Apple's iPhone SE takes on new Android models as worldwide smartphone market rebounds in 2016

The worldwide smartphone market will rebound slightly in 2016, CCS Insight predicted, gaining 2.9 percent over "a weak 2015." And according to new data from Kantar Worldpanel ComTech, the new iPhone SE could account for a respectable chunk of that growth.

But Apple's mid-range handset is squaring off against some formidable competition in the form of new Android devices from Samsung and Huawei.

Global smartphone sales last year saw only 1 percent growth from 2014 due largely to macroeconomic uncertainties in major emerging markets such as Brazil and Russia and phone ownership in developed markets that inched closer to saturation. And handset replacement cycles are lengthening "as technology innovation plateaus," according to CCS, leading to decreased consumer interest in new devices.

But the worldwide market will begin to recover as demand in China stabilizes in 2016, the firm said, and emerging markets will drive growth over the next few years.

"As mature markets slow, smartphone growth is now almost entirely confined to emerging markets," CCS said. "The volume boost these markets offer will result in smartphones accounting for more than three-quarters of all mobile phones in use worldwide by 2020. Growth will primarily be fueled by the greater availability of more-affordable smartphones in emerging markets."

Source: CCS

And while the iPhone SE doesn't appear to be setting any sales records in its first week, the market is ripe for Apple's new phone, Kantar said. Fifty-eight percent of Apple's user base own an iPhone 5s or older model, and reliability and durability are top priorities for owners of older and smaller iOS phones.

"The average lifecycle on these (older) iPhones is 27.5 months, longer than the overall smartphone market at 20.9 months, suggesting that up until now these iPhone owners have been hesitant to upgrade," Kantar analyst Lauren Guenveur wrote. "This is either because they prefer a more compact iPhone, or because they are not interested in investing in the new models."

Forty-nine percent of iPhone owners with screens of four inches or smaller plan to change devices within the next year, according to Kantar's data, and 84 percent of that group plans to buy another iPhone. Battery life is the top priority for that group, followed by reliability and durability, camera quality and screen size.

"For these owners, the iPhone SE, starting at $399, makes an appealing choice, combining a form factor they already own and are comfortable with, with many of the same specs as the latest iPhone 6s and 6s Plus," Guenveur concluded.

Kantar also reported that Android continues to gain ground in urban markets in China as well as in the U.S. and five major European markets. The market share of Google's mobile OS in urban Chinese areas for the three months ending in February was 76.4 percent, up from 73 percent during the same period during the prior year. Apple's iOS failed to show growth in those markets for the first time since August 2014, Kantar said.

"While Android's share grew steadily in the EU5 (comprising Great Britain, Germany, France, Italy and Spain), performance varied considerably by market, underlining the impact that Huawei and local vendors are making in some markets," said Dominic Sunnebo, business unit director at Kantar's European division, in a prepared statement. Google's mobile OS is likely to get a boost from a new high-end smartphone expected to be introduced by Huawei today that will feature a dual-lens camera "that promises better color and sharper contrasts even in lowlight conditions," as The Wall Street Journal reported.

Android's recent momentum has been fueled largely by the success of Samsung's new Galaxy S7, which has sold an estimated 9 million units since its debut last month, Bloomberg reported -- three times the rate of S6 models during the same period last year. Analysts say that success stems in part from Samsung's newfound strategy of releasing its flagship handset earlier in the year and giving it a cheaper price tag than the previous model.

Still, Android's steady growth could be threatened by the iPhone SE, Sunnebo added, because its low price tag is likely to appeal to some users who might otherwise buy a new Android device. "There are also significant numbers of potential buyers, particularly in China, who may not be able to afford the high price of a flagship iPhone but may find that the iPhone SE lets them take their first step into the Apple ecosystem," Sunnebo said.

For more:
- see this CCS release
- see these Kantar press releases

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