Cheap phones are rapidly changing the smartphone dynamic for device makers, a new report indicates.
While total units projected to sell in 2016 are still higher than those sold in 2015, the change in sales value will move into negative territory, almost everywhere in the world. Revenue expected will be lower, thinks researcher GfK in its latest report.
In North America, where there are no longer many first-time smartphone purchasers left, the number of units sold will only grow by 1.6% to 193 million units in 2016, up from 190 million in 2015. Despite that gain, the value in the sales will drop by almost a percentage point (0.9%).
One reason? Anyone who wanted a smartphone has gotten one, and we’re not eager to trade them in. Plus, most who are buying a smartphone, are buying devices that are getting cheaper.
Sales numbers exceptions include Emerging APAC, or Asia Pacific, which includes India. In that particular country, unit growth will still be relatively high at 34%. Those sales, however will be dominated by sub-$100 smartphones, GfK says. Sub-$100 phones are popular with first-time buyers, of which there are still plenty in India, the researcher reckons.
China will also continue to see growth. GfK counts China separately to Emerging APAC.
LTE volume growth there will slow over the massive 248% LTE-driven smartphone unit growth in 2015. GfK says that genre of smartphone will be down to 17%. However, consumers like high-end devices, at the $500+ level, there, which will help revenues.
China overall will see a 3.1% gain in units sold in 2016, year-on-year, and a 1.7% gain in sales value.
Other than Emerging APAC and China, the Middle East and Africa is the only other region that will experience sales value growth in 2016. It will see 3% sales value growth, GfK thinks. Egypt is the “star performer” there, the researcher says in its press release on the study.
“Key markets in Emerging Asia and Middle East & Africa are forecast to drive unit growth,” says Kevin Walsh, of GfK in the release.
Problem areas include Latin America, which will be off by 23% sales value. Economic woes in Brazil will contribute to that. Russia and Ukraine are also not doing well when it comes to smartphone sales.
Interestingly, and perhaps an indicator for the future, is that Europe is eyeing the sub-$100 segment. Consumers are eschewing the expensive slabs, in favor of cheap, ultra-low-end phones there. GtK says it saw a 61% unit growth in that genre in 2015.
Western Europe includes highly-developed nations such as France, United Kingdom and Germany. Notably, the sub-$100 smartphone genre was originally thought to appeal to developing regions only.
Perhaps a harbinger of things to come in the developed world: Taste-makers in Europe are quite happy with sub-$100 phones. And that’s a problem if you’re a phone maker trying to sell expensive phones there now, and perhaps a problem if you’re going to try to sell expensive phones anywhere, in the future. Volume will become even more important.
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