CCS Insight forecasts a slow down of shipment to two billion a year
Mobile phone shipments are set to peak in five years’ time, hitting a plateau of two billion units per year, as a lack of innovation curtails new smartphone purchases.
Research by analyst firm CCS Insight expects mobile phone shipments n 2016 to drop by 1.3 percent compared to 2015.
While it may seem like a small slippage, with the myriad of news smartphones released to the market this year, it indicates a trend that businesses and consumers are not so inclined to upgrade their smartphones as regularly as new models with incremental upgrades are released.
It could be argued that the smartphones of the past two years are sufficiently advanced that upgrading to newer models with slightly improved processors, cameras and displays result in diminishing returns, and that more innovation is needed if people are to continue to show an interest in new models or at least stick to the increasingly common two-year upgrade cycles many smartphone users tend to follow.
CCS’s research showed that smartphones are expectedly the dominating device in the mobile market, with 1.42 million units forecasted to ship in 2016, a rise of 4.1 percent over 2015. However, a lot of this growth is driven by major brands like Samsung, Apple and Huawei who have the scale to sell smartphones at volume. Smaller companies are being squeezed out of the market as it slows down according to CCS.
This situation is set to be further exacerbated as CCS expects phone component prices to hike in the second half of 2016 after earthquakes disrupted production of part such as displays and camera modules in Taiwan. This will lead to the big smartphone players snapping up components and leaving a shortage for smaller firms.
“This is the first time we have seen component price rises for years. Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products,” said Marina Koytcheva, director of forecasting at CCS Insight
“It’s a great opportunity for the big players like Huawei and Samsung to exploit their scale, apply pricing pressure and strengthen their leading positions.”
With the recall of millions of Samsung’s Galaxy Note 7 smartphone, it is no surprise that the company will need all the part it can get to resupply its customers with new fault-free devices.
And with Apple’s iPhone 7 models selling out, it does not look likely that the big smartphone players are going to be too troubled by market slowdown in the short-term.