worldwide-smartphone-shipments-2016-2020

Ever since the introduction of 4G, the digital economy has been growing rapidly. 4G has facilitated better internet speed, making it easier for the users to access the internet. According to a report by International Data Corporation (IDC), 4G smartphone shipment will grow to 21.3% YoY in 2016, reaching 1.17 billion units. A majority of this growth is expected to come from the Asia-Pacific regions excluding Japan, Latin America, Central and Eastern Europe, and the Middle East and Africa.

In the emerging Asia Pacific market, only 61% of the total smartphones shipped in 2015 were 4G-enabled. According to IDC, 4G-enabled smartphones are expected to account 77% of the total smartphone shipments in 2016. In mature markets like U.S., Canada, Japan and Western Europe, the adoption if 4G clocked 85% in 2015 and is expected to touch 94% in 2016. According to Melissa Chau, associate research director, IDC, 4G adoption in many emerging markets are slogging because of expensive 4G data tariffs and relatively expensive 4G-enabled smartphones.

Smartphone Market Growth based on OS

The global smartphone shipment is expected to reach 1.45 billion units in 2016 and will be increased to 1.7 billion by 2020, with a YoY growth rate of 0.6% and 4.8% respectively. Though the growth in shipment remains positive in 2016, it has decreased from 10.4% growth in 2015. Interestingly, out of the total 1.45 billion units, Apple iOS and Android will power 99% of smartphone devices.

Apple iPhone Sales Decline: First Time Ever

The shipment of iPhone in 2016 is expected to reach 206.1 million units, an 11% decline from the previous year. In 2015, Apple shipped over 231.5 million units of iPhone. The figures clearly articulate that 2016 was comparatively a bad year for Apple. Earlier this year, IDC predicted that Apple would ship nearly 227 million iPhones in 2016, but in their latest report, the shipment volume is further cut down to 206.1 million. It looks like the response to iPhone 7 and iPhone 7 Plus didn’t perform as it was expected.

It the very first time in the history of Apple that the iPhone sales are down as compared to the previous years. Apple needs to focus on making their iPhones more innovative, and even the pricing strategy needs to be reconsidered looking at the declining sales figure. By 2020, the market share of iPhone is expected to be flat at 14.2%, but the year-over-year growth rate is expected to see a positive rise by 2.5%. During the next five years, Apple iPhone is expected to growth with only 1% CAGR.

Google Android: Dominating with 85% Shipment Share

Google’s Android is the only OS which is expected to see growth at the rate of 5.2% YoY by the end of 2016. Out of the total 1.45 billion smartphones estimated to be shipped in 2016, 1.2 billion units (85%) will be powered by Android. Android smartphones are available at cheaper rates and are sold by multiple OEMs. Undoubtedly, Android is going to be the market leader in the foreseeable future. In 2020, the market share is expected to reach 85.6% indicating a 4.2% YoY growth. The five-year CAGR for Android is estimated to be 4.6% which is the highest among all the OS(s).

The point of concern regarding Android’s future is Google’s entry into hardware segment with its Pixel Phones which was launched this year. It is too early to predict anything regarding the move made by Google, but there are possibilities that it might have a negative impact on Google’s relation with other OEMs that manufacture Android smartphones.

Windows Phones Are Dead

Windows Phone OS has been losing its market share to almost a diminishing state. This year, the shipments of Windows Phone are expected to decline by huge 79.1% YoY. The shipment volume is expected to be 6.1 million by the end of 2016 but is further expected to fall by over 5 million units to just 1 million units by 2020, leaving a market share of just 0.1%. Apparently, it will witness a negative 5-year CAGR by 48.6%. But it doesn’t end here. Microsoft is not ready to give up on the smartphone segment so easily. In the beginning of this year, the company had launched a smartphone HP Elite X3. Also, as 2017 will roll in, Microsoft and HP are all set to launch yet another Windows Phone which apparently might corporate some ground-breaking innovation.

 India is the Hottest Market in Terms of 4G Adoption

However, the Indian smartphone market seems to have a tremendous growth potential. In Q1 2016, the smartphone market grew a healthy 23% YoY. In the same quarter, 65% of the total smartphones shipped in India were 4G/LTE enabled. The growth of 4G in India is also fuelled by government initiatives like Digital India which aims at ensuring easy access to technology infrastructure and government services to citizens. The introduction of Reliance Jio was another revolutionary step taken in Indian Telecom history which has highly contributed to the growth in 4G adoption in India. Reliance Jio has been providing free 4G sim cards will free data and calls. Also, they are offering 4G smartphones at a price as low as Rs. 2,999 (approx. $44) under the brand name LYF Mobiles, to support the Digital India initiative.

In India, even 4G tariff rates are similar to 3G tariff rates which make it a no-cost switch to a faster internet for users. Recently, the government of India announced Demonetization, which caused cash crunch in the country. This initiative has fuelled usage of digital payment methods. As a consequence, there has been an increase in the demand for 4G smartphones to enable these transactions. It also helped Apple sell over 1 lakh iPhones in just three days.

We are quickly seeing this change in key growth markets like India where now operator Reliance Jio is aggressively trying to shake up the market by handing out free 4G SIM cards and launching own-branded low-cost 4G-enabled smartphones, said Melissa Chau, associate research director, IDC.

The fourth quarter results are highly anticipated. 2016 has seen many ups and downs in the smartphone market. These projections indicate that soon the world will be depending on their 4G enabled smartphones for every single task. OEMs and Telecom operator now know where to put all their strategies and capital to get the best ROI.