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.

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

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7 Comments

1. aho13

Posts: 97; Member since: Sep 10, 2014

cheaper handsets are same as flagships of last year or two , which already enough for most people .

2. Mikele

Posts: 177; Member since: Nov 19, 2013

I agree with you

7. adamvzwez

Posts: 51; Member since: Mar 29, 2015

i work at a phone store and will tell you that even though budget handsets are fine at first, they actually end up being terrible for power users in the long run. But if you need talk text and some occasional web browsing with some social media here and there then yes a budget handset probably will suffice.

3. SPASE

Posts: 261; Member since: May 03, 2013

I paid $2,200 outright for my first mobile, that was 25yrs ago though. I must say, I'm loving today's prices and diversity.

4. avishekmukherjee

Posts: 362; Member since: Apr 09, 2015

Good news

5. xondk

Posts: 1904; Member since: Mar 25, 2014

Uh.... this seems a weird statement, as its only two months and those two months have been those without flagships? so yeah? With samsung's pre-order numbers, that 'flat' rate is going to change.

6. chenski

Posts: 774; Member since: Mar 22, 2015

Those preorders wont make a difference in the hig picture

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