Smartphone Market Sees Dramatic Decline In 2016 - InformationWeek
IoT
IoT
Mobile // Enterprise Mobility Management
News
9/2/2016
10:05 AM
50%
50%

Smartphone Market Sees Dramatic Decline In 2016

The smartphone market is expected to hit a big slowdown this year, with shipments growing by less than 2% -- a dramatic decline from 2015, according to new numbers from IDC. For IT departments managing fleets of mobile devices, the focus will likely be on only two operating systems: Android and iOS.

9 iOS, Android Apps To Creatively Boost Productivity
9 iOS, Android Apps To Creatively Boost Productivity
(Click image for larger view and slideshow.)

The global smartphone market, which seemed to enjoy steady growth ever since the introduction of the first iPhone 10 years ago, has now hit a significant slowdown, with shipments expected to grow only 1.6% this year, according to new numbers from IDC. This is dramatically down from the 10.4% growth seen in 2015, according to the research firm.

A lack of compelling features, market saturation, and a willingness of users and IT to buy "good enough" devices are attributed to the smartphone shipment outlook of 1.46 billion units in 2016.

Market growth is coming from emerging markets in Asia, Africa, and the Middle East, which will see a compound annual growth rate (CAGR) of 5.4% from 2015 to 2016. However, in mature markets -- the United States, Western Europe -- it's the reverse, with CAGR of negative 0.2%.

These numbers, which IDC released Sept. 1, confirm much of what vendors such as Apple and Samsung have reported in their financial results -- that the market that once saw massive growth has greatly shrunk. In its latest earnings report in July, Apple said it shipped about 40 million iPhones during the quarter compared to 47 million units during the same time a year ago.

(Image: bombuscreative/iStockphoto)

(Image: bombuscreative/iStockphoto)

The long rumored iPhone 7, which Apple will likely announce this month, is expected to help boost the company's shipment numbers. However, observers are torn over whether the new smartphone will be the technological leap forward that will inspire people to buy, or just another also-ran as the company bides its time until next year.

In an attempt to bounce back, the industry has launched buy-back programs and other incentives to get consumers into stores and ordering the devices. Larger smartphones, or phablets, are seen as a growth area. Companies will try to blend virtual and augmented reality into these devices to spark interest, but those efforts are likely 12 to 18 months away, so it will be some time before vendors see return on that investment.

Jitesh Ubrani, senior research analyst with IDC's Worldwide Quarterly Mobile Device Trackers, noted in a statement:

From a technological standpoint, smartphone innovation seems to be in a lull as consumers are becoming increasingly comfortable with 'good enough' smartphones. However, with the launch of trade-in or buy-back programs from top vendors and telcos, the industry is aiming to spur early replacements and shorten lifecycles. Upcoming innovations in augmented and virtual reality (AR/VR) should also help stimulate upgrades in the next 12 to 18 months.

For IT departments managing fleets of different devices, IDC's forecast offers some noteworthy insight about mobile operating systems. Specifically, the report confirms that the smartphone market is a two-OS race between Google's Android and Apple's iOS.

By the end of the year, Android, which is installed on many different devices from several manufacturers, is expected to have a market share of about 85% worldwide. iOS will own nearly 14% of the market, with Microsoft's Windows Phone accounting for only 0.5%, and the "other" category -- read BlackBerry -- is projected to have a paltry 0.3%.

[Read how Tim Cook sees the future of Apple.]

However, the more startling numbers are the research firm's market share estimates for 2020, where Windows shrinks to 0.1%, and the "other" category is reduced to zero -- which appears to predict that the BlackBerry OS will cease to exist.

Scott works with the editors and editorial directors of InformationWeek, Dark Reading, and Network Computing to help build audience engagement for all three publications. He also oversees editorial newsletters for InformationWeek and works as the day-to-day news editor for ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Whoopty
50%
50%
Whoopty,
User Rank: Ninja
9/6/2016 | 7:12:56 AM
Re: Cost of operation
While I think you're right, I do think hardware is a big part of it too. My smartphones tend to last a year or two after the contract is up before I drop them or something goes wrong and I'm sure many others are the same. Regular upgrading just doesn't feel like it has as much benefit any more, unless you wait a couple of years.
ChrisD528
50%
50%
ChrisD528,
User Rank: Apprentice
9/4/2016 | 5:13:31 PM
Agree
Yes well said slow to respond about cost now they understand but so sad to bad poor cell phone company lmao
moarsauce123
50%
50%
moarsauce123,
User Rank: Ninja
9/3/2016 | 1:24:33 PM
Cost of operation
The downturn in the smartphone market has nothing to do with the smartphones, operating systems, or apps available. I see the core reason for stagnation and decline in the still ridiculously high cost of operating a smartphone. Yes, prices for decent data plans have come down, but they are still very high compared to other markets. If smartphone manufacturers want to sell more gear they have to get wireless carriers drop the prices drastically and stop nickle and dimimg customers.
sferguson10001
50%
50%
sferguson10001,
User Rank: Strategist
9/2/2016 | 10:42:03 AM
Re: Blackberry who?
Regarding BlackBerry, I totally agree. The hardware will go first and soon, with the operating system to follow after that. The company is pivoting to back-end services, management and security. Windows Phone remains a mystery. It seems like Microsoft wants to keep the OS around so it can say it's still there, and then use that a base to push out it's other apps to Android and iOS. I think Microsoft wants to focus on Surface and use that as the ultimate PC replacement, and push smartphones further and further away.
melgross
50%
50%
melgross,
User Rank: Ninja
9/2/2016 | 10:35:48 AM
Blackberry who?
It won't be just the BB10 OS that will be gone, as it's almost gone now, but Blackberry as a phone producer, in its entirety. Will Win Phone be around in 2020? I think it's questionable, at best. Some commentators insist that Win Phone is crucial to Microsoft's future, but it's pretty obvious that it isn't. And while Samsungs Tizen, as a Phone OS, has never gone anywhere, the small number of phones with that that they sell in India alone exceeds the number of Blackberry phones sold worldwide, and likely the number of Win Phone devices as well, as the trajectory of that continues its rapid slide to nowhere.
News
IT Budgets: Traditional Still Bigger than Cloud
Jessica Davis, Senior Editor, Enterprise Apps,  9/20/2018
Commentary
Building a Smart City Doesn't Have a Common Blueprint
Guest Commentary, Guest Commentary,  9/18/2018
Commentary
AWS vs. Azure: Users Share Their Experiences
Guest Commentary, Guest Commentary,  9/7/2018
Register for InformationWeek Newsletters
Video
Current Issue
The Next Generation of IT Support
The workforce is changing as businesses become global and technology erodes geographical and physical barriers.IT organizations are critical to enabling this transition and can utilize next-generation tools and strategies to provide world-class support regardless of location, platform or device
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll