China, Android to be hardest hit in coming smartphone slump

Larger iPhones having big impact on market

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The growth in smartphone shipments will decline through 2019, hitting Android phones and the Chinese market especially hard, according to research firm IDC.

The slowdowns come at the same time that Apple is benefiting from big sales of its larger iPhone 6 and iPhone 6 Plus devices. Overall iOS smartphone shipments will grow by 23% in 2015, IDC predicted.

Apple's innovation with its 4.7-in. display on the iPhone 6 and the 5.0-in. iPhone 6 Plus display has been demonstrable, said IDC analyst Ryan Reith.

"There's been a large move to the large screen, and the trend is very real," Reith said in a telephone interview. He noted that Samsung phones and other Android devices have for several years been in the phablet range, which IDC defines as devices with screens ranging from 5.5 inches to 7 inches.

"If Apple had gotten out earlier with its latest phones, their impact may have been even bigger," Reith said. "There was a huge shift to iOS in the fourth quarter of 2014 and the first quarter of 2015, and this will likely continue."

Reith predicted that the iPhones coming in the fall of 2015 won't have bigger screens than the current versions, but will have other improvements. Apple is notoriously silent on discussing hardware rumors and nothing is for certain, he said.

"The sweet spot for large smartphones is 5 inches, while 5.5-inch devices will make up 30% of the market and those over 6 inches will be just 2% of the market," he said.

"Apple can ride this trend with the current screen sizes for two years or maybe three years," Reith said. "The new Apple products really do have some legs."

The growth rate for all Android smartphones that ship in 2015 will be 8.5%, far below the 32% Android global growth rate in 2014. Growth in China for all types of smartphones in 2015 will be just 2.5%, about one-tenth of the rate of 20% in 2014, Reith said.

The growth rate for iOS also will decline, from 26% in 2014 to 23% in 2015, but that slide is expected, given the overall slowdown in growth in smartphone shipments as the market becomes widely saturated.

The overall smartphone growth rate was 27.6% in 2014, but IDC now believes that figure will be 11.3% for 2015, a slight adjustment from an earlier forecast of 11.8% for all of 2015.

China has been a big market for Android devices in recent years, making up 36% of all Android volumes last year, Reith said. "When the largest market in the world slows down, it will be important for the largest smartphone operating system."

Earlier in May, IDC noted that smartphone shipments in China contracted by 4% in the first quarter of 2015 compared to the same quarter a year earlier.

While many analysts view China as an emerging market, IDC has taken the position that the smartphone market there is saturated, and that the the vast majority of phones sold there are smartphones.

Reith noted that half of the smartphone market in China comes from China-based companies which primarily use the Android OS. "Those domestic smartphone companies are scrambling for how to keep market momentum," he said.

Despite the positive outlook for Apple smartphones in 2015, IDC also predicted the iPhone's five-year annual growth rate through 2019, currently at 7.3%, will slightly lag behind Android, at 7.5%.

Android devices from a variety of manufacturers still continue to dwarf all shipments of iOS and others on a global scale. IDC believes Android will ship nearly 80% of all smartphones in 2015, or about 1.1 billion devices, with that number rising to 1.5 billion in 2019. By comparison, iOS shipments for 2015 should reach 16.4% of the total, or 237 million units, in 2015 and 14%, or 274 million, in 2019.

Windows Phone will remain at about 3.2% market share in 2015, shipping nearly 47 million phones, IDC said. Those numbers will increase to 5.4% in 2019, when Windows Phone will surpass 103 million smartphones shipped, IDC predicted.

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