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Report: Smartphone Market to Make a Comeback in 2017

While 2016 was a bad year for smartphones — seeing just 2.5 percent year-over-year growth for the devices — this year things are looking up. Overall, worldwide smartphone shipments are expected to rebound with single-digit growth. Android devices will comprise a majority share (85 percent) of the smartphone market, followed by Apple (14.7 percent) and Microsoft in third place (0.1 percent).

Those are the latest predictions from technology research firm International Data Corporation (IDC). Based on its Worldwide Quarterly Mobile Phone Tracker, IDC forecasts shipment volumes to grow 4.2 percent in 2017 and 4.4 percent in 2018, with a compound annual growth rate (CAGR) of 3.8 percent over the 2016-2021 forecast. Smartphone shipments are forecast to reach 1.53 billion units in 2017, growing to 1.77 billion in 2021.

As for specific platforms, IDC doesn't expect much change throughout the forecast period: Android will still dominate the smartphone market, with shipment volumes reaching 1.35 billion units in 2017. Although Android growth will gradually decline during the forecast period, IDC does not yet expect shipments to contract year-over-year “given the demand for new features such as augmented and virtual reality,” according an IDC statement.

The biggest Android markets driving volume continue to be the Middle East & Africa; Central & Eastern Europe; and Asia/Pacific (excluding Japan). While the average selling price in these markets ranges from $150 to $200, more mature markets like North America and Western Europe see twice that price range, “which is a big reason many device OEMs are launching flagship models in these markets first,” according to IDC. Additionally, IDC expects phones with displays of five inches and greater to grow from 75 percent of Android shipments in 2016 to 91 percent in 2021.

For iOS, last year was the first time Apple experienced a year-over-year decline in shipments, as iPhone volumes fell 7 percent in 2016. However, IDC expects a strong rebound in iPhone volumes in 2017: Shipments are expected to increase 4.9 percent over 2016, reaching 226 million units. The growth will be the result of Apple’s next set of devices launching with many rumored technical changes, as well as a strong push for the iPhone’s 10th anniversary.

Half of all Apple shipments will come from North America and Western Europe. Additionally, Asia/Pacific (excluding Japan) continues to grow, “mainly driven by continuous demand in China,” according to IDC. The region accounted for roughly 30 percent of 2016 iPhone shipments and is expected to grow to about 36 percent in 2021.

Microsoft smartphones are forecast to be virtually nonexistent “given the lack of OEM partner support,” according to IDC.  “Windows Phone continues to decline as a share of the smartphone space as many OEMs have given up producing phones for the platform.” IDC predicts volumes to plummet 69.5 percent and only 1.8 million units.

Notably, phablets displayed 49 percent year-over-year growth as consumers continue to gravitate toward big-screened devices in both emerging and developed markets.

"Phablets will undoubtedly be the main force driving the market forward thanks to an abundance of feature-rich devices in both the premium and entry-level segments,” said Anthony Scarsella, research manager with IDC's Worldwide Quarterly Mobile Phone Tracker, in an IDC statement. “Total phablet shipments worldwide are expected to reach just under 680 million units by 2021, resulting in a compound annual growth rate of 9.2 percent for 2016–2021. In comparison, regular smartphones will grow at a rate of just 1.1 percent during the same period, proving perhaps that bigger may be better, or at least more popular when it comes to smartphones."

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