrunch: According to a report from Gartner, smartphone sales growth is expected to shrink from 14.4 percent growth in 2015 to just 7 percent in 2016, with only 1.5 billion smartphone units expected to ship globally this year. Gartner notes the market grew 73 precent in 2010, which was a high-point for the industry. One of the main reasons why the growth is shrinking is because consumers have less of a reason to upgrade their devices each year. Gartner notes that new devices offer only incremental upgrades over existing hardware and carriers have been moving away from subsidizing upgrades. The lifetime of a premium smartphone is between 2.2 and 2.5 years in emerging markets. The biggest smartphone growth is expected in India, where an estimated 139 million smartphones will be sold this year alone. The industry is growing 29.5 percent year-over-year in India. As for China, Gartner expects "little growth" in the region in the next five years calling it a "saturated yet highly competitive" market. Last week, it was reported that Microsoft is selling about 1,500 of its patents to Chinese device maker Xiaomi to build a 'long-term partnership.'
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Smartphone Sales Growth Will Drop To Single Digits In 2016, Says Gartner More

Smartphone Sales Growth Will Drop To Single Digits In 2016, Says Gartner

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  • Unsurprising (Score:5, Insightful)

    by Noble713 ( 3516573 ) on Tuesday June 07, 2016 @07:30PM (#52271499)
    Of course sales growth / adoption rates have to level off: you can't sell a billion phones every year to a population of ~7 billion indefinitely. Much like desktops before them, smartphones have reached the point where the hardware is "good enough" that replacing it at less than a 3-5 year interval is unnecessary.

    • Re:Unsurprising (Score:4, Interesting)

      by Feral Nerd ( 3929873 ) on Tuesday June 07, 2016 @07:35PM (#52271531)

      Of course sales growth / adoption rates have to level off: you can't sell a billion phones every year to a population of ~7 billion indefinitely. Much like desktops before them, smartphones have reached the point where the hardware is "good enough" that replacing it at less than a 3-5 year interval is unnecessary.

      Funnily enough that does not stop the unwashed masses that make up 'the market' from expecting such growth to go on indefinitely kind of like they also expect real estate prices to rise indefinitely despite ample evidence to the contrary in the form of innumerable burst real estate bubbles. It is almost comical to watch how surprised everybody is when a bubble burst or a rapidly growing market segment gets (inevitably) saturated.

      • Funny thing real estate prices have essentially risen indefinitely and will continue to do so with the odd correction. The only question is what rate of growth is sustainable? Look at any long term graph of property prices.

        • Re: (Score:1)

          by Anonymous Coward

          And they will keep rising as long as the population keep growing and concentrating in small areas

          And going back to the topic about smart phones drop to single digits I am just pleased to add that for once Microsoft seems to be ahead of the curve :)

          • Re: (Score:2, Interesting)

            by jezwel ( 2451108 )
            What I don't understand is Microsoft *not* doubling down on the emerging market of dockable phones replacing desktops, laptops, and tablets. An x86 compatible phone running full Windows and able to run all those Windows desktop apps could be the desktop replacement item of choice for many roles in enterprises.
            My current PC runs mostly web based apps, doesn't do any real local processing, and has a 1.4GHz CoreM CPU, 8GB RAM, and a 128GB SSD. Phone hardware is perilously close to meeting / exceeding all o

            • A dockable phone is nice because you can connect a big screen, a real keyboard, and so on. But guess what's easier to carry than all that shit? A laptop! And then the dockable phone doesn't seem so hot anymore. Also, if everything you run is web-based anyway, why do you need Windows desktop apps?

              • The idea is that I do not have to carry the big screen/keyboard all the time, but still have all my files and programs (and do not need to set up terminal services and a storage server, both of which require an internet connection, so are not as useful in places where mobile internet is slow).
                Of course, this is if you use something that is not web based, if all you need if facebook and gmail, then, I guess, you do not need a Windows dockable phone.

                I would be satisfied with a more modern Viliv N5 (or a Psion

                • Re: (Score:2)

                  by Rob Y. ( 110975 )

                  Yeah, but why do you need all that stuff on your phone. All that desktop goodness is more or less useless on a pocketable device. And if desktop mobility is what you want, a Surface Pro probably accomplishes that better than any phone can - and without the need for the docking station (though you could use one if you wanted). And, of course, once all the desktop stuff you need is web based, a future touch-enabled, Android-capable Chromebook will do it all for 200 bucks. Sure, you'd still need to carry a

                  • Something like the Psion Series 5 was quite useful - it is small enough to fit in a pocket, but has a relatively good keyboard and a touchscreen. Its downsides (IMO) are only related to its age - no built-in internet connectivity, slow CPU, incompatibility with desktop file formats, like .doc (without conversion).

