I’ve been using cell phones since the 1980’s and I’ll never forget my first one, the Motorola DynaTAC (aka Brick Phone). The data plan was paid for by my EDA employer, and it did make me more productive because clients, prospects and co-workers could get a hold of me by simply dialing, not having to go through a secretary to send me a message. It seems like every couple of years I have been upgrading my cell phone, and with AT&T I’m on a two year cycle where I purchase a replacement phone, typically a refurbished phone at a discounted price. That’s my experience, but what is happening in the smartphone industry today?
Thankfully we have sources like IC Insights that dutifully collects and reports on such business trends. I’ve just read their most recent research bulletin titled, “Strong Smartphone Growth in a Saturated Cellphone Market”. In 2015 they have analyzed that some 89% of new cell phones are being sold to existing customers, while 10 years ago that number was only 56%.
1.675 billion, now that’s a lot of cell phones being sold in 2015 and the percentage sold to existing customers are predicted to inch up from 89% to 91% in 2016. Vendors like Apple, Samsung and Xiaomi are hoping to convince consumers like me to upgrade to a new cell phone model often, at least once per year or sooner if possible.
The cell phone market has two types of phones: feature phones and smartphones. The feature phones have pre-built apps and cannot add new apps, while smartphones use Apple iOS or Android (and some Windows) to allow nearly unlimited apps. Let’s look at the growth rate of the total cellphone market versus Smartphones and other cellphones:
As expected all of the growth is in the Smartphone segment, while all of the decline is in the other cellphone category. Smartphone shipments were over 50% of the total quarterly cellphone shipments starting back in Q1 of 2013. In Q4 of 2015 the estimate is for 80% of total cellphone shipments to be a Smartphone. By 2019 the forecast is for Smartphones to command 95% of total cellphone shipments.
The two biggest Smartphone vendors Apple and Samsung sold some 504 million devices in 2014 for a 40% market share, and in 2015 they will increase devices to 560 million Smartphones however with a slight drop to a 39% market share. Samsung is in trouble because their shipments are expected to decline by 1% this year, while Apple is flying high with a projected increase of 20%, thank you iPhone 6s.
Who is causing Samsung to decrease in unit shipments? It’s the Chinese companies where the seven largest vendors in China will now reach a 31% market share. Remember the Chinese company names Huawei and Xiaomi.
Read the full research bulletin here.
Related Blogs
- Smartphone sales growth declining
- Smartphone Penetration in Bali & Gili Islands
- Samsung Smartphone declines
If you believe in Hobbits you can believe in Rapidus