Smartphone market to see modest growth through 2021: IDC

Ultra high-end devices such as Samsung's Galaxy Note 8 will fuel the smartphone market over the next few years, IDC said.

Worldwide smartphone shipments will continue to grow at least through 2021, according to a new forecast from IDC. And high-end devices will drive revenues as the segment struggles to recover after a lackluster 2016.

The market research firm predicted shipments will grow from 1.47 billion in 2016 to a little more than 1.7 billion in 2021 due to a combination of new users and “a somewhat stagnant” replacement cycle of two years. The market will see a five-year compound annual growth rate of 3.3%, marking a slight uptick from the 2.5% year-over-year expansion it saw last year.

“The big inflection point that everyone is watching for is when the smartphone market experiences its first year-over-year decline,” IDC’s Ryan Reith said in a press release. “We believe the two main catalysts for continued growth are bringing first-time users onto a smartphone and maintaining life cycles that are close to two years. At the end of 2016, we estimated that about half of the world’s population was using a smartphone, which leaves plenty of room for additional first-time users.

“And, despite very high saturation levels in mature markets like North America, Western Europe, Korea, and Japan, we still see the majority of users replacing their handsets roughly every two years. We expect these trends to hold through the forecast.”

While overall shipments will see only modest growth over the next few years, high-end handsets will claim a larger share of the market, driving increased revenues. That trend will become more apparent in the coming weeks with the launch of devices such as Samsung’s Galaxy Note 8, which sports a price tag of roughly $950, and a new flagship iPhone from Apple that is also expected to cost nearly $1,000.

“The high-end spectrum of the smartphone market shows no signs of slowing down as we expect the average selling price of a smartphone to increase over 7% in 2017,” IDC Research Manager Anthony Scarsella said in the announcement. “Premium phablet offerings from a variety of vendors look to be the main driving force behind the growth of devices with screens 5.5 inches and larger, which are set to grow over 34% in 2017 across all operating systems. The average selling price of these devices is also expected to increase 9% as we await the arrival of ultra-premium devices such as the iPhone 8, Note 8, V30, Essential Phone, and the second-generation Pixel.”