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Gartner: Smartphone market to plummet, single digit growth expected
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MacNN Staff
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Jun 8, 2016, 08:00 AM
Research firm Gartner has predicted more bad news for news for smartphone makers, forecasting that the annual growth of the global smartphone market will be as little as 7 percent for 2016. This is only half of the 14.4 percent growth that the global smartphone market achieved in 2015, and well down from the rapid growth of 2010, when global smartphone growth was a stratospheric 73 percent. The report aligns with Apple's own outlook for the next quarter, where it also expects to record relatively soft sales.

Gartner cites a western smartphone market that has reached market saturation, a slowing Chinese market (which has been critical in maintaining double digit growth over the past two years), while the lack of game-changing innovations and incremental upgrades over the past couple of cycles has also meant that customers are holding on to their smartphones longer. Adding to the softening of demand is that carrier subsidies for smartphone has also started to taper, making upgrading a more expensive proposition than it has in the past.

Coinciding with Apple's push into the Indian market, something that Apple CEO Tim Cook recently identified as a top-five priority for the company this year. With feature phones still dominating sales, at roughly 60 percent of total phone sales, the Indian market remains a strong prospect for helping to offset declines in growth elsewhere. Gartner projects 139 million smartphones will be sold in India this year, growth of 29.5 percent year-over-year, which sounds promising. However, as a high-end seller Apple isn't particularly well positioned to take advantage of the bulk of this growth, which is largely expected to come from devices priced under $120.

The Gartner report adds to the growing number of analysts who have predicted a flat year for iPhone sales leading up to the launch of the "iPhone 7." Goldman Sachs recently downgraded its outlook for Apple shares from a target price of $136 to $124 expecting fewer iPhone sales for the year, down to 212 million from its previously bearish forecast of 213 million for the year. However, the bright spot for Apple is expected to come when it launches the "iPhone 7," which is forecast to create a new sales record when it lands in September.
( Last edited by NewsPoster; Jun 8, 2016 at 09:30 AM. )
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Jun 8, 2016, 02:43 PM
I generally distrust research firms, but Gartner may be right on this one. I like my iPhone 5 and see little reason to upgrade. If I wanted a larger screen, I'd be equally happy with with an iPhone 6. The technology has hit a plateau. Smartphones are too small and constrained by portability to do much styling. Other than marketing speciality iPhones for sports (rugged/waterproof) or business (extended battery life) there is not much anyone else can do. // \\ It is a stretch, but perhaps Apple could adapt iPhones into an at-work-only communication etc. device for hospitals and the like. There's a disconnect between personal devices and at-work devices that needs filling. It makes no sense for a hospital, for instance, to demand that nurses use their personal iPhones at work. Yet at the same time dealing all the time with a hospital-provided iPhone could be an irritation for a nurse who also has to manage her personal phon too. Hospital could let nurses use that personal phone as they like, but on arriviing at work supply them with an adapted-for-hospitals version to carry on the job. Done right, that'd be a new market.
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Steve Wilkinson
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Jun 8, 2016, 03:10 PM
@Inkling... maybe something like user-switching for iOS.

Actually, the battles I see more often ARE companies where they issue a work phone (often Blackberry up here) and the workers are about ready to rebel because they'd like to use their own phone. It's a battle between IT and BYOD. If there were some kind of user-switching, then it wouldn't matter much which route they go, but IT could still have their way and the user too, if done right... and the two would be properly segmented.

But yea, the slowdown is kind of inevitable unless the world economic situation shapes up. And, IMO, I don't think good times are coming. I think we're better off preparing for some pretty bad times. That said, I think unless Apple totally messes up, they are as positioned as anyone to ride it out, while having better than industry standard profits.
Steve Wilkinson
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