After declining 0.3% in 2017, the worldwide smartphone market is expected to contract again in 2018 before returning to growth in 2019 and beyond. According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, smartphone shipments are forecast to drop 0.2% in 2018 to 1.462 billion units, which is down from 1.465 billion in 2017 and 1.469 billion in 2016. Looking further out, IDC expects the market is to grow roughly 3% annually from 2019 onwards with worldwide shipment volume reaching 1.654 billion in 2022 and a five year compound annual growth rate (CAGR) of 2.5%.
The biggest driver of the 2017 downturn was China, which saw its smartphone market decline 4.9% year over year. Tough times are expected to continue in 2018 as IDC forecasts consumption in China to decline another 7.1% before flattening out in 2019. The biggest upside in Asia/Pacific continues to be India with volumes expected to grow 14% and 16% in 2018 and 2019. Chinese OEMs will continue their strategy of selling large volumes of low-end devices by shifting their focus from China to India. So far most have been able to get around the recently introduced India import tariffs by doing final device assembly at local India manufacturing plants. As for components, almost everything is still being sourced from China.
“With 2017 now behind us a lot of interesting market dynamics are unfolding,” said Ryan Reith, program vice president with IDC’s Worldwide Quarterly Mobile Device Trackers, in a statement. “Even though it declined 5% in 2017, China remains the focal point for many given that it consumes roughly 30% of the world’s smartphones. But plenty of pockets of growth can be found beyond China. India is now grabbing headlines and the market itself is going through some rapid transformation. Local India manufacturing continues to ramp up, despite still having a heavy dependence on China for components. The boom in India is likely to continue in the years to come, but the move toward building up local production has certainly caught the eye of many in the industry.”
Outside of Asia/Pacific, the biggest regions for growth will be the Middle East, Africa, and Latin America. All three regions have relatively low penetration rates and plenty of upsides. Economic challenges have been the main inhibitor over the past two years, but IDC expects consumer spending to rise throughout the forecast and smartphones to be a big benefactor.
The other catalyst to watch will be the introduction of 5G smartphones. IDC predicts the first commercially ready 5G smartphones will appear in the second half of 2019 with a ramp up across most regions happening in 2020. IDC projects 5G smartphone volumes to account for roughly 7% of all smartphones in 2020 or 212 million in total. The share of 5G devices should grow to 18% of total volumes by 2022.
“Although overall smartphone shipments will decline slightly in 2018, the average selling price (ASP) of a smartphone will reach $345, up 10.3% from the $313 ASP in 2017,” said Anthony Scarsella, research manager with IDC’s Worldwide Quarterly Mobile Phone Tracker, in a statement. “This year will continue to focus on the ultra-high-end segment of the market as we expect a surge of premium flagship devices to launch in developed markets in 2018. Devices featuring large AMOLED bezel-less displays, advanced camera functions, and an overall increase in speed and performance will be the driving factor in the increase of ASPs. Moving forward, we can expect this trend to continue as the ASP for a smartphone will continue to grow throughout the forecast period. In 2022, the final year of our forecast period, the average selling price for a smartphone will be $362, resulting in a 5-year CAGR of 2.9%.”
Platform Highlights
iOS: Apple’s iPhone volumes are expected to grow 2.6% in 2018 to 221 million in total. IDC is forecasting iPhones to grow at a five-year CAGR of 2.4%, reaching volumes of 242 million by 2022. With rumors of some upcoming larger screen iOS smartphones, IDC has changed its screen size forecast for Apple by introducing volumes greater than 6 inches. Products are likely to begin shipping in the fourth quarter of 2018, with volumes ramping up and accounting for 36% of all iPhones shipped by 2022.
Android: Android’s share of total smartphones is expected to remain relatively stable at 85% of total shipments worldwide. Volumes are expected to grow at a five-year CAGR of 2.5%, with shipments totaling 1.41 billion by 2022. IDC estimates that 98% of Android phones will ship with screens larger than 5 inches by 2022, with 36% being 6 inches or larger. While some of this will remain premium flagship models, the aggregate ASP of Android phones with a 6-inch screen or greater by 2022 is projected to be $414.
Worldwide Smartphone Platform Shipments, Market Share, and 5-Year CAGR, 2018 and 2022
(shipments in millions)
MacDailyNews Take: Unit sales are cute, but profit share is the goal.
SEE ALSO:
First quarter U.S. smartphone sales declined 11% YOY, Apple iPhone sales grew a record 16% YOY – May 22, 2018
Latest iPhone X news is good for Apple but bad for Android phone peddlers – May 21, 2018
Apple’s iPhone X remained the world’s best-selling smartphone in March – May 18, 2018
Apple sells an iPhone X every three seconds in Europe – May 9, 2018
Canalys: Apple’s iPhone X was Europe’s No.1 smartphone in Q1 – May 9, 2018
Strategy Analytics: Apple’s iPhone X the world’s best-selling smartphone model in Q1 2018 – May 4, 2018
Apple’s iPhone X made 5 times the profit of 600 Android OEMs combined – April 18, 2018
Apple’s iPhone captured 86% of global handset profits in Q417; iPhone X alone took 35% of global handset profits – April 17, 2018
Apple’s iPhone X is the UK’s most popular smartphone – April 9, 2018
Wow amazing that they have the data in from 2022 already! Can they send e the lottery numbers too?
It says “forecast” in the article. Maybe that wasn’t clear when you read it.
I note that the predictions ( guesses ) for five years hence are given to one tenth of one percent. Believe such a guess at your peril and certainly don’t assume that guesses with decimal points are going to be any more accurate than guesses ending up in round figures, they’re all just wild guesses.
In an earlier thread, I pointed out that the predictions of analyst Nehal Chokshi turned out to be wrong by nearly 15% when he was only trying to predict a month or two into the future.
Just out of interest, this is what IDC predicted in 2014 for smartphone sales figures by type in 2018 –
Android 997.7m, 80.2% share
IOS 184.1m, 14.8% share
Windows phone 43.3m, 3.5% share
Others 9.3m, 0.7% share.
Compared to the figures they are currently projecting for 2018, the results work out as follows –
Android
243m higher than forecast
Percentage market share 4.6% higher than forecast.
IOS
37m higher than forecasted
Percentage market share 0.3% lower than forecast.
Windows phone
No longer counted, so I will lump them in with the the “other” category to report other types including Windows –
51.9m lower than forecast
Percentage market share about 3% lower than predicted.
IDCs predictions for 2018 turned out to be 19.6% too low for Android, 20.1% too low for IOS and nearly 100% too high for Windows ( assuming that IDCs predictions for 2018 turn out to be correct ).
When their figures turn out to be about 20% too low for both of the two major categories, that decimal point on their predictions for 2022 seems utterly pointless
I always have to laugh when I see predictions calculated to a tenth of a percent when they’re talking about years from now. It proves how stupid these people actually are. Just round the numbers off to the nearest percent if they’re just going to guess. This kind of prediction stuff will only work if no companies come out with new products or if the economy doesn’t fluctuate. However, the future can’t be written in stone. The further out the future prediction it could almost change exponentially as new tech comes along.
I often wonder who these predictions are meant for. Hedge fund investors? Institutional investors? Hard-core gamblers? Who else would require such long-term numbers when Wall Street seems to me to be a quarter-to-quarter sales unit race. When analysts start changing Apple sales numbers a couple of weeks before quarterly results, then I would have to think long-term predictions are absolutely useless.
I’m sure no analyst predicted Face ID six months before it was introduced, so all I’m saying is things can crop up that can’t be foreseen and can easily wreak havoc with predicted numbers. Something as simple as Qualcomm being bought out by Broadcom could have thrown the Android smartphone market into a tailspin. One just never knows.
I think it’s wiser to now look at Apple as a whole than just a single product category. Buffett definitely agrees with that assessment of Apple. I believe Apple can still come up with alternative revenue drivers even if the iPhone market doesn’t continue to grow.