Continued 4G expansion in China, plus accelerating growth in Russia, drove global demand over the year 2016 according to GfK data.
Smartphone sales in 4Q16 totalled 391 million units globally, up six percent year-on-year. But the growth trend was not reflected in Western Europe, where despite strong demand in Great Britain during Black Friday promotions, sales fell four percent year-on-year in 4Q16.
The report is based on final GfK Point of Sales data for July and August, and September estimates based on preliminary data. GfK forecasts end-demand consumer purchases rather than manufacturer shipments. Market sizes are built up by point-of-sale (POS) tracking in 90+ markets with updates on a weekly and monthly basis.
Smartphone demand totaled 1.41 billion units in 2016, in line with GfK’s previously projected figures. Looking ahead, GfK forecasts global smartphone growth in 2017 to moderate to five percent year-on-year, with total demand reaching 1.48 billion.
Smartphone demand totaled 38.6 million units in 4Q16, down four percent year-on-year.
In Great Britain, demand was strong during November’s Black Friday promotions, but this was not enough to offset 10 percent year-on-year declines in both Germany and France in the quarter.
In 2016, the region saw a three percent fall in demand year-on-year, bringing sales for the year to 131.6 million units. GfK forecasts flat year-on-year demand in Western Europe in 2017, as the overall region reaches saturation.
In Central and Eastern Europe, a Russian recovery saw smartphone demand totalling 24.2 million units in 4Q16, up 16 percent year-on-year. Due to improving political stability, Ukraine saw an impressive growth of 34 percent year-on-year. In Russia, currency stablization was the leading catalyst for improving smartphone demand, pushing sales up 10 percent year-on-year. GfK forecasts smartphone demand to reach 84.4 million in 2017, a rise of eight percent year-on-year.
Following a dip in 3Q16, the North American market saw a turnaround in demand in 4Q16, spurred on by flagship device launches and aggressive operator promotions, both coinciding with the holiday season. Smartphone demand hit 58 million units, an increase three percent year-on-year. GfK forecasts that tough competition between the carriers this year will drive marginal growth in smartphone demand of one percent year-on-year, totaling 193.4 million units in 2017.
For Latin America, Argentina enjoyed a ‘stellar’ 2016, and Brazil bounced back. Smartphone demand in the region reached 32.3 million units in 4Q16, building on the turnaround which started in 3Q16. This is up eight percent year-on-year. Brazil’s improving political and economic situation heralded a gradual recovery in demand during 2016, with November posting the first year-on-year increase in demand of the year. Argentina demand remains strong, with 4Q16 up 38 percent year-on-year. In 2016, demand across the region is down one percent year-on-year. However, GfK has an optimistic outlook for 2017, as demand in Brazil continues to grow after two years of economic downturn.
In the Middle East and Africa, growth abated, with smartphone demand totalling 41.9 million units, up one percent year-on-year. This was weighed on by macroeconomic weakness in Saudi Arabia, Nigeria and Egypt. However, GfK forecasts year-on-year smartphone demand growth in the region to accelerate in 2017, helped by expected economic improvements.
In China, smartphone demand totaled 118.9 million units in 4Q16, up 12 percent year-on-year. The 4G smartphone user base hit 57 percent by the end of the year, driven by operator subsidies. Having penetrated the highly populated urban areas, 4G is now expanding to smaller cities and rural areas, as 2G and 3G users are encouraged to upgrade. GfK expects four percent year-on-year growth in 2017, bringing sales to 467.9 million units.
In developed Asia (Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan), South Korea drove growth in a saturated region. Overall smartphone demand totaled 20.5 million units in 4Q16, up four percent year-on-year. South Korea saw impressive growth of 17 percent year-on-year, helped by increasing demand for mid-range smartphones. However, like Western Europe and North America, the region is saturated and GfK expects smartphone demand to fall two percent year-on-year in 2017 to sales of 72 million.
In emerging Asia (India, Indonesia, Cambodia, Malaysia, Philippines, Thailand, Vietnam), growth was driven by India and Bangladesh. Smartphone demand in the region totaled 56.8 million units, up seven percent year-on-year, a slight slowdown from 3Q16. Demand in India grew five percent year-on-year, with strong Diwali sales in October partially offsetting the negative impact of demonetization. GfK has a positive outlook for the region for 2017, with smartphone demand expected to grow nine percent year-on-year, reaching 229.4 million units. Bangladesh’s projected growth of 28 percent year-on-year, added to India’s rise of nine percent year-on-year, provides a major contribution to this forecast figure.
Arndt Polifke, Global Director of telecom research at GfK, comments, ‘There is no other technology product that is as intensively used by consumers as the smartphone. As a result, smartphone demand remains stable even in saturated markets. Spurred on by the impressive range of exciting innovations, such as virtual reality, artificial intelligence, smart home functionality, mobile payments and mobile health, smartphones are going to gain further relevance for consumers in developed markets. On top of this, developing regions such as the Middle East/Africa and Emerging Asia have yet to mature and as such still have significant potential for growth. These two factors lead to a solid growth outlook for smartphone demand in 2017.’
The GfK figures are more optimistic than Gartner predictions that with 1.5 billion units shipped in 2016, global growth in smartphone sales will slow this year to 7%, after growing 14.4% last year. Gartner attributes the slowdown to a combination of saturation in major developed markets, economic weakness in China, and lengthening upgrade cycles. Gartner, IDC and other analysts consider India, Indonesia and Sub-Saharan Africa to be the major growth markets going forward. Given the lower price points in these markets, with half of all smartphones sold in India at less than $120, these markets favour value-driven Android vendors such as emerging players in China over premium players like Apple and Samsung.