                    Viliv N5 is more modern (2010), but still quite slow and 1GB RAM pretty much limits it to Windows XP (though it can run Linux, I have programs that are not fully compatible with it).

                    Something like

                  • a Surface Pro probably accomplishes that better than any phone can
                    Android-capable Chromebook will do it all for 200 bucks

                    A Surface nor a Chromebook are phone-form-factor. Your general point is that people should just carry laptops instead of docking phones. Do you really need an explanation why that doesn't make sense?

                    • Re: (Score:2)

                      by Rob Y. ( 110975 )

                      My point was that people who need to carry around a machine capable of doing desktop-style work should carry light laptops - rather than paying for a high-spec'd phone that can do those things - but only do them reasonably if docked to an external keyboard and monitor. Yeah, there may be some people who need to be able to dock a device and use it in multiple locations - without also needing to use it when away from a docking station. But that's a small population. There's a bigger population that needs a

                    • My point was that people who need to carry around a machine capable of doing desktop-style work should carry light laptops - rather than paying for a high-spec'd phone that can do those things

                      Because,

                      1. Bigger is better
                      2. I like backpacks
                      3. I heard a laptop battery can stop a bullet
                      4. More computers is better

                      http://www.blogcdn.com/de.enga... [blogcdn.com]

                      ?

                    • Re: (Score:2)

                      by Rob Y. ( 110975 )

                      What part of 'some people need to use their devices in places without access to a docking station' did you miss? If you want a phone that you can use as a desktop at home or at work where you have a docking station - more power to you. If you need to use that thing on a train or airplane - or Starbucks for that matter - the Continuum thing won't work for you. That's all I'm saying. For those people, who need a real laptop, there's no point in having a phone that can be a desktop too. If they can manage

                    • What part of 'some people need to use their devices in places without access to a docking station' did you miss?

                      Yeah, and some people don't. FFS dude, did I say "docking stations will completely replace all possible use cases for a laptop"? The answer is no because I guess I have to spoon feed you this. We're not talking about those people obviously. We're talking about the 2 billion people that ONLY carry phones and are obviously okay without a laptop.

                      For those people, who need a real laptop, there's no point in having a phone that can be a desktop too.

                      You know what else? For people that need a card, a bike isn't good enough. Also, for people that like pizza, a carrot isn't good enough.

              • A dockable phone is nice because you can connect a big screen, a real keyboard, and so on. But guess what's easier to carry than all that shit? A laptop!

                Um, what? The point of a dockable mobile device is to NOT carry around a keyboard, mouse, screen, etc. in any form, laptop or otherwise.

                • Then you're assuming wherever you arrive will have all those things available for your use. But such a place would probably provide a PC as well - because who just has PC accessories lying around without a PC? We're stuck in a loop now.

            • Comment removed based on user account deletion

        • Funny thing real estate prices have essentially risen indefinitely and will continue to do so with the odd correction. The only question is what rate of growth is sustainable? Look at any long term graph of property prices.

          I was trying to make the point that in every real estate bubble (or bubbles in general) I have seen people expected the inflation of the bubble to go on indefinetly despite recent history being littered with stories of burst real estate bubbles. It's like the part of the brain that handles critical thought and common sense gets shut off as people start watching reality shows about real estate speculation while they watch the bubble value of their house go up and get second mortgages to pay for consumption.

        • scarce resource in an inflationary economy -> would expect price to go up (to maintain value).

          Big difference between price going up, and sales numbers going up (not just sales $). Sales numbers mean more widgets must be made. Eventually we run out of supply. Money is an arbitrary system. We can just use bigger numbers on the bills indefinitely (with occasional resets of new currency or new currency unit).

    • Re: (Score:2)

      by rtb61 ( 674572 )

      The desktop situation is far different to the smart phone drop in sales. When it comes to desktops, the majority of consumers are simply not buying them at all any more. They only ever bought desktops because that was the only cost effective solution, for general use, media consumption and education because notebooks at one stage were far too expensive and smart phones or tablets or smart TVs did not exist. The desktop market is shrinking right back to it's original base, power users, business, government

    • If you own the *whole* market, 1B phones to 7B people would be a median replacement rate of about 7 years.

      Which seems very possible, especially if you actually have a replacement schedule of 3-5 years to cover small kids and people who still don't get them.

      But yeah, go from replacing your phone every other year to 3-5, as well as having market saturation among people who can afford them, and you're going to see slow sales growth.

    • That's not the only reason. Nowadays smartphones reached a comfort zone (size, specs & ergonomics) that tend to have people keeping their phone for longer. Incremental upgrades (at a significant cost) are not that appealing.

    • Re: (Score:2)

      by mysidia ( 191772 )

      The problem is Smartphones have levelled off in what is being added GAME-CHANGING IMPROVEMENTS ARE NO LONGER BEING MADE.

      If the technology remains stagnant, then people won't need to replace their cell phones. People aren't going to replace their cell phones, just because of minor refinements..... you need something HUGE that is compelling. A Killer App to get people onto your new phone.

      A hardware game-changing improvement, not a software enhancement that is easily copied.

    • Of course sales growth / adoption rates have to level off: you can't sell a billion phones every year to a population of ~7 billion indefinitely. Much like desktops before them, smartphones have reached the point where the hardware is "good enough" that replacing it at less than a 3-5 year interval is unnecessary.

      Assuming a 5 year replacement, and 7 billion customers, that means 1.4 Billion new devices each year. So a billion phones a year sounds reasonable.

    • Of course sales growth / adoption rates have to level off: you can't sell a billion phones every year to a population of ~7 billion indefinitely. Much like desktops before them, smartphones have reached the point where the hardware is "good enough" that replacing it at less than a 3-5 year interval is unnecessary.

      When the damn vendor stops supporting that smartphone after two years and you stop receiving critical security updates on your "good enough" device, actually caring about your life getting hacked also appears to be "unnecessary".

      Seems we've quickly forgotten about the true problem here. A smartphone is hardly a desktop.

    • Of course sales growth / adoption rates have to level off: you can't sell a billion phones every year to a population of ~7 billion indefinitely. Much like desktops before them, smartphones have reached the point where the hardware is "good enough" that replacing it at less than a 3-5 year interval is unnecessary.

      A billion a year = new phone for everyone on earth every 7 years on average. That is do-able (probably in the near future), especially since first world is already comfortable with 2-3 years average.

      But your point stands. Eventually growth has to level off. Even if we got to the point of buying a new phone rather than recharging, we still must hit an endpoint, where it makes no sense to buy phones on a faster cycle.

  • Holy crap (Score:4, Funny)

    by Waffle Iron ( 339739 ) on Tuesday June 07, 2016 @07:31PM (#52271505)

    That's no more than nine phones world wide!

  • ...and companies who built their business plan on the current growth continuing will have a hard time of it. We've reached the flat end of the curve. Current phones (with the possible exception of Windows Phone, which could use a couple more iterations, and Blackberry... well, sorry) are Good Enough.

    I wonder how many companies will realize the ramifications of this?

    Technical Support will become more important, because people aren't trading in their phones every 18 months. (Replacing cracked screens, bon

    • There is already a huge business in replacing screens and other things like that. Hell there is a phone repair kiosk in every shopping mall I visit.

      The killer for that business is that good phones aren't that expensive and screens make up a significant % of their cost. No you may not pay $600 to replace your battery, but you will pay $400 to replace a cracked screen on a 2 year old device knowing you will get a new phone, new battery, when the screen replacement cost is $200

      • There is already a huge business in replacing screens and other things like that. Hell there is a phone repair kiosk in every shopping mall I visit.

        The killer for that business is that good phones aren't that expensive and screens make up a significant % of their cost. No you may not pay $600 to replace your battery, but you will pay $400 to replace a cracked screen on a 2 year old device knowing you will get a new phone, new battery, when the screen replacement cost is $200

        Really? I do replace broken screens, headphone jacks and the like as a small side business. You can buy a new screen for an iphone 6 (for instance) for around $30, less if you go wholesale. You need special tools to get the thing open, but you only have to buy those once. It takes about an hour to replace it if you're working carefully.

        If the kiosks are really charging $400 per phone to replace a broken screen, I really need to open a kiosk.

        Seriously, there's nothing in a modern smartphone that justifie

        • Never looked at iPhone repairs as never owned one. But all the android ones I've looked to repair seem to come with an integrated glass, digitiser, LCD. The glass is glued to the digitizer and LCD and getting them apart is almost impossible.

          If you look at all the ifixit guides it's always replace that entire component. My phone is an LG G4, the replacement screen digitizer LCD is US$109 on Ebay. Iphone ones do appear to be cheaper thats for sure.

  • isn't this a repeat post? (Score:5, Funny)

    by turkeydance ( 1266624 ) on Tuesday June 07, 2016 @07:32PM (#52271509)
    not only is my short-term memory horrible...so is my short-term memory.

  • Smartphone sales *GROWTH* (Score:4, Interesting)

    by Guybrush_T ( 980074 ) on Tuesday June 07, 2016 @07:38PM (#52271549)

    Growth is the important term here. Of course it is decreasing, now that basically everyone has a smartphone. You cannot go above 100% of the market. It used to grow a lot when people were transitioning from dumbphones to smartphones.

    So, yes, people change their phone less often, but the 2010 figures were mostly the transition to smartphones.

    • Re: (Score:2)

      by Lumpy ( 12016 )

      Yes you can. I carry TWO smartphones, An iphone 6 plus and a HTC ONE M8. I just wish I could get working LTE dual sim hexaband phones here so I could have the two lines on one phone.

    • It's not this but it's harder to maintain growth in a larger market let alone keep growing faster. Getting 5% growth on 1M is easier than 5% growth on 10M. The smart phone market has been growing for years. And while it is reaching saturation point in developed countries there is still plenty of growth available in the developing markets. The problem is that there are so many people that already have smartphones that you have to sell huge numbers to keep growth growing. And that is what the investment ma

  • In other news, the late Amazing Criswell filed suit against the Gartner Group, claiming "I've got the patent on making shit up for profit!"

    • What's the name of the other one, whose business model is "saying the opposite to Gartner for profit"?

  • only 1.5 billion smartphone units expected to ship globally this year

    I guess a billion isn't what it used to be. Tough to grow by double digits when the market is that big.

  • Its hard to justify (Score:3)

    by TheRecklessWanderer ( 929556 ) on Tuesday June 07, 2016 @08:42PM (#52271837) Journal
    It's hard to justify spending 800 bucks on a new smart phone every year or two.

  • Umm, does anyone else realize that 7% of 1.5 billion is 105 million? If you figure $600 per phone that's $63 billion in new sales.

  • Comment removed (Score:5, Interesting)

    by account_deleted ( 4530225 ) on Tuesday June 07, 2016 @09:48PM (#52272117)
    Comment removed based on user account deletion
    • Not Gartner, but this is one of my favourites: https://foundersgrid.com/bitco... [foundersgrid.com]

      Read the predictions, then check the date at the bottom of the page.

    • Re: (Score:2)

      by c ( 8461 )

      It's only 2016; Microsoft could still pull off a 10% Windows Phone market share by 2018. Have some faith.

      *giggle* *snort*

      Damn. I almost managed to keep a straight face...

  • I've wondered, but never to the point of taking the time, have Gartner prognostications ever been tracked?

  • Last week, it was reported that Microsoft is selling about 1,500 of its patents to Chinese device maker Xiaomi to build a 'long-term partnership.'

    So this has become a thing, apparently. It's not nearly the worst thing I've seen on a news site (even just today), but it is a transparent ploy and roundly unhelpful.

    Well, unhelpful to the reader. I'm sure it's helpful to the site owners to zombie up a lightly attended article from X days back and plop some eyeballs on it.

    But whipslash, can you maybe ask the guys that tune the bot to make it a little less non-sequitur-y?

  • From a security standpoint, smartphones are often abandoned well before their useful life. In that sense, it's a bit difficult to find the comparison with "good enough" desktop hardware. You won't lose support from your internet provider if you choose to reload your desktop. Even if you choose to run a different OS altogether, and use a different browser. The same cannot be said for smartphones.

    And when consumers treat an unsupported smartphone as "good enough", the end result is finding their lives get

  • Slowing growth in the market is not a bad sign, it just means the market is reaching saturation. Which is neither good or bad. Overall sales and profits won't decline, they just won't grow faster than the population. Competition may intensify, causing individual market participants to grow or lose market share, but the overall picture won't change.

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