Emerging markets are finally catching up on 4G smartphones (GOOG, GOOGL, AAPL)
This story was delivered to BI Intelligence Apps and Platforms Briefing subscribers. To learn more and subscribe, please click here.
4G capable handsets are projected to reach double-digit growth of more than 21% in 2016, according to new data from IDC.
4G device shipments are expected to reach almost 1.2 billion units by the end of the year, up from 967 million devices shipped in 2015. Much of this growth is likely to come from emerging markets such as APAC (not including Japan), Latin America, Central and Eastern Europe, and the Middle East and Africa.
Meanwhile, overall smartphone shipments are expected to see a massive deceleration in year-over-year (YoY) growth, reaching just 1.5 billion units by the end of the year. This represents annual growth of just 0.6%, down significantly from the more than 10% YoY growth achieved in 2015.
More cost-effective data tariffs and lower handset costs are largely to thank for the growth of 4G devices, the report notes. In the past, the cost-prohibitive nature of data made it difficult for users in these markets to adopt the better networks. In India, for example, mobile carrier Reliance Jio, began handing out free 4G SIM cards and launching low-cost 4G capable phones. This led to 16 million subscriptions within a month.
The uptick in adoption presents new opportunities for app developers, businesses, and brands looking to reach these massive markets. Slower network standards have been a barrier to app makers and brands looking to emerging markets for growth, as they are less able to support the data-rich media that apps and ads require. 4G's faster network speeds allow for the transmission of richer media and better mobile video.
The Android platform is likely to be the biggest beneficiary from the adoption of 4G devices in emerging markets. This is due in part to its massive global market share — 85% of smartphone shipments in 2016 — which should allow it to capture mindshare in these regions. Android also offers a wide range of low-cost devices that are expected to begin gaining 4G capabilities as the technology becomes more readily available in developing markets.
As mentioned earlier, the global smartphone market is expected to slow considerably over the next few years. Despite a record-setting holiday quarter, 2015 was likely the last year of double-digit growth for smartphone shipments.
Mature markets were at the heart of this year’s deceleration. Adoption has reached new highs in key markets in the United States, Europe, and China. The pool of first-time buyers in these countries is shrinking rapidly, and sales are now primarily coming from phone upgrades.
Meanwhile, emerging markets will continue to see robust shipment growth. India and Indonesia, in particular, will help fuel a large share of the shipments growth within the global smartphone market over the next few years.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartphones by country that forecasts the market through 2021 to reflect slower, stabilizing growth in the long term.
Here are some key points from the report:
- The global smartphone market is still growing at a steady pace due to more widespread adoption in emerging markets. We estimate the global market will hit about 2.1 billion units shipped in 2021.
- Shipments growth over the past few years has been driven by the falling price of smartphones, which has made handsets more accessible in emerging markets. The average selling price of a smartphone in India nearly halved between 2010 and 2015.
- With relatively low smartphone penetration, we forecast Indian smartphone shipments to grow rapidly over the next five years. Nevertheless, India has a long way to go before it surpasses China as the world’s leading market for smart handsets. India is estimated to account for roughly 10% of the global smartphone market in 2016, considerably less than China’s 30% share.
- The global platform wars are over, even as smartphone adoption continues to rise across various markets worldwide. Android and iOS are estimated to account for 97.3% of global platform market share in 2015, compared to 96.3% last year.
- Apple closed the year with another strong quarter on the back of its iPhone 6s and iPhone 6s Plus launches. Still, the vendor saw a slight decline in YoY growth of its share of the market in the face of stiff competition from Samsung and Chinese vendors such as Huawei.
In full, the report:
- Forecasts global smartphone shipments through 2021.
- Explores why India is the next high-growth smartphone market.
- Breaks down the global smartphone platform wars.
- Discusses smartphone vendor performance market share.
To get your copy of this invaluable guide, choose one of these options:
- Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
- Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the smartphone market.