Smartphone Market Forecast To Deliver Modest Growth

Is the smartphone market going to see growth stall in 2016?

Not according to the latest survey data from the UBS Evidence Lab. The data suggests stabilization in the medium-term for the smartphone market, with marginally improved replacement rates expected in the U.S. and China.

“Our central assumption is that emerging market demand should deliver modest unit growth and an aspirational upgrade market,” according to the reports. That said, “Our view remains that the smartphone market could decline if the upgrade cycle slows.”

In the U.S., 52% of respondents intend to upgrade their phone in the next 12 months -- up from 46% in our prior survey -- and 69% in China, up from 63% in our prior survey.



UBS also found some stabilization in expected handset lifetimes -- having seen this increase in our prior survey -- as well as continued aspiration in the smartphone market.

For its findings, the UBS Evidence Lab surveyed 6,336 smartphone users across the U.S., U.K., Germany, mainland China and Japan.

Also of note, customers in the States and China are apparently more excited about the “iPhone 7” than they were last year’s iPhone 6s. Yet, excitement for the iPhone 7 has not yet exceeded the excitement for the iPhone 6, which debuted in 2014.

The findings come at a critical time for Apple, which just failed to report quarterly growth for the first time in 13 years. Along with global economic headwinds, sagging iPhone sales were chiefly to blame.

Last year, the company enjoyed a sales surge driven by the launch of the iPhone 6S and 6S Plus. Now, even if Apple had some fancy new phone to sell -- which it doesn't -- most consumers are not ready for an upgrade.

This past quarter, domestic iPhone revenue fell 18% year-over-year, and 26% in China. That's a big problem, considering that phone sales have consistently comprised about two-thirds of Apple's business.

Stateside, Apple's share of smartphone users is expected is expected to account for a 43.5% share in 2016 -- up slightly from 43.3 in 2015, by eMarketer’s estimation.

Looking ahead, analysts say Apple's biggest and best hope lies in the success of its next iPhone.


“Clearly, Cook & Co. have a few tough quarters ahead until we get to the buildup around iPhone 7 later this year, which is what bulls (including ourselves) are focused on to turn this ship back into growth waters,” Daniel Ives, a senior analyst at FBR, explained in a recent note to investors.


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