Smartphone Sales Will Fall to Single-Digit Increases in 2016: Gartner

Those crazy former annual smartphone sales increases, such as the record 73% jump in 2010, are old history as market saturation continues. 

Gartner, Tuong Nguyen, smartphones, smartphone sales, India market, China market

Sluggish global smartphone sales will continue through 2016 as the annual double-digit sales increases of the past few years disappear and make way for single-digit increases.

That's the conclusion of the latest research from Gartner, which predicts worldwide smartphone sales growth of only 7 percent, or about 1.5 billion handsets, through the end of the year.

"The smartphone market will no longer grow at the levels it has reached over the last seven years," Roberta Cozza, an analyst with Gartner, said in a statement. "Smartphone sales recorded their highest growth in 2010, reaching 73 percent," but those kinds of sales increases won't be hit again anytime soon due to market saturation, according to the research firm.

The anticipated 7 percent growth rate for 2016 is down substantially from the worldwide 14.4 percent growth rate that was recorded in 2015, the company said. In 2020, smartphone sales are projected to total 1.9 billion devices.

A big part of the slowdown in global smartphone sales is due to market saturation, with 90 percent saturation rates in North America, Western Europe, Japan and mature Asia markets, which will also slow future growth for smartphones, according to Gartner.

"It's a natural extension of what we've been talking about in the past," Tuong Nguyen, a Gartner analyst, told eWEEK. "The larger mature markets are at a point where they are saturated. In the U.S., as an example, pretty much everyone who wants a smartphone has one, and that's the key."

Many users of feature phones are satisfied with what they are using and don't want or need more expensive and feature-laden smartphones, added Nguyen. And users of existing smartphones are seemingly happy with their devices and don't see any compelling new features that would make them want to upgrade or switch devices in today's market, he said.

"They're not really waiting for anything new to come out," he said. "Those who have them already, what they have is good enough."

That trend certainly is affecting the smartphone sales slowdown, he continued. In addition, "there's much more competition for our wallets" from other technology devices, including smart televisions, laptops, virtual reality devices and more.

"It's not only that people are not wanting to replace their existing smartphones, but people are saying they will hold off and get other tech gear instead," he said. "It's kind of exacerbating the problem by extending the life of existing devices."

With key major markets in the U.S., Europe and Asia slowing, smartphone makers are turning more of their attention to making sales in countries such as India and China, where there are large populations of people who still do not have smartphones, Nguyen said. The problem with that approach is that buyers in those nations often have much lower incomes and typically don't buy expensive smartphones.

"In India and other developing countries, people have different income brackets, so we're not talking about purchases of iPhones and other top-of-the-line phones," he said. "It sets an aspirational bar, but it's not a one to one swap-out" that adds to global smartphone sales. "Most of the people in those countries are buying entry-level devices."

In India, about 167 million feature phones were sold in 2015, which was about 61 percent of total mobile phone sales in India, according to Gartner. In comparison, Gartner expects about 139 million smartphones will be sold in India in 2016, which will be an increase of about 29.5 percent from 2015.

In China, smartphone sales growth hit 16 percent in 2014 but were flat in 2015, with little growth expected over the next five years, according to Gartner. Smartphone sales in China made up 95 percent of the total mobile phone sales there in 2015.

In May, Gartner global smartphone sales figures for the first quarter of 2016 showed Samsung continuing to lead the world with 81.2 million phones sold for a 23.2 percent market share, followed by Apple with 51.6 million iPhones sold for a 14.8 percent share, according to an earlier eWEEK story. But Samsung's sales were essentially flat compared to the first quarter of 2015 when it sold 81.1 million smartphones for a 24.1 percent market share, and sales were down substantially for Apple from last year's first quarter, when it sold 60.2 million iPhones and had a 17.9 percent market share.

Meanwhile, Huawei had a banner first quarter in 2016, with sales of 28.8 million smartphones, compared to 18.1 million handsets in the same quarter one year prior. Huawei's market share rose to 8.3 percent in the latest quarter from 5.4 percent a year earlier.