Mobile device markets fall 2% in Q1 2016

mobile forecast

It’s seems strange to report that the mobile device market is falling following years of disproportionate growth, but it is. Revenues fell 2% to $95b in the quarter and in the year by 3.5% to $376b for the year. I include basic and smart phones, smart tablets and wearables and IoT devices I my count (see Figure for a forecast to 2020). The problem here is that all product types apart from smart wearables and IoT devices are mature, with the focus of selling now on replacement phones and tablets for those who already use them. You’ll be interested in finding out more about the winners and losers among the suppliers and technologies.

mobile shareDespsite its sluggish performance the mobile device market is massive – $370b in revenue, shipments of 1.5b and an installed base of 3.7b makes it one of our industry’s most important. Hardly surprisingly Apple held the largest share (44.1%) followed by Samsung (24.9%) in the year to the end of March: for shipped units things were reversed, with Samsung leading (23.6%) Apple (18.4%) in second. By the way I was right 5 years ago when I predicted that iOS would win over Android – 47 disaggregated suppliers can’t compete with a high value offering designed for a complete user experience – and the brief time Google itself owned Motorola’s phone business did little to reassure android suppliers that it would remain independent.

Despite the wildly optimistic predictions for growth in China and India by almost all other market research companies, sales in these and other emerging countries are declining as they are in western economies: China was down 24%, India 5% and BRIC down  20% in the last quarter. Off course there are still under-penetrated regions and countries around the world (Africa for instance),but the future for smart devices now involves selling more to the affluent middle classes wherever they’re based.

As with countries, so with their suppliers. My table shows the market shares for the year to the end of March 2015 and 2016.

Table – Mobile device market shares ($USb) – year to end March 2015 and 2016

<Q1 2015 Share % <Q1 2016 Share % Growth %
Apple $165.5 42.4% $166.2 44.2% 0.5%
Samsung $95.0 24.4% $93.7 24.9% -1.4%
Huawei $13.6 3.5% $16.2 4.3% 19.6%
Lenovo $10.8 2.8% $10.2 2.7% -5.3%
LG $9.3 2.4% $8.4 2.2% -9.3%
Microsoft $6.8 1.7% $5.7 1.5% -15.6%
Sony $6.5 1.7% $5.2 1.4% -20.5%
ZTE $3.6 0.9% $4.9 1.3% 37.8%
Xiaomi $4.6 1.2% $3.4 0.9% -26.3%
Micromax $1.7 0.4% $2.5 0.7% 45.9%
Other $72.7 18.6% $59.7 15.9% -17.9%
Total $390.0 100.0% $376.2 100.0% -3.5%

It shows that most vendors’ business was down in the year: in particular Chinese Xiaomi (-26.3%), Japanese Sony (-20.5%), American Microsoft (-15.6%), Korean LG (-9.3%). Apple and Samsung (the market leaders) had relatively flat growth, while Indian Micromax (+45.9%), Chinese companies ZTE (+37.8%) and Huawei (+19.6%) all grew substantially. In a sense this is a shift in the provision of basic mobile phones – the new owners of older businesses (Microsoft’s of Nokia, Lenovo of Motorola) are not as interested in non-smart products, while the new Far Easter manufacturers are.

There are still many good businesses to develop around mobile device markets – m commerce, phone theft protection, security, identity, doing something more constructive with the billions of photos being taken, etc. However this is no longer a market in which we can expect massive growth. The exception is IoT devices, which will take off massively. I’ll  review that later once the leading suppliers emerge.

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