Apple and Samsung may be in a tight spot this year if technology research firm Gartner’s predictions play out.
New analysis from the firm projects the smartphone market will expand at only 7% this year, a sharp slowdown from the 14.4% growth seen in 2015. Total worldwide shipments of smartphones is expected to hit 1.5 billion, reported TechCrunch.
The reasons are multifold. The Western markets are inundated with smartphones at this point, and even most Chinese consumers have their hands on a device, while at the same time the need to upgrade has diminished. New smartphone releases haven’t had major improvements, and carriers are offering fewer subsidized upgrades. China, in particular, is a “saturated yet highly competitive” market that will see “little growth,” according to Gartner.
The biggest smartphone growth engine this year will be India, which is expected to snap up nearly 139 million smartphones, according to Gartner. That’s a 29.5% growth rate year-over-year. However, Indian buyers tend to favor the less expensive models. The average price of a smartphone in India is below $70, and Gartner expects smartphones priced under $120 will account for most of the new sales. That will give a leg up to companies with less expensive models from makers like Jolla or Micromax.
Smartphone sales growth hit its peak in 2010 when sales grew 73%, noted Gartner. As smartphones have overtaken standard models, or “dumbphones,” in most markets, sales growth has lagged for some major manufacturers. That trend has hit Apple’s (AAPL) earnings, in particular. After years of blockbuster sales, iPhone sales declined for their first time last quarter. Many investors fear that the iPhone has hit a point of saturation and won’t be able to keep up its expansive growth.