North America and Western Europe are going to peak in terms of smartphone sales growth in the next couple of years, according to a new report from research firm CCS Insight.
The findings are not especially surprising considering North America and Western Europe are relatively mature smartphone markets, when compared with South Asia, Africa and other emerging markets. The firm said the decline in smartphone sales in North American and Western Europe will be driven by a number of factors, including gradually lengthening replacement cycles, a slowdown in innovation in devices, and the increasing popularity of tablets, smart watches and other non-phone gadgets.
CCS Insight expects 2.07 billion total handsets (smartphones and feature phones) to be sold in 2015, up 5.7 percent from 2014. The firm expects total handset sales to grow to 2.35 billion units in 2019, representing a compound annual growth rate of 3.7 percent between 2014 and 2019. The firm said smartphone sales will continue to overtake sales of non-smartphones.
The firm also estimates that at the end of 2015 there will be more smartphones than feature and basic phones in use worldwide. That trend is likely going to accelerate in the years to come: CCS expects 2 billion smartphones to be sold in 2019, or 85 percent of all handset shipments.
Although the global market continues to grow, future gains will be confined to emerging markets, CCS found. That prediction is line with what other research firms expect; for example, IDC reported last month that in 2014 73 percent of smartphones were shipped to emerging markets.
"In the absence of a disruption like the one prompted by the iPhone's arrival in 2007, many consumers in developed markets consider the latest generations of smartphones as 'good enough' devices," the firm reported. "Screens are reasonably large and approaching the size of small tablets, processors can handle the majority of tasks, camera sensors are good, battery life is robust, and the user experience is supported by software updates. At the same time, new products like tablets, wearables, virtual reality headsets and connected home devices have already started, or soon will start, to tempt people and to compete for their spending."
CCS predicts that North American consumers' current enthusiasm for larger, faster and more advanced smartphones will continue until 2016, after which replacement rates will start slowing down.
The Western European market declined in 2014, owing to a significant fall in sales in the UK, where the market cooled and shifted to longer replacement rates, CCS noted. "We expect these longer rates to become the norm in the near term," the firm said. "Other countries in the region remained roughly flat or saw small growth in 2014. We forecast shipments in the region to remain relatively stable, growing very slightly, in 2015 and 2016, but to start declining slowly from 2017 onward as replacement cycles lengthen. Our forecast indicates smartphone sales in North America and Western Europe will reach their highest point in 2017 and to decline slowly after that."
- see this CCS Insight report (reg. req.)
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