Consumer Electronics

Smartphone Sales Cooling Off as Chinese Growth Slows

iPhone6
courtesy of Apple Inc.
Global smartphone sales are forecast to rise by 11.3% year-over-year in 2015, a nice clip but well below the 27.6% growth in sales during 2014. Sales in China are forecast to grow just 2.5% year-over-year, the first year ever in which Chinese smartphone sales growth trailed the global market.

The slowdown in China is also likely responsible for the slower pace of growth forecast for the Android platform from Google Inc. (NASDAQ: GOOG). Sales of Android-based smartphones are expected to grow 8.5% year-over-year in 2015. Shipments are expected to total 1.15 million units and Android’s global market share is forecast at 79.4%.

Apple Inc. (NASDAQ: AAPL) is expected to post sales growth of 23% in 2015. The company is expected to ship 237 million smartphones and grab 16.4% of the global market.

The fastest growing smartphone platform by shipment volumes is forecast to be Microsoft Corp.’s (NASDAQ: MSFT) Windows Phone, expected to grow from 3.2% global share in 2015 to 5.4% share in 2019, a compound annual growth rate of 24.3% compared with 7.5% for Android and 7.3% for iOS.

The data was reported on Tuesday by IDC and included this comment from a company executive:

[S]martphone shipments in China actually declined year over year in the first quarter of 2015, showing that the largest market in the world has reached a level of maturity where rapid growth will be harder to achieve. This has implications for Android because China has been a critical market for Android smartphone shipments in recent years, accounting for 36% of total volume in 2014. As Chinese OEMs shift their focus from the domestic market to the next high-growth markets, they will face a number of challenges, including competition from ‘local’ brands.

IDC expects Apple’s growth to remain above the worldwide market growth rates through the forecast period thanks to the introduction of the larger screen versions of the iPhone 6. The researchers also believe that there is a “large chunk” of Apple’s installed base stuck on pre-iPhone 6 and 6 Plus devices and that there will be plenty of growth as those phones are upgraded.

Whereas China is expected to take nearly 30% of the global market in 2015, that share shrinks to less than 24% in 2019. The U.S. share of the global market falls from nearly 12% in 2015 to about 9.5% in 2019, while India’s share is forecast to climb from about 7.6% to more than 13% by 2019. By 2019, nearly 47.5% of the entire worldwide market for smartphones will come from countries other than the U.S., China, India, the U.K., and Brazil. Just over 44% of the 2015 market now comes from these other countries.

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