Technology | Media | Telecommunications

Thursday, May 28, 2015

Smartphone Market in China is Reaching Saturation

Worldwide smartphone shipments are expected to grow by 11.3 percent in 2015, which is down from 27.6 percent in 2014, according to the latest global market study by International Data Corporation (IDC).

While overall smartphone growth will continue to slow as mature markets reach saturation, some markets will experience robust growth in 2015 and beyond. As a result, worldwide shipment volumes are forecast to reach 1.9 billion units annually by 2019.

IDC now expects 2015 to bring two notable milestones. First, they predict that this will be the first year in which China's smartphone growth, forecast to be 2.5 percent in 2015, will be slower than the overall worldwide market.

Second, Google Android smartphone growth is also expected to be slower than the worldwide market -- now forecast at 8.5 percent in 2015. IDC believes both trends will persist throughout the forecast period, which now goes out to 2019.

"Smartphone volume still has a lot of opportunity in the years to come, but two fundamental segments driving recent years' growth are starting to slow," said Ryan Reith, program director at IDC.


As reported earlier in May, smartphone shipments in China 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 further growth will be harder to achieve.

IDC believes that this has implications for Google because China has been a critical market for Android-based smartphone shipments in recent years -- accounting for 36 percent of total volume in 2014.

That said, 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.

In contrast to the overall market, IDC now expects Apple iOS smartphones to grow by 23 percent in 2015 and remain above worldwide market growth rates throughout the forecast period to 2019.

However, IDC believes a sizable portion of the recent Google Android gains were from those people who abandoned their old iPhone models for a more affordable larger screen Android smartphone. This may be a win-back opportunity for Apple. But the relatively high-price of new iPhones will remain a significant hurdle for Apple to overcome.