The recent 2016 Internet Trends Report by Mary Meeker says that global internet user base, as well as smartphone sales, have seen a slowdown. As per the report, the global internet users stand at around 3 billion, however, the growth in new internet users globally has been flat with a growth rate of just 9 per cent seen in 2015, which was the same as in 2014. This average falls even further to 7 per cent if we remove India from the equation.
Global smartphone user growth is also slowing down, says the report, with 21 per cent growth seen in 2015 as opposed to 31 per cent in 2014.
Concurrently, smartphone unit shipments have also slowed drastically with 2015 seeing a growth of 10 per cent, as opposed to 28 per cent in 2014. The Asia-Pacific smartphone market, though, continues to see strong growth and accounted for 52 per cent of global smartphone users last year.
This is in sync with a June 2016 report by research firm Gartner, which also stated that smartphone sales will continue to slow down and will no longer grow at double digit rates. Worldwide, smartphone sales are expected to grow 7 per cent in 2016 to reach 1.5 billion units, says Gartner. However, India continues to be a high potential smartphone market for manufacturers with Gartner estimating that 139 million smartphones will be sold in India in 2016, growing 29.5 per cent year over year. Overall, Gartner expects smartphone sales to reach 1.9 billion in 2020.
"The smartphone market will no longer grow at the levels it has reached over the last seven years," said Anshul Gupta, Research Director at Gartner. "Smartphone sales recorded their highest growth in 2010, reaching 73 per cent. In the mature markets, premium phone users are extending life cycles to 2.5 years, which is not going to change drastically over the next five years,” he added.
In emerging markets, the average lifetime of premium phones is between 2.2 and 2.5 years, while basic phones have an average lifetime of three years and more, Gartner further said. This is significant as users now seem to prefer to hang on to their devices for longer periods of time, which is directly affecting the purchase cycle say Gartner analysts.
A similar scenario is being seen in China, reports Gartner. After recording growth of 16 per cent in 2014, sales of smartphones in China were flat in 2015. "In this saturated yet highly competitive smartphone market, there is little growth expected in China in the next five years," said Annette Zimmermann, Research Director at Gartner.
“Sales of smartphones in China represented 95 per cent of total mobile phone sales in 2015. Similar to India, falling ASPs for smartphones will make them more affordable for users," explained Zimmermann.
One reason for the slowdown of smartphone sales is that mature markets have reached saturation with smartphone penetration standing at 90 per cent. Meanwhile, according to the 2016 Internet Trends Report, the sale of Android phones is continuing to increase, while sales of Apple smartphones have decreased. This could be connected to the fact that the Average Selling Price (ASP) of Android phones has been decreasing. Currently, according to reports, India has among the lowest ASP for smartphones at an average price of under $120, down from $158 in 2014.