The global smartphone market reached a new shipment record in 2016 but the times of double-digit growth rates seem to be over. Around 1.5 billion smartphones were sold, led by Samsung, closely followed by Apple and behind by some distance were Huawei, Oppo and Vivo. This equals a modest global growth rate of just 3 percent. Compared to previous years you may ask what is going on? Looking into the future, we have identified four reasons why the smartphone market may pick up again this year.
1. Smartphone Innovations Are Boosting Demand
Many analysts were skeptical when Apple launched the current iPhone 7 during last autumn. The general criticism was that the Californian tech giant lacked new ideas. A new camera, longer battery life and wireless headphones are simply incremental improvements, not disruptive innovations. We expect Apple to raise the bar significantly for the 10th anniversary of the iPhone this year. New features in the field of augmented and virtual reality are already seriously discussed in many forums and could stimulate new demand.
However, not only Apple, but also Samsung as the world’s second-largest smartphone brand is likely to introduce a new version of its flagship model soon. The S8 could be presented as soon as March. A completely new all-screen concept is anticipated whereby the screen almost covers the device’s entire surface. In addition, the new screen will serve to support virtual reality applications. None of these developments would reinvent the smartphone completely, yet the quality of innovations is increasing significantly after two sluggish years.
2. Cool Brands from China Enter the Global Smartphone Market
The times in which Chinese smartphone brands scored particularly with low prices are over. Numerous former contract manufacturers have made a name for themselves as promising vendors of innovative smartphones. Chinese brands such as Nubia, OnePlus and Xiaomi are considered innovative, cool and affordable – especially for young customers around the word.
This development was predicted, yet suppressed by many established brands. In this unfilled niche, the new stars are now pushing out of the land of the rising sun and reaching new target groups. Some facts and figures for the records: In 2012, Huawei, Lenovo and ZTE represented the three Chinese manufacturers making it into the world’s top ten smartphone brands – now there are seven providers from China alone!
3. Consumer IoT Growth Gives Smartphone Market a Push
The global market for connected IoT devices is growing steadily. While last year around 4 billion consumer IoT devices were in use, Gartner predicts it should amount to nearly 14 billion by 2020. We often forget the fundamental importance of smartphones in connection with IoT.
As a universal control center, smartphones are the heart and brain of many consumer IoT applications. Smart home devices, fitness trackers and wearable gadgets are dependent on linking to a smartphone and are controlled by software platforms from Apple, Google or Amazon. These in turn require a solid computing power built into smartphones. Older models are not suitable which is why we are anticipating a wave of renewal as a result of IoT growth.
4. Emerging Markets Catching Up at Higher Pace
In a new study amongst 26,000 end-customers in 26 countries, Accenture found out that 54 percent would like to purchase a new smartphone this year. However, this figure is significantly higher in emerging markets. For example, three out of four customers in China want to buy a new phone.
The backlog in places like Brazil, China and especially India is huge. Even if smartphone sales continue to stagnate in saturated markets, the potential in emerging markets is sufficient to generate new growth. In India alone, there should be 1.4 billion mobile subscriptions by 2021 – and behind each subscription is a potential smartphone customer.
Summary: We are excited about the innovations that Apple, Samsung and young Chinese brands such as Nubia, OnePlus and Xiaomi will surprise us with this year. There are many valid reasons why the smartphone market will grow faster than the past 2 years and some of them can be seen at the Mobile World Congress 2017, which starts on 27th February in Barcelona.
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Kimberly Meyer is the Head of Global Marketing & Communication at B2X.