Emerging markets are powering smartphone sales, according to forecaster GfK, with full year global smartphone sales for 2016 set to increase from $400.7 billion to $426 billion, up 5%.
GfK says this rise by 5% to sales of US $426 billion in 2016 is ‘strong sales of mid-range to high-end units which has reversed the previous trend of low-end (<USD 100) share gains.’
Before we go on, it’s important to note that GfK says it ‘forecasts end-demand consumer purchases rather than manufacturer shipments.’
The company explains that ‘market sizes are built up by point-of-sale (POS) tracking in 90+ markets with updates on a weekly and monthly basis. For the US, GfK employs proprietary market modelling and consumer research rather than POS to produce its market forecasts. Values are based on unsubsidised retail pricing. Data is available quarterly and the next data set is due in November 2016.’
{loadposition alex08}Kevin Walsh, director of trends and forecasting at GfK said: “Volume growth is coming from many emerging markets, especially a resurgent China, but also Emerging Asia and Africa. GfK says ‘churn rates have fallen in response to carrier’s retention strategies, including family plans.’
We are told that ‘The market will need to wait until 4Q for the next incremental driver of growth. It is in the last quarter of the year that major product launches are expected to have a higher impact, compared to 2015. Consumers that have been waiting for big launches will be ready to invest in upgrades.’
Details below chart, please read on.
Western Europe: Brexit fails to bite
GfK states that ‘Smartphone demand totalled 30 million in 2Q16, a fall of 1% quarter-on-quarter and also of 1% year-on year. The decline was felt most sharply in Spain, where demand declined 11% year-on year. This fall was a response to the country’s three leading operators raising their annual tariffs by an average of EUR 30. In the UK, demand declined 2% year-on-year in 2Q, showing no immediate impact from the vote in June to leave the European Union. Declines in these two countries were partially offset by 3% growth in France and 1% growth in Germany.’
‘The share of demand for devices sized 5” and above increased significantly from 38% in 2Q15 to 60% in 2Q16. Correspondingly, the share of demand for high-end smartphones (USD 500+) increased from 31% in 2Q15 to 35% in 2Q16, with unit growth of 12% year-on-year. GfK also states that it ‘forecasts that smartphone demand in the region will decline to 134 million units in 2016, a drop of one percent year-on-year.’
Central and Eastern Europe: Growth finally returns to Russia and Ukraine
‘Smartphone demand hit 17 million units in 2Q16, down 1% quarter-on-quarter and up 12% year-on-year. Russia was a key driver of growth, up 12% year-on-year, following five quarters of decline. A release of pent-up demand in Ukraine lead to strong growth of 35% year-on-year following six consecutive quarters of decline. GfK forecasts that smartphone demand in the region will increase to 77 million units in 2016, up 8% year-on-year.’
Latin America: Brazil woes continue as Argentina remains buoyant
‘Here smartphone demand reached 23 million units in 2Q16, up 5% quarter-on-quarter, but down 8% year-on-year. This regional decline was due to a fall in demand of 20% year-on-year in Brazil. Growth in Argentina remained high at 58% year-on-year, still buoyed by the removal of import restrictions in December last year. GfK forecasts that demand in the region will decline to 94 million units in 2016, a drop of 11% year-on-year.’
Middle East and Africa: Saudi Arabia depresses regional growth
’Here smartphone demand reached 41 million units in 2Q16, down 2% quarter-on-quarter, whilst year-on-year growth slowed to 5%. In Saudi Arabia, on-going macroeconomic weakness caused demand to decline by 24% year-on-year in 2Q. This decline offset growth of 19% in Egypt and 15% year-on-year in South Africa. GfK forecasts that smartphone demand in the region will grow to 176 million units in 2016, up 9% year-on-year.’
More below, please read on.
China: Rural sales drive highest growth for over two years
‘Smartphone demand totalled 109.7 million in 2Q16, giving a flat quarter-on-quarter, while growing 24% year-on-year. This year-on-year growth improved from 19% in 1Q16 and is the highest seen for over two years. The strong growth was driven primarily by continued operator subsidies (which began in early 2016), which helped drive strong 4G smartphone adoption in the smaller cities. Local brands have benefitted from growth outside the major cities, seeing their share of the country’s smartphone market increase from 74% in 2Q15 to 81 percent in 2Q16.’
‘The shift to larger screen sizes continued, with 5”+ share increasing to 83% in the quarter, an impressive growth from 63% in 2Q15. GfK forecasts that smartphone demand growth in China will moderate in the second half of the year, bringing 2016 to 439 million units, up 14% year-on-year.’
Developed APAC*: Australian demand declines year-on-year (APAC coutries listed below)
17 million units were sold in 2Q16, down 12 percent quarter-on-quarter and one percent year-on-year. Demand declined nine percent year-on-year in Australia but grew two percent in Japan in the same period. GfK forecasts that demand in the region will total 72 million units in 2016, a decline of one percent year-on-year.
Emerging APAC*: Philippines and Vietnam post strong unit sales (APAC countries listed below)
Strong growth in both the Philippines (37 percent year-on-year) and Vietnam (11 percent year-on-year) helped the region grow overall demand by three percent quarter-on-quarter and four percent year-on-year to 51 million units. Indonesia saw a mild decline of 0.3 percent. GfK forecasts that demand in the region will reach 213 million units in 2016, a growth of five percent year-on-year.
Arndt Polifke, global director of telecom products at GfK concluded, “The smartphone market expanded yet again in 2Q16. This is despite many headwinds, demonstrating the underlying strength of the sector. Later this year, new product launches will further bolster demand. Further ahead, innovations such as extended battery life and foldable displays will support growth, as we progress towards 5G upgrades near the end of the decade.”
*Countries included in Developed/Emerging APAC in this release:
Developed APAC:
Australia
Hong Kong
Japan
New Zealand
Singapore
South Korea
Taiwan
Emerging APAC:
India
Indonesia
Kampuchea (Cambodia)
Malaysia
Philippines
Thailand
Vietnam