Smartphone revenue will remain flat in 2016 as market growth shifts to budget handsets

Although 2016 has already seen some excellent smartphone announcements, the mobile industry won't be having it easy this year. Market growth froze in 2015, and analysts say the difficult situation isn't likely to budge in 2016. According to GfK's latest Quarterly Smartphone Tracker report, revenues from smartphone sales in the fourth quarter of 2015 dipped slightly to $115.2 billion, down 0.2 percent from a year ago.

the mobile industry won't be having it easy this year.

Ironically, the same period saw a record number of handsets sold – 368 million units, up 6% year over year. However, commoditization made the average selling price tumble 6% in the fourth quarter. Even Apple projects a year of little to no growth in its iPhone business, and has had its stock fall by 26% since last summer.

With handset revenues falling, we saw mobile technology vendors extend their focus to accessories and smart gadgets, such as virtual reality headsets, connected appliances, and fashionable wearables. LG is betting big on the innovative "Friends" ecosystem of accessories for the LG G5, while HTC has racked up millions of dollars in pre-orders of its Vive virtual reality headset.

GfK’s director of trends and forecasting, Kevin Walsh, made it clear that the market picture largely varies by geography. While India saw smartphone sales rise 34% during the fourth quarter, growth was driven by phones costing less than $100. Comparatively, sales in China grew by 12 percent, while North American sales fell. Overall, what growth there is to be had is among increasingly cheaper phones, which is why we're seeing leading manufacturers dedicate increased attention to value-for-money oriented products.

The research firm forecasts the same trends will continue during 2016 – growth will be among cheaper handsets, while handset sales will grow from 1.308 million to 1.4 million. But revenue will remain flat, only increasing .5 percent to $401.3 billion.

via VentureBeat