The Transition to Less Expensive Smartphones Continues

Carl Weinschenk
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Enterprise Mobility Management Myth Busters: Users vs. IT Reality

The smart companies are the ones that anticipate change and react accordingly. This is difficult in a corporate environment because things are often going well when strategic changes should be made. Therefore, it takes foresight and courage to take steps that can cut into profits and divert resources.

That’s a big deal in the mobile business. For a few years, a number of trends have pointed to the transition of the smartphone business from North America and Western Europe. They include the saturation of devices in those economies and the lack of compelling new features that would lead to upgrades.

That context is important in considering the numbers released last week by IDC. The firm found that smartphones shipments during 2016 will grow at 1.6 percent. That is, as the story at InformationWeek says, “dramatically down” from the 10.4 percent growth during the previous year.

A deeper look at the numbers shows the starkness of the shift. The firm found that the compound annual growth rate (CAGR) in Asia, the Middle East and Africa will be 5.4 percent between 2015 and 2016. In the United States and Western Europe, however, the CAGR will be a startling -0.2 percent.

Apple seems to have gotten the message or, conversely, the market is telling Apple what the new reality is. Gartner’s numbers released in August found that the company sold 44.39 million iPhones during the second quarter. That was almost 4 million less than during the second quarter of 2015, according to the report at V3. Interestingly, its global sales numbers, which presumably include the developing economies, rose from 330 million to 344 million.

Another recent study also pointed to the change. GfK, a German firm, reported favorably on second quarter and yearly smartphone growth. On the quarterly side, the winners included Central and Eastern Europe and China and emerging Asia/Pacific (APAC) nations. Losers were Western Europe, North America, Latin America and developed APAC nations.

The yearly numbers – which of course use estimates for 2016 – followed the same basic pattern. The unit sales rose 6.9 percent during the quarter while sales value only rose 6.2 percent. This means that more less-expensive smartphones were sold this year than last.

Moving the focus of the smartphone business away from North America and toward developing economies has been underway for a while. The recent results from IDC, Gartner and GfK suggest, in different ways, that the trend is accelerating.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at and via twitter at @DailyMusicBrk.


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