Emerging Markets Fuel Smartphone Demand

There is good news for electronics components suppliers in the mobile device sector. Smartphone manufacturers saw healthy demand in the third quarter (Q3) of 2015, which is expected to continue into the fourth quarter. Demand for affordable smartphones in emerging markets fueled worldwide sales of smartphones in Q3 2015, according to Gartner, Inc. Global sales of smartphones totaled 353 million units in Q3, a 15.5 percent growth over the same period in 2014.

"The availability of affordable smartphones in emerging markets saw consumers upgrade their 'feature phones' to smartphones more quickly because of the small price gap," said Anshul Gupta, research director at Gartner, in a statement "Smartphone sales in emerging markets rose to 259.7 million in the third quarter of 2015 — an 18.4 percent growth over the third quarter of 2014 — while sales in mature markets saw growth of just 8.2 percent over the same period."

IC Insights forecasts smartphone shipments to reach 410 million units in the fourth quarter of 2015 and account for 80 percent of total cellphones shipped in that quarter. “On an annual basis, smartphones first surpassed the 50 percent penetration level in 2013 (54%) and are forecast to represent 95 percent of total cellphone shipments in 2019,” according to the researcher’s latest report.

The Gartner report, Market Share: Devices, All Countries, 3Q15 Update, shows that Samsung continues to lead in smartphone sales, although Apple continues to dominate at the premium end of the smartphone market with its iPhone 6 and 6 Plus models during most of the third quarter of 2015. “The global launch of the iPhone 6s and 6s Plus during the last week of September 2015, along with the simultaneous launch in China, further added to its overall sales during the quarter,” said Gartner.

There is no surprise that Samsung and Apple continue to dominate the smartphone sector. Samsung refreshed its flagship devices only four months after its previous version to address slowing demand for high-end devices and to further compete with Apple’s large-screen iPhones, according to Gartner.

However, IC Insights expects Samsung’s 2015 smartphone shipments to grow only five percent, compared to a market growth rate of 13 percent this year. The market researcher attributes it to a surge in Apple’s iPhone 6s, resulting in its smartphone shipments increasing by 20 percent this year, and losing share to Chinese manufacturers. “It appears that Samsung is losing smartphone market share to the up-and-coming Chinese producers like Huawei and Xiaomi while Apple continues to dominate the high-end smartphone segment,” said IC Insights.

Global mobile phone sales also grew in Q3 although more slowly, totaling nearly 478 million units, an increase of 3.7 percent from the same period in 2014, according to Gartner. Similar to smartphone growth, emerging markets helped drive sales of local brands. Gartner noted that Huawei continues to grow in both its home market and global markets particularly in Europe thanks to growing brand visibility.

IC Insights forecasts that 89 percent of the new cellphones sold worldwide in 2015 will be replacements or additional cellphones sold to existing subscribers. The percentage is forecast to rise to 91 percent in 2016 and 94 percent in 2019. This means that only about six percent of 2019 handset sales are expected to be to new customers, said the market researcher.

“Micromax Informatics cemented its place among the top 10 global mobile phone vendors worldwide, while Chinese brands such as ZTE, Huawei, Xiaomi, TCL Communication Technology, Oppo and BBK became increasingly aggressive in the emerging markets,” said Gartner.

In terms of smartphone operating system (OS) market share, Apple’s iOS continued to grow 21 percent, while Android gained 1.4 percentage points in share year over year thanks to strong smartphone sales from Samsung and Huawei globally, and Windows smartphone market share dropped from three percent to 1.7 percent year over year. Gartner’s research director Roberta Cozza, expects Microsoft smartphones “to focus on driving value for enterprise users.